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SUMMER 2007

8 NO.4

VOL.4

Ellen F. Goldman

Strat egic Think ing

At the Top

Please note that gray areas reflect artwork that has been intentionally removed. The substantive content of the article appears as originally published.

REPRINT NUM BER 48418

Leadership

Strategic Thinking At the Top


S
trategic thinking is generally considered important to a companys per-formance.1 Indeed, some have advocated for companies to develop the strategic thinking of their executives as a core competency. But how exactly should organizations accomplish this? Past studies on the subject have been limited, typically focusing on singular teaching methods, experiences or plan-ning processes.2 As such, the research has yielded little insight into the broader picture of how individuals tend to acquire expertise in strategic thinking. What types of work experiences, for example, are more important than others,

and do they need to follow any specific chronology?


To answer these and other questions, I conducted a study that identified executives who were considered the top strategic thinkers in their industry.3 (See About the Research, p.76.) The study then investigated the totality of experiences (educational, job related or other) that contributed to the high ability of those individuals. In addition, the research investigated the different ways in which the executives acquired their expertise in strategic thinking a process that typically took more than a decade.

The data showed that strategic thinking arises from 10 specific types of experiences for instance, spearheading a major growth initiative or dealing with a threat to organizational survival. Moreover, executives appear to gain their expertise in strategic thinking through one of three developmental patterns. These findings help demystify the process by which strategic thinking is learned, offering important implications for management development and the practice of strategy.

Defining Strategic Thinking


First, though, what exactly is strategic thinking? Although numerous books and articles purport to cover the subject, they typically deal more with strategic planning and strategic management. According to Henry Mintzberg, the man-agement guru, Many practitioners and theorists have wrongly assumed that strategic planning, strategic

thinking and strategy making are all synonymous, at least in best practice.4 To avoid any confusion, my study used the following definition: Strategic thinking is a distinctive management activity whose pur-pose is to discoverstrategic novel, imaginative strategies which can rewrite the rules of

Ellen F. Goldman is a visiting assistant professor of human and organizational learning in the Graduate School of Education and Human Development at George Washington University. She is also the principal of Growth Partners, a Reston, Virginia-based consul-tancy that specializes in strategic thinking. Comment on this article or contact the author through smrfeedback@mit.edu.

Expertise in thinking is not the product of innate ability and pure serendipity. It arises from specific experiences (personal, interpersonal, organizational and external) which occur over 10 or more years.

Ellen F. Goldman

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the competitive game; and to envision potential futures signifi-cantlymost falling somewhere in the middle. It should be noted, howdifferent from the present.5 Furthermore, strategic thinking wasever, that even the individual with the strongest pronature view specified as being conceptual, systems-oriented, directional (linkingfelt that experiences were still necessary to develop a persons

strategic thinking ability. And most participants felt that without the future with the past) and opportunistic.6 A related question is whether strategic thinking is an innate skillsome hard-wiring, learning to think strategically would be more or one that can be acquired. This question is at the heart of everydifficult but not impossible. discussion of individual abilities. But even those leadership theorists
who believe in inherent mental processing capabilities7 note that suchTen Contributing Experiences abilities must be enhanced as part of management development. MyThe study identified 10 experiences that contributed to the devel-opment study was concerned with identifying the ex-periences thatof a persons ability to think strategically, and those experiences contributed to the development of expertise in strategic thinking, notrepresented four levels of interaction: personal, in-terpersonal, with measuring any levels of cognitive functioning. As such, theorganizational and external. (See Ten Experiences That Contribute to nature-versus-nurture argument was moot to this research.the Ability to Think Strategically.) Every ex-ecutive did not benefit Interestingly, the study participants volun-teered views that spannedfrom all 10 experiences, and no two executives had the same set of the nature/nurture spectrum, with experiences. But each individual

