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by Susan Reece
MOST LEADERS RARELY reflect on their thinking patterns and biases and miss critical information that is vital to their growth and profitability.
Great strategies result from rich and varied viewpoints, facts, and instincts. Great strategists discern what is critical, identify their preferences, understand their biases, and plan for blind spots. Insight into thinking preferences, power, and politics provides a leader with a strong platform for strategy formulation and implementation.
One organization’s path of strategy development demonstrates the power gained by moving beyond its comfortable, predictable thinking patterns. A staid consumer products organization had plateaued in revenue growth and profitability. The company languished for years because it had little insight into the thinking and assumptions that were driving its leaders. By challenging long-held beliefs about what presaged company success, leaders doubled revenue and reached unparalleled profitability — even during a time when its industry was flat.
Nine Dimensions
Leaders vary in their approach to strategy along nine dimensions that comprise the strategic process: structure, inclusion, locus of dominant influence, origination, risk tolerance, risk assessment, success drivers, manifestation, and adaptation. Our Strategy Preference Indicator reflects thinking preferences in these dimensions. A description of possible dichotomies on these dimensions provides a framework for how biases can be transformed into breakthrough thinking.
- There’s an old debate as to whether strategy is the idea, process, or plan. The need for structure varies from a formal planning process to serendipity. Some see strategic planning as a linear process that starts with planning and ends with execution. Other leaders assume that strategy evolves on its own.
- Inclusion in formulating strategy varies from the CEO as sole strategist to seeking inputs from many constituents.
- Locus of dominant influence reflects a leader’s tendency to be driven by an internal or external perspective. An internal focus recognizes the ability to execute but pushes strategy toward the tried and true. An external focus keys off the plays of competitors and industry expectations. If one perspective tends to dominate strategic thinking, the deleterious effects range from a seduction into products, services or technologies that are too far afield from the current brand equity or a tendency toward incremental improvements.
- Some leaders believe that strategy is created; others believe it is selected— origination. Generic strategic positions are described as technology leader or low cost producer. Leaders who engage in innovative thinking can define differentiating positioning that creates a tailored value proposition or new market space.
- Leaders vary in their tolerance for risk and are often unaware how it affects their strategic thinking. Riskaversion and risk-seeking preferences tend to be personality-based, but are moderated by the inputs they rely on.
- Risk assessment identifies and analyzes strategic risk—omission and commission. Strategic risk is often viewed as abstract and gets short shrift. Identifying omission errors is a difficult undertaking because it is easy to critique an idea but challenging to examine the white space for “what else.”
- Leaders differ in their emphasis on the success drivers of growth and profitability. Many leaders are not clear on the relative value of each to their shareholders. Savvy leaders have a clear view of their financial drivers and the blind spots associated with a bias toward growth or profit.
- Some strategists are great analysts and idea people; others focus on execution. If the desired end state is top of the mind as strategy is formulated, the odds of manifestation (commercialization of any strategic idea) is enhanced.
- Organizations adapt over time through orderly transformations or in response to revolutionary change. Some leaders prefer to put strategies into motion and maintain them; others hypothesize shifts that threaten strategy and add change management muscle.
How These Insights Add Value
Few leaders know where they fall in their strategic thinking styles. Since successful strategy is multi-dimensional, preferences reveal areas for exploration for missed potential.
The strategy odyssey of the consumer products company illustrates the breakthroughs that are possible with a catalyst to challenge status-quo thinking about strategy. The leadership team embarked on a new multiyear strategy formulation path that stimulated the thinking of the senior team. Honest reflection enabled them to focus on what they did well, identify the enabling structures, and plan how to capitalize on them in new ventures. Shared clarity was created — crucial as preferences differed vastly.
Since alignment had been lacking, employees had pursued areas that had limited commercial potential, stressed resources, and flamed fiefdoms. A plan was implemented to align information, budget and people resources. Once a consistent view of the strategy was reinforced, the attributes that once sapped energy diminished greatly.
The leadership team reconciled their divergent comfort levels with risk related to investments and growth. The sustainable growth level was modeled and consideration given to how and when to pursue acquisition or organic growth. The level of risk tolerance was affirmed by the Board and used to fill in missing components of strategy. The next-level management group was included in visioning work on logical adjacencies and untapped market space. New thinking enabled them to reach into new markets, distribution channels, and technology. As a result, their execution effectiveness was magnified. Internal process improvement initiatives were launched. A multi-faceted strategy emerged that produced unparalleled profitable growth.
Your long-term success hinges on the ability to explore strategy with curiosity and challenge long-held beliefs.
LE Susan Reece, Ph.D., is president of Dalton Spencer Consulting. Call 770-476-5583 or email sreece@daltonspencerconsulting.com.
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