Strategy
Copyright (c), Micro-Touch & Consult (TM), 2015
Good Strategy and Bad Strategy and why it matters
London school of economics and political science
Keywords
Strategic Leadership - Strategic Thinking - Different Levels of Strategy - PESTLE - SWOT - Competition - Strategy Models - Linear Strategy - Adaptive Strategy - Interpretive Strategy - Strategy and Innovation - Strategy and Change
Produced by: Micro-Touch & Consult, 2012
Introduction
Strategic thinking and strategic leadership transcend plain leadership. Leadership is more about directing the organization to some goal and future, which is set by strategy. This strategy is defined and characterized by strategic thinking and strategic leadership which set the stage for leadership within the organization (Yukl, 2006 and 2007;Johnson et al 2008, Kaplan, 2001).
The characteristics of strategic thinking and strategic leadership are additions to the theories of leadership and they are complementary. These strategic characteristics are described within frameworks and types of strategic leadership and strategic thinking. There exist different models which can be used to describe strategy and how it can be used. It is necessary to make choices out of these models, frameworks and types when trying to give a clear and relative short overview of the concepts of strategic thinking and strategic leadership (Johnson et al, 2008, Kaplan, 2001).
In this assignment these choices are made and from a short overview about strategic thinking and strategic leadership, several types are described. Following this introduction, these elements are used within an analysis of some models of strategic leadership. This context is then linked to change and innovation related to strategy. The focus of this analysis is the place of innovation and change within this strategic process and what characteristics are relevant.
Strategic Leadership
Strategic leadership is more than the process of influencing an organization to understand and agree what needs to be done and how it can be done effectively. Strategic leadership is focused on the external direction of the organization and how the organization must be guided to reach strategic goals. The strategic leader is able to formulate a vision of where to go and how to get there. A good strategic leader knows how to align the formulated strategic leadership style to the context of the organization (Johnson, 2008;Kaplan & Norton, 2000). Strategic Leadership is not a static phenomenon.
The style of strategic leadership must be tailored to the context in which it is used and the most successful leaders are able to do that. Middle managers are more seen as the implementers of the strategy chosen by strategic leaders. These middle managers are well suited to improve and sustain quality, processes and other strategy related activities defined by strategic management. This middle management layer is not on its own strong and well-focused enough to create and align an entire organization on strategy (Johnson et al, 2008; Kaplan, 2001).
Strategy is not a one man show or the sole responsibility of one strategic management layer. Different management layers contribute to implementing, sustaining and exposing the strategy of an organization. Analysis of strategic responsibilities among different management layers within organizations show a fundamental change in how these responsibilities are divided. Strategic leadership is changing and it becomes the responsibility of many people instead of just one strategic top layer. Let middle management do what they are good at and often they know very well how to contribute best to a given strategy (Johnson et al, 2008; Liedtke, 1998; Hughes, 2005; Garrat, 2010; Ghobadian et al, 2004).
Strategic Thinking
It is interesting to investigate how strategic leadership can be improved. Strategic thinking is the foundation of strategic leadership. Strategic leadership is not just leading a company during day to day operations wherein all the members can perform. Strategic leadership is more than just leadership. Strategic leadership is closely bound to visionary guidance, setting goals and head to it. In a sense, strategic leadership is visionary leadership embedded in proper strategic planning to reach the goals. It is understanding and shaping the future in such a way that it secures realizing the vision (De Witt, 2005;Hughes, 2005).
Strategic thinking is closely linked to the cognitive processes that make it possible to collect and interpret information to form ideas which sustain the competitive advantage of an organization. Strategic thinking is not a process on its own. It is an interaction between people and together this can Strategic Thinking and Strategic Leadership result in a collective process. It is besides a process of the head also a process of the heart and partly a matter of intuition. Strategic thinking must be lifted above the visible level of reality and include also the realm of what is not yet visible. Strategic thinking must also include possibilities which only can be defined when the personal mental models are exceeded. In this sense, strategic thinking is a creative and innovative process where thinking outside the box is a key element of successful strategy implementation (Hughes, 2005;Johnson et al, 2008;Beer, 2009).
Different levels of strategy
Strategy can be approached through different views or models. Planned strategy embraces the opinion that strategy can be centrally planned from out a highly analytical analysis. In this sense it is seen as a rational process. Planned strategy is deliberately moving towards a certain goal while emergent strategy is more comparable with moving away from where the organization is now through small incremental steps (Beer, 2009;Johnson et al, 2008;Holbeche, 2006).
In contrast with planned strategy, ideological strategy is often based on emotions instead of rational thinking. It is interesting to see that planned strategy is more related to transactional leadership with its numbers and statistics while ideological strategy is more related to transformational leadership where idealized influence is important (Yukl, 2010;Pardey, 2007;Conger, 2006;Johnson et al, 2008;Mintzberg, 1987).
Pestle, SWOT and competition
External factors are important for an organization and are of influence on the strategic choices. There are two main characteristics of strategy and they are free choice or imposed. It is an interesting question if free choice strategy even does exist. A free chosen strategy is also based on internal and external forces and these forces cannot be neglected even if it is a ‘free choice’ strategy. Imposed strategy is forced upon the organization by external factors like important stakeholders or Political, Economic, Sociological, Technological, Legal and Environmental (PESTLE) elements (Johnson et al, 2008;Beer, 2