About the Research


The goal of this study was to identify how expertise in The Seidman phenomenological in-terviewing strategic thinking develops. Given the complexity of techniqueii was utilized to gather data. The process the process, the research was limited to one industry consisted of three 90-minute interviews with each healthcare and to only the provider segment participant. The first interview estab-lished the within that industry. A technique known as social context for the participants experiences; the second labelingi was used to select the referral sources, focused on the reconstruction of their experiences who were ex-perienced healthcare strategy and their developmental process; and the third consultants and leaders of professional encouraged reflection on the meaning of that organizations. The sources were then asked to process. The inter-views, which were all audiotaped, identify two or three individuals with whom they had utilized a semistructured protocol, and Seidmans worked and who met the studys specific definition of criteria of sufficient numbers to reflect the range of an expert strategic thinker. participants and saturation of information was A pool of 36 potential executives was generated, reached at 10 participants. from which 10 were ultimately selected to participate. Based on the comments provided by the The individuals were all CEOs and were participants, graphic maps of their experiences were representative of the general demographics of U.S. prepared. The figures were used in subsequent health-care CEOs with respect to geographic region, interviews in a manner similar to the way in which setting of the organization (urban versus suburban), cogni-tive maps are used in research on strategic type of organization (teaching versus community) and decision making: to focus peo-ples attention, trigger gender (male versus female). The professional work their memory, reveal gaps in information, highlight experience of the participants ranged from 23 to 40 key factors related to their experiences and years. enhance the understanding and impor-tance attached to those experiences.iii The mapping process also provided the participants with the opportunity to work collaboratively with the researcher during the discovery process, and it pro-duced a tangible product that resulted from the time the participants invested in the study. The interviews were transcribed, and the resulting 15,000 pages of data were analyzed, first by reducing the volume of information to what was most important and interesting, then by capturing the es-sence of the entire experience of becoming an expert strategic thinker for the different participants (through the preparation of individual profiles), and fi-nally by identifying thematic connections across all the data.iv Numerous steps helped ensure the trustworthiness of the study, including researcher epoche, a prolonged engagement with the partici-pants, triangulation of data, member checks, peer debriefing, peer code check-ing and the establishment of an audit-like trail.v
1. J. Shanteau, Psychological Characteristics and Strategies of Expert Decision Makers, Acta Psychologica 68 (September 1988): 203-215; and R.J. Sternberg, Cognitive Conceptions of Expertise, International Journal of Expert Systems 7, no. 1 (1994): 1-12.

2. 3. 4. 5.

I. Seidman, Interviewing As Qualitative Research: A Guide for Researchers in Education and the Social Sciences, 2nd ed. (New York: Teachers College Press, 1998). C.M. Fiol and A.S. Huff, Maps For Managers: Where Are We? Where Do We Go From Here? Journal of Management Studies 29, no. 3 (May 1992): 267-285. C. Moustakas, Phenomenological Research Methods (Thousand Oak, California: Sage Publications, 1994). Y.S. Lincoln and E.G. Guba, Naturalistic Inquiry (Newbury Park, California: Sage Publications, 1985).

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described at least one experience at Ten Experiences That Contribute to the Ability to Think Strategically each of the four levels of interaction. Family Upbringing/Education Family
upExpertise in strategic thinking arises from the contributions of 10 experiences that can be grouped into four levels of interaction: personal, interpersonal, organizational and external. Every executive in the research study did not benefit from all 10 experiences, but each individual reported at least one experience at each of the four levels of interaction.

bringing and education are grouped together because the study participants discussed them interchangeably; the two types of experiences typically occurred simultaneously, reinforcing one another. One aspect noted was the value of exploring different perspectives, for example, through travel and

Level of Interaction
Personal

Experience
Family Upbringing/Education General Work Experiences

exposure to different cultures as well as


Becoming a CEO

through debate training and practice of


Interpersonal Being Mentored Being Challenged By a Key Colleague

the Socratic method. General Work Experiences The participants cited experience in a variety of organizational types and locations, which provided exposure to numerous strategic issues and familiarity with a breadth of strategies. The most impor-

Organizational

Monitoring Results/Benchmarking Doing Strategic Planning Spearheading a Major Growth Initiative

