What are managers thinking (and dreaming) in lock down? . . .

by Jeremy Raymond, a ProTem Expert

With space and time, managers have been thinking strategically

“I have had time to think and plan, without being distracted by the endless chasing after opportunities. I haven’t had to react all the time and I have realised it is really worthwhile stopping. I also notice that some of the people aren’t that talented. They don’t have many ideas and there’s nowhere to hide now in a business that needs really needs ideas

It’s like the sea. When the sea is rough you don’t notice the rubbish swirling around. But when it is calm, the rubbish floats to the surface”

(Regional luxury retail operations manager, Hong Kong)

Senior managers are usually a busy crowd. They need to react. They are told their organisations must be ‘ agile’ and that they personally should be ‘ responsive’. But recently they have had more time to reflect on what these requests really mean and how their part of the business needs to adapt to a shift in the social and commercial environment. They have been asking their teams to contribute to this thinking process, partly to retain their interest, but also to ensure the best solutions to what are essentially unpredictable conditions. Put simply, they have begun thinking strategically.

Most managerial problems in organisations are operational, tactical or technical. Managers stub their toes on such problems every day: the system that doesn’t work, the colleague who underperforms, the boss who doesn’t have a properly analyzed plan or just a prejudice about what ought to be done. Such issues require a reactive, tactical response; the most efficient way of doing something that the manager can devise. This is mostly about doing the same thing, but in a different way.

‘Strategic’ thinking is about the future and lifts your mental process out of short term considerations in order to realise something of your businesses potential. As a part of this, you hope to improve the company’s competitive advantage in a changing market. It is fundamentally about the future, or rather alternative futures that the company might choose, where or how to invest, where or how to cut. You might say that this is a bit of a secret, the idea that strategic thinking is not the province of Executives. Anybody can ‘think like an owner’ at any time and at any level. It is about making the company more effective, not just more efficient. But lack of time means that even quite senior managers may have avoided this part of their role; perhaps because it takes them into the rather less certain territory of leading.

Strategic thinking takes a bit of courage, as the recommendations which it produces may require the company to change and do a different thing (not just the same thing, differently). And, of course, that brings with it disruption and some tough decisions; what to stop as well as what to start, what competences are more important, who we no longer need.

Without strategic thinking the world moves on and a business gets left with a product portfolio, brand or customer proposition that seems shipwrecked on the shores of something nobody noticed as that significant. As managers get more senior, they need to create time to do this aspect of their job, but often they do not, especially if the recent past has been successful. Success doesn’t encourage managers to embrace ambiguity as they should. The future has always belonged to the learner more than the learned. Complacency kills strategic thinking. Fortunately for strategic thinkers the current crisis has left organisations with zero room for complacency.

Even before the crisis, the environment for business was becoming increasingly turbulent. Essentially this is nothing new (apart from the pace of change) because technological, geo-political, legal and social changes in the environment of a business are inevitable. There are many examples of companies — and economies — that did not think strategically enough to avoid being left ‘washed up’.

            Kodak and its failure to see the impact of digital cameras is a famous example; a market leader for 50 years, with a brand that everybody knew and respected — suddenly brought down by a technical innovation allowing mobile phones to become the preferred mass image–making tool.

            Retail businesses are often caught out by changes in social trends in the same way; the nature of customer need and desire changes so the proposition of any retail brand has to adapt or die. Each generation likes to shop differently — street market, bricks and mortar, online. No brand, no matter how big, can avoid the fate of Debenhams and Philip Green's Arcadia Group amongst many others, if they do not think strategically and invest in changes to brand, merchandise and channels to market.

What starts out as a disruptor of your successful business — new technology, changes in the customer or geo-political landscape, even a pandemic — may actually be a potent source of competitive advantage if you spot it coming and have a plan to exploit it. Functions in business which are often thought of as ‘support’ — legal, IT, HR, supply chain — may be key to establishing this sort of competitive advantage, even though they are not profit centres and may not have a seat on the top table. If ‘the war for talent’ in developing economies is real, then HR had better have some concrete proposals for how to gain advantage from recruiting, developing and retaining talent. If ‘the digital revolution’ in procurement is happening, sourcing management becomes a critical skill, although purchasing does not always have this status. If global pandemics become more frequent, supermarket supply chains and channels to market had better have alternatives in place. And so on.

