STRATEGIC THINKING VERSUS STRATEGIC PLANNING

The concept of strategy is often used interchangeably for the concept of strategy formation. Although it is easy to blend, even confuse the two, in reality, they are distinct, but related activities. In fact, the standard dictionary definition of the word strategy only contributes to the lack of clarity. On the merriam-webster.com/dictionary Website, the definition of strategy is as follows:

1a (1): the science and art of employing the political, economic, psychological, and military forces of a nation or group of nations to afford the maximum support to adopted policies in peace or war (2): the science and art of military command exercised to meet the enemy in combat under advantageous conditions

b: a variety of or instance of the use of strategy 2a: a careful plan or method: a clever stratagem

b: the art of devising or employing plans or stratagems toward a goal

It is not until you get to 2a of the definition that the meaning of strategy as applied in the context of business becomes evident.

In order to clarify the definition, it becomes appropriate to consider the concept of strategy separately from the process of strategy formation. To start, strategy embraces almost all of the critical activities of a firm. That is, strategy provides a sense of unity, direction, and purpose, as well as accommodating the changes necessitated by the firm's environment. Hax44 suggests that the following six dimensions need be included in any unifying definition of strategy:

1. Strategy as a coherent, unifying, and integrative pattern of decisions. Strategy gives rise to the plans that assure that the basic objectives of the enterprise are met, and that it is conscious, explicit, and proactive.

2. Strategy needs to be considered as a means of establishing an organization's purpose in terms of its long-term objectives, action programs, and resource-allocation priorities. This clearly indicates that resource allocation is a firm's most critical aspect of strategic implementation and effectiveness.

3. Strategy needs to be considered as a definition of a firm's competitive domain. One of the principal concerns of strategy is defining the businesses a firm is in or intends to be in, and relates back to dimension (1) mentioned earlier.

4. Strategy needs to be considered as a response to external opportunities and threats and in internal strengths and weakness as a means of achieving competitive advantage. A central objective of strategy is the achievement of a long-term sustainable advantage over a firm's key competitors.

5. Strategy needs to be considered as a logical system for differentiating managerial tasks at corporate, business and functional levels. This point recognizes the various hierarchical levels in most organizations, and that each level has differing managerial responsibilities in terms of their contribution in both defining and operationalizing the strategy of the firm.

6. Strategy is a definition of the economic and noneconomic contribution the firm intends to make to its stakeholders. It is easy for managers to fall into the trap of "bottom line/short-term" profitability as the ultimate driving force. Sustained profitability is the legitimate and desired outcome of a well-executed strategy.

It becomes apparent from the previously mentioned text that strategy encompasses the overall purpose of the organization. As such, defining it properly entails examining all of the multiple aspects that comprise the whole. Strategy becomes a framework by which an organization asserts it continuity, while managing to adapt to the changing environment in order to achieve competitive advantage.45

Further examination of the literature on the difference between strategic thinking and strategic planning provides little clarity. Strategic planning is often associated with a programmatic, analytical thought process, whereas strategic thinking refers to a creative, divergent thought process. The source of the confusion lies in the fact that although the terms are frequently used, they are often used in fundamentally different ways by different authors. For some, strategic thinking and planning are distinct modes that are both useful at different stages in the strategic management process (e.g., Mintzberg); others posit that strategic thinking is not so much creative as analytical (Porter). Still for some, strategic planning remains an analytical activity, but the organizational practices surrounding it have been transformed, whereas others believe the real purpose of the analytical tools of strategic planning is to facilitate creativity, which is a part of strategic thinking. Last, for a select group, strategic planning is a useless activity that should be scrapped in favor of strategic thinking.46

Heracleous47 proposes that strategic planning and strategic thinking are two distinct thinking modes, and that strategic thinking needs to precede strategic planning. This view is based upon the premise that planning cannot produce strategies because its focus is programmatic, formalized, and analytical. Planning is what happens after the strategy has been decided upon, discovered or purely emerges. Mintzberg48 endorses this view by suggesting that the concept of strategic planning is based upon three principal fallacies. First is the fallacy of prediction, the belief that planners can accurately predict what will happen in the marketplace. Second is the fallacy of detachment, the basis of which is that effective strategies can be produced through formalized processes by planners who are detached from business operations and the market. Last is the fallacy of formalization, a disputable concept suggesting that formalized procedures can produce strategies, whereas their appropriate function is to operationalize existing strategies.