External

Dealing With a Threat to Organizational Survival Vicarious Experiences

tant factor here was the responsibility for significant projects (for example, implementing the merger of two organizations, evaluating a business for sale or turning around an organization that was facing bankruptcy) and the freedom to make most, if not all, of the decisions related to those initiatives. Becoming a CEO This experience is somewhat paradoxical.
Many

tions vice president of planning. In general, the interactions were private and spontaneous, with a wide range in tone from relaxed, informal conversations to highly aggressive, confrontational exchanges. Monitoring Results/Benchmarking participants cited the The
im-

boards want individuals who already have expertise in strategic thinking as their CEOs. But many of the study participants cited becoming a CEO as important to the development of their strategic thinking because, with that promotion, they gained access to important information (for instance, the views of important external parties) which enabled a big picture view of their business. [Note: All the individuals that the study identified as experts in strategic thinking were CEOs, even though this attribute was not a criterion in the selection process.] Being Mentored Many executives have mentors, but not all
men-

portance of their involvement in monitoring the operational and market performance of their organizations. Such efforts were usually extensive and fairly sophisticated. Market data, for example, were often segmented by geography and demographics, with information on purchaser preferences and use, and views of competitors detailed by the various market segments. Other key data tracked each market segments stated preferences in relation to the actual behavior of those customers. Doing Strategic Planning development of strategic thinking The

tors help others to develop their strategic thinking. Those who do are individuals who are in frequent contact with the executive (at least once daily), providing immediate feedback. Moreover, their influence starts early in an executives career, within a few years

ability is enhanced by participation in strategic planning processes with three characteristics. The first is having planning sessions with management teams on a regular basis, often monthly or quarterly. The second is preparation for these sessions, such as the required reading of materials that help focus peoples

of that individuals first job, perhaps as a first boss.

think-

ing and provide a sense of the meetings purpose. The third is the formal output of the planning process: often an overall plan foll Being Challenged By a Key Colleague Colleagues played an impor- owed by business-unit goals and tactical plans. But even less tant role by challenging the thinking of the executives. structured output establishing a general direction and imIndividuals performing this role worked very closely with the mediate next steps, for example can help develop an executives executive, for example, as his boss, board chairman or organiza- strategic thinking.
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Spearheading a Major Growth Initiative These projects


must in-volve significant complexity, be both capital and labor intensive and require at least a year to complete. Examples include estab-lishing a new program (developing the business case, obtaining regulatory approval, overseeing facility construction and re-cruiting staff), acquiring an organization (identifying, negotiating with and acclimating the new group) and building a new facility (that is, overseeing its construction). As with the category of general work experiences, the freedom to make important deci-sions makes these projects valuable to the development of strategic thinking ability.

years with a wide range of frequency: The interaction could occur monthly for a few hours, quarterly for one day or three days twice annually. In many cases, the regular contact is enhanced by small group interactions and social time, for example, a monthly pro-fessional meeting of CEOs that includes sessions in which people break into smaller groups (perhaps geared toward specific topics) followed by dinner with ample time for networking opportuni-ties. The study participants also noted the benefit of vicarious experiences gained through indirect means, such as by reading business publications. Generally speaking, each of the 10 experiences took place over a significant period of time, often in excess of one year, and re-quired considerable responsibility on the part of the executive

Dealing With a Threat to Organizational Survival The


types of threats that most contribute to the development of strategic thinking are those that involve attempts at control by another entity, which occur repeatedly and that could have a severe impact on the ex-ecutives organization. Such experiences typically force a major rethinking of issues that strike at the core of the individuals in-volved, substantially sharpening their focus.