In this way strategic thinking is the ‘parent’ to innovation and organisational change. Your great insight — no matter how robust the logical business case — will not transform the way the business on its own. Strategic thinking is only valuable when you turn it into strategic action and changes in behaviour. This may provoke resistance and requires collaboration around a plan. To innovate you have to think politically and empathetically as well as analytically. Different metrics and targets probably won’t be enough.

 “We are all in the gutter, but some of us are looking at the stars”.

(Oscar Wilde Lady Windemere’s Fan 1892)

There are many ways to project yourself into the future, as science fiction demonstrates. But although strategic thinking requires creativity (or divergent thought), it also requires rigorous analytical thinking (convergent thought) and the ability to abstract the idea in an appealing way (what psychologists call ‘reframing’) so that insights can be shared.

Here are the three basic steps in thinking you need

•             Wonder
•             Test
•             Conceptualise

Wonder. Start with the stargazing moment of curiousity and observation, about yourself or anomalies in the market or gaps in provision, sometimes caused by social dislocations like a pandemic. Good strategic thinkers habitually scan the market, listen to customers and reflect on their own situation. All this information incubates in their heads and then…a great strategic insight emerges that feels quite personal. When you have a sudden change in your life which impacts the way you see the world — and we have all had one of those recently — you tend to become more aware of such opportunities.

            “Why doesn’t anybody…?” Howard Schulz was in coffee bar in Milan and wondered why Americans didn’t value the same coffee experience as the Italians; real taste, high price, sociable, strongly caffeinated. Starbucks was the ultimate answer (although the caffeine maybe got a bit lost along the way).

            Ingvar Kamprad wondered why well- designed furniture had to be so expensive. Because stores wouldn’t stock his products because they showed up other stock, he went mail order. Flat pack followed logically to reduce transportation cost and when people started coming to the warehouse to see and test the furniture, the warehouse store was born. IKEA was the result of this evolution.

In neither case was the strategic solution fully formed at that moment of wondering. Both Starbucks and IKEA learned from mistakes and market reactions to adapt their strategic proposition, but the initial observation remained the driving force behind the proposition of both businesses.

Of course, both founders had to think about the validity of their intial observation, analyse the reality of that opportunity and assess if the anomaly or gap was real and big enough to base a business on.

Test. The second stage of strategic thinking is analysis — the rigorous testing of hypotheses about why things happen as they do and what, therefore, the future might bring. Hypotheses tend to be educated guesses about cause and effect which enable you to predict some future state or impact. While hypothesizing in divergent (creative, expansive), hypothesis testing is a convergent thinking process ( reductive, narrowing down) where ideas are subjected to research and testing — in reality (e.g. structured experiments with customers) and in theory (e.g. using data or with financial modelling and the application of logic). 

Afterwards only a few ideas a left standing or the initial idea has been modified. The entrepreneurial strategic thinker has to be obsessive about their idea but not wedded to its ultimate realization in the world — which can be quite difficult. Allowing others to call your ‘baby’ ugly is not always easy. Letting it ‘grow up’ can be equally hard. This may account for why many startups fail at the point where they try to become more ‘established’.

As the future performance of the business may depend on the results of strategic thinking, the leader’s initial conclusions should be challenged. Strategic thinking is ultimately collaborative because it has to be rigorous in its application of logic to the testing of hypotheses. Although as leaders we may fall in love with the idea, our vision of a rebooted business, we cannot allow ourselves to fall in love with our associated hypotheses, especially any which predict a fabulous future. 

Peer review is part of professional life. It has to be for strategic thinkers too. Judgment must be based on evidence, not just assumptions drawn from past experience, or dreams of glory, if your shared aim is to find a pathway to future success. (For this reason, strategic ideas can be resisted most strongly by the more experienced senior managers; your vision just won’t fit their experience)

Conceptualise. The third aspect of strategic thinking is conceptualizing the proposition in ways that can be understood, accepted and turned into operational action. The conceptual aspect of strategic thinking can happen at any time but is usually brought into play when the leader needs to share their thinking with people who have not been directly involved. Conceptual thinking is about using different terms to describe something which is familiar, but which needs a re-vamp. 