The preceding view stresses that strategic thinking and strategic planning involve distinctly different thought processes. Strategic planning is analytical, systematic, and convergent, whereas strategic thinking is synthetic and divergent. This view challenges conventional wisdom regarding strategic planning by seeking to limit planning to the operationalization of existing strategies as opposed to being able to generate new or creative strategies. In contrast, Porter and others believe that strategic thinking is analytical. Porter supports this view with his analytical frameworks of five forces analysis, the value chain, the diamond model of national competitive advantage, and strategy as an activity system. In this view, strategic thinking is not a synthetic and divergent thought process; rather, it is convergent and analytical, and therefore used interchangeably with the term strategic planning.49

In reality, although an organization may begin with a rational plan, what evolves may be something very different than what was actually intended. These "emergent" strategies evolve as part of a pattern in a stream of actions, as opposed to any preconceived plan.50

Liedtka51 suggests that in the face of unpredictable, highly volatile, and competitive marketplaces, a capacity for innovative, divergent strategic thinking at multiple levels of the organization is central to creating and sustaining competitive advantage.

Liedtka's52 examination of strategic thinking led her to present five major attributes of strategic thinking, as follows:

1. Strategic thinking reflects a system or holistic view that appreciates how the different parts of an organization influence each other, as well as their different environments.

2. Strategic thinking embodies a focus on intent. This contrasts with the traditional approach that focuses on creating a "fit" between existing resources and emerging opportunities. Strategic intent intentionally creates a substantial "misfit" between them.

3. Strategic thinking involves the ability to think in the time continuum. Strategic thinkers understand the interconnectivity of past, present, and future.

4. Strategic thinking is hypothesis driven. By asking the question "what if" followed by the critical question "if then," strategic thinking spans the analytical-intuitive chasm Mintzberg refers to in his definition of thinking as synthesis and planning as analysis.

5. Strategic thinking raises the capacity to be intelligently opportunistic. It means to recognize and take advantage of newly emerging opportunities.

The ability to think strategically facilitates another dimension of the process of strategy making. It recognizes that strategic thinking and planning are distinct, but interrelated and complementary thought pro-cesses.53, 54 Heracleous55 asserts that thinking and planning must sustain and support each other for effective strategic management. He observes that creative groundbreaking strategies emerging from strategic thinking still must be operationalized through convergent and analytical thought (strategic planning).

The previously mentioned view suggests that the real purpose of strategic planning is to facilitate strategic thinking, where the structured planning tools of strategic planning are used to aid creative thinking. One of the principal tools associated with this view is "scenario planning," a process for examining appropriate responses to a spectrum of possible futures. The tool facilitates managers in questioning their underlying assumptions, and sensitizes their thinking to potential competitive arenas substantially different from their current ones. Schoemaker56 describes scenario planning as a "thinking tool and communication devise that aids the managerial mind rather than replace it." It is particularly valuable in times of high uncertainty and complexity in that it challenges the status quo. Scenario planning is a tool that aids an organization's ability to identify trends and uncertainties in the macro-environment. It provides a means for sketching possible futures by capturing a range of options, stimulating thinking about alternatives, and challenging the prevailing mindset.57 De Geus58 suggests that value of planning does not reside in the plan itself, but in changing the mental models of managers involved in the process.59 The ability to think strategically gives meaning and insight to the process of strategic planning. It recognizes that strategic thinking and planning are "distinct, but interrelated and complementary thought processes," that must sustain and support each other for strategic management. Creative, groundbreaking strategies that emerge from strategic thinking still have to be operationalized through convergent and analytical thought (strategic planning). Planning is vital, but cannot produce unique strategies that challenge existing boundaries, unless it stimulates the creative mindset in the process.60

 
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