usually the individual had to perform tasks that were materially new to him. Some of the experiences catalyzed others, but they did not occur in any specific order (except for the obvious categories of family upbringing/education, being mentored, and becoming a CEO).
In addition to the 10 experiences, the study identified two other important factors. The first was personal characteristics, specifically, being methodical, balanced, goal-oriented, curious, receptive to criticism, detail-oriented, a perfectionist and a mav-erick. The second was a supportive work environment, including the presence of a strong management team that frees up the CEOs time to focus on strategic issues and contributes to his thinking. Also of impor-tance was the attitude of the board, particularly regarding failure. As one executive explained, When you do make a mistake, theyre worried about fixing the problem, not fixing the blame. Neither of these factors is sufficient to develop strategic thinking ability without the requisite experiences described earlier, but they may amplify the value of those experiences. Avid Alone Time

Vicarious Experiences This category includes interactions


with others in similar roles, with the frequency of contact being an important factor. Usually, the contact is maintained for several

Pattern 1: The Development of Understanding


In this developmental pattern, expertise in strategic thinking arises from the culmination of various experiences (small ovals) which provide new and different perspectives. The experiences occur over years, and each is fueled by the individuals natural curiosity (large oval). This figure is a reproduction of the actual map created during interactions with one executive in the study who best exemplified this particular patternSignificant of development.

Past Colleagues

The Overall Developmental Process


The development of an in executives Professio ability to think nal strategically develops gradually Organizati over ons a considerable amount of time. Most participants in the Curiosity study said they took more than 10 years to acquire their expertise, and during that time their confidence grew as they became more comfortable General Work dealing with increasing levels Fathers of business complexity and Approach ambiguity. Interestingly, the to Life executives described their development in a manner consistent with one of three distinct patterns. The patterns,

Planning

Natural
Retreats

Meetings with Other Executives

which can best be understood throughinto how expertise in strategic graphic maps that were created with thethinking is acquired. participants, provide valu-able insights

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Pattern 2: The Practice of Rational Planning


In this developmental pattern, expertise in strategic thinking is the result of the executive continually asking the same three questions (large ovals): Where are we going? How are we getting there? Are we executing efficiently? The arrows denote the flow of knowledge from the various experiences (small ovals) to the three questions. Note that an experience can provide value to more than one of the questions. This figure is a reproduction of the actual map created during interactions with one executive in the study who best exemplified this particular pattern of development.

Boss Data
Monitoring

Benchmarks Question of Legacy Practice s


Best

Mentors

Logical Evaluation of Alternatives

Desired Metrics Time

Where
Problems/ Complaints

Use Past
Successes

Going?
(Vision)

Dialogue with Team

How Getting There?


(Strategies)

(Models) Community Views General Business Knowledge (Standards) Sense of Ownership Beta Methodical Thinker

Mistakes

After-the-Fact Groups Critique

(Implementation)

Is Execution Efficient?

Pattern 1 The first pattern reflects a repetitive process of using past experiences toand the repeated application of the three consider alternative perspectives. (See Pat-tern 1: The Development of steps, no matter how big or small the Understanding.) One executive described the process this way: Theres a solution toissue, with expertise in strategic thinking every prob-lem, and if you cant come up with it, you need to look at the problem acquired after years of honing the from a different angle. The key ingredient here is a natu-ral curiosity that fuels the practice.
executives search for greater understanding, thus expanding his ability to think strategically. The result: The executive learns to see all sides of an issue and is able to Pattern 3 The final developmental pattern is alter the angle from which he views a problem to search for a better solution. In thisportrayed as the tackling of bigger and bigger manner through the exploration of different perspectives repeatedly over time business challenges, with the execu-tives ability to think strategically growing the executive develops expertise in strategic thinking.
continuously over time. (See Pattern 3: The Pattern 2 This pattern includes the three major steps of a logical planning processCompletion of a Hierarchy of Chal-lenges, p. understanding where you are, determining where you want to be and detailing how80.) Key features include modest initial to get there with each step informed by information, experience (both actual and activity followed by a step-like progression. vi-carious) and discussion. (See Pattern 2: The Practice of Rational Planning.) Key The catalysts to movement can be ei-ther positive or negative: opportunities to build features include the use of data to fuel thinking new services as well as pressures from financial losses, takeover attempts and other

challenges to survival. Expertise in thinking strategically is acquired by meeting andand how the ex-ecutives approached those effectively dealing with the challenges, with each experience improving the executivesexperiences (namely, by considering different ability. perspectives, by using a planning model or by The three patterns reflect how executives described the ways in which they learned tojust divthink strategically. They illustrate both what occurred (specifically, the 10 experiences)
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Pattern 3: The Completion of a Hierarchy of Challenges