It is used in branding (“Think of yourselves as no longer in ‘the lipstick business’ but in ‘the happiness business’”) and also to communicate different business propositions. From my experience IBM’s insight into its problems in the early 1990s was this: “In the future we will not make money by selling mainframe computers. There’s no margin any more. Now the value is in services applying technology to our clients’ businesses. For ‘ tin’ read ‘ tin soldiers’”. All senior leaders need to be able to think in the abstract about their situation to come up with such ideas and to communicate them. Metaphors, stories, and images are all representations of the conceptual aspect of strategic thinking.

“We shape our buildings and afterwards our buildings shape us”

(Winston Churchill. Address to the House of Commons 1943

 “There’s an easy narrative for conversations about the future at the moment; ‘Everything has to change. You are all dinosaurs’. But some of the ideas are impractical when you are dealing with organisations which are in existential difficulty. Noble thoughts are for later”

(Coaching conversation with a client trying to help a conservative membership clientele to think about a different future)

And now you have your concept and your business case, you will need to overcome resistance and complacency, fear, uncertainty and doubt. What you are suggesting is new, possibly iconoclastic, probably dangerous to some people’s power or position. The street cannot be littered with the corpses of sacred cows or your recommended strategy will never succeed. You will need to master logic, empathy and story telling. You will need to persuade others that this is the right thing to do

“When I made my suggestions for how we should reorganise initially my boss pushed back. But then I went to a meeting where he totally owned the idea. I mean totally. Everybody thought it was his. I felt so demotivated”

(Coaching conversation with senior manager)

Ensuring you get the credit is one thing. Timing the launch of your brilliant vision upon the waiting world is also critical. Especially if your audience are waiting for a Messiah to fix the problems overnight and rescue them. Nothing is less potent than an idea whose timing is wrong.

To summarize, strategic thinking is not one but several sorts of thinking:

· Creative (the ability to generate ideas about what might be and hypotheses about associated problems and opportunities)

· Analytical (the ability to crunch the data to see if those creative ideas are correct)

· Synthetic (the ability to find new patterns in data)

· Conceptual (the ability to ‘reframe’ ideas in new appealing ways)

· Empathic (the ability to consider the idea from different perspectives and needs)

· Logical (the ability to organise the ideas in a way that make sense or tell a story)

One final thought about this period of managerial reflection, prompted by an Executive response…

Three aspects of behaviour are often used to predict high potential people and future leaders:

•             they learn faster than others
•             they are curious about many things and not restricted by the    prevailing organisational mindset
•             they are comfortable with abstract thinking, the big picture stuff.

Leaders are expected to shape the future, to create an inspiring vision for others to follow. Strategic thinking is the process they go through to clarify their ideas and think about how to ‘launch’ their agenda for change.

This can happen at any level in an organisation and does not necessarily have to be the province of Executives. In fact, because strategic thinking is often ‘revolutionary’ it is more likely to originate from smart junior people, if the company culture will allow for such irreverence. High potential people in operational (junior) roles often get a bit bored with the repetitive nature of their job and would like to improve things (for themselves as well as for their organisation). Often those closest to the market, or serving clients, have the best initial ideas about opportunity and anomaly. If the organisation allows them time to think too.

Rationally, Executives know they must develop strategic thinkers rather than just compliant followers. This secures the future of the business in the longer term and may encourage high potentials to stay longer. Many Executives in larger organisations reflect Churchill’s concern about the House of Commons. They worry that their organisation tends to entropy and fret about their people’s ability to innovate and act as entrepreneurs.

Emotionally however, like anybody else, they may not be so open to an idea that shows up flaws in their operation or a missed opportunity. The strategic thinker imagines that in the kingdom of the blind the one-eyed man is king, but the kingdom’s Executives can turn out to be deaf as well.

Perhaps this is the aspect of strategy and strategic thinking that Executives need to reflect on while in lockdown.

Strategic solutions to survival are rarely to be found in the C suite, although the power to authorise action certainly does. Like those Mums and Dads who **** you up, they don’t mean to block strategic ideas, but they do. Many Execs agree that culture is often the unstated problem. Even more than a reluctant Board, company culture can constrain strategy and its precursor, strategic thinking. Perhaps for Executives the lockdown is an opportunity to think about the oldest Executive leadership challenge of all.

•             Have we created an organisational climate which allows for and encourages strategic thinking?
•             How do we respond to others ideas? (Why don’t more people bring us more strategic solutions?)
•             How am I personally encouraging as many people as possible breathe the ‘secret’ oxygen of strategic thinking?
•             How do we need to change?

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