In this developmental pattern, expertise in strategic thinking results from the executive tackling increasingly difficult chal-lenges over the course of years. During this time period, the upward direction of the red line (from left to right) indicates the individuals increasing ability to think strategically, and the arrows show how the different experiences (ovals) influence each other. This figure is a reproduction of the actual map created dur-ing interactions with one executive in the study who best exemplified this particular pattern of development.

Commu nity Involve ment

Politi cal Exposure Orga nizati onal


(Str uct ure ) Ch ang e

New Boss Scenario Evaluation Executive Payment Change Doing a Master Plan Evaluating an Acquisition Team and Mentored Observation Community Dialogu e Dialogue with External Parties Trade Organizations Education

Being

General Experience

Board Interactions

Consultants Questions

must be highly individual because no two people will absorb the same experience in exactly the same way. ing in and doing what was needed). TheNevertheless, some general salient point here is that all theguidelines do apply. Experiexecutives in the study described theirences that contribute most to development in a manner that wasthe development of strategic consistent with one of the three patterns. thinking tend to take place over a year or more and Improving Strategic require significant Thinking responsibility on the part of The study results have a number ofthe individual usu-ally the implications for companies in theirperformance of a task that is efforts to improve the strategicmaterially new to that person. thinking of their execu-tives. TheMoreover, its crucial to important thing to remember, though,remember that the developis that any development programment of expertise in strategic

thinking takes at least a decade, during which time many of those experiences must be continu-ally repeated. With all this in mind, the Include Strategic Thinking As a following approaches should benefit companies in their efforts to developFormal Component of the stra-tegic thinking of theirManagement Development Programs One of the most remarkable managers.
findings of the

study was the tacit expectation that an executive would, all of a sudden, think strategically upon becoming a CEO. But, clearly, if companies want expertise in strategic thinking they must take the necessary steps to nurture this ability. Management development programs should identify specific experiences (spearheading a growth initiative, for instance) and target their inclusion in the careers of high-potential executives. Although individual in na-ture, such experiences should, taken together, cross all four levels of interaction: personal, interpersonal, organizational and environmental. Moreover, each experience should contain the necessary attributes (being mentored, for example, must include frequent contact and immediate feedback). Finally, the experi-ences should be preceded by a briefing on strategy theory and vocabulary (if needed) to ensure that the executive understands key concepts that will help him obtain the maximum benefits from those experiences.

Require Executives to Develop the Strategic Thinking of Their Subordinates Because strategic
thinking develops gradually over a

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long period of time, and because general work experiences and being mentored are two important experiences during this growth,business schools and others interested in management superiors are in a key position to influence their sub-ordinates education and development have vigorously debated how best to development. As such, companies should include thisteach strategy to future leaders. Some experts have ques-tioned responsibility as a part of an executives performance re-view:whether the topic should be taught at all or at least whether it What projects and roles have you given your subordinates toshould be taught to managers. Often missing from the debate, develop their strategic thinking? Are these assignments ofhowever, has been any in-depth discussion of how individuals sufficient size, and have your subordinates been given the requi-learn to think strategically in the first place. What specific site freedom to act? And have your efforts resulted in noticeable experiences are important and how do they contribute? Moreover, improvements in their strategic thinking, however subjectivelywhat are the different ways in which people absorb those determined? experiences to develop the ability to think strategically? Without adequate answers to these questions, its no wonder that schools have had trouble teaching strategy to students and that many Activities These two experiences contribute significantly to imcompanies have difficulty developing the strategic thinking of portant procedural knowledge related to strategic thinking. Without thistheir executives.
Encourage Early Participation in Strategic Planning and Benchmarking

knowledge, executives can waste considerable time by attempting strategy development or implementation in inef-ficient or inappropriate REFERENCES ways. Of course, companies will find it impractical for all their managers 1. J. Mason, Developing Strategic Thinking, Long Range to be involved in every strategic planning activity. Nevertheless, Planning 19, no. 3 (June 1986): 72-80; N.B. Zabriskie and A.B. executives can also be encouraged to participate in strategic planning Huellmantel, Develop-ing Strategic Thinking in Senior with other organizations, for example, with subsidiaries, professional Management, Long Range Planning 24, no. 6 (December 1991): 25-32; I. Bonn, Developing Strategic Thinking As a Core associations, community groups or small, local businesses.

Support Activities That Incorporate Experiential Learning


Interest-ingly, with respect to the development of strategic thinking, the study participants attributed little value to graduate professional programs. Thus, when managers do undertake such programs, the curriculum should incorporate experience in addition to the teaching of theory, for example, through the inclusion of oppor-tunities to do strategic planning and benchmarking, discussion of vicarious experiences (perhaps by having experts mentor nov-ices) and assignments that broaden an individuals perspective through observation, dialogue and debate.
2.

Competency, Management Decision 39, no. 1 (2001): 63-71; and E. Essery, Reflecting On Leadership, Works Management 55, no. 7 (2002): 54-57. M. Easterby-Smith and J. Davies, Developing Strategic Thinking, Long Range Planning 16, no. 4 (August 1983): 39-48; D.L. Bates and J.E. Dillard, Generating Strategic Thinking Through Multi-Level Teams, Long Range Planning 26, no. 5 (October 1993): 103-110; and P.M. Senge, Mental Models, Planning Review 20, no. 2 (March/April 1992): 4-10, 44.
E.F. Goldman, Becoming an Expert Strategic Thinker: The Learning Journey of Healthcare CEOs (Ph.D. diss., George Washington Univer-sity Graduate School of Education and Human Development, 2005), Dissertation Abstracts International UMI No. 3181551.

3.

Maximize the Benefits of Strategic Planning Sessions

Companies should hold strategic planning sessions on a regular basis Busi-ness Review 72, no. 1 (January 1994): 107-114. (monthly or quarterly, for example), and those meetings should have 5. L. Heracleous, Strategic Thinking or Strategic Planning? a high degree of process regularity, with an emphasis on preparation: Long Range Planning 31, no. 3 (June 1998): 481-486. reviewing materials and thinking about specific questions that are 6. H. Mintzberg, Patterns in Strategy Formation, Management provided in advance. In addition, the meet-ings should include Science 24, no. 9 (May 1978): 934-948; P. Hanford, Developing Director and Ex-ecutive Competencies in Strategic Thinking, in B. content that expands peoples perspectives (for example, comparative Garratt (ed.) market information from another industry or the viewpoint of a Developing Strategic Thought: Rediscovering the Art of Directionconstituency that is seldom heard). During these sessions, the Giving (London: McGraw-Hill, 1995): 157-186; and J.M. Liedtka, company should ensure that the participants (not the planning staff orStrategic Thinking: Can It Be Taught? Long Range Planning 31, no. 1 outside consultants) perform the information synthesis and(February 1998): 120-129. interpretation. After all, the firm wants to develop the strategic 7. E. Jacques and S.D. Clement, Executive Leadership: A Practical Guide to Managing Complexity (Arlington, Virginia: thinking of the partici-pants and not necessarily that of the staff or Cason Hall & Co., 1991). consultants. Staff members could, however, provide valuable input into manage-

4.

H. Mintzberg, The Fall and Rise of Strategic Planning, Harvard

ment development plans, because they might be able to identify Reprint 48418. specific aspects of strategic thinking that are lacking in indi-Copyright Massachusetts Institute of Technology, 2007. All rights reserved. vidual executives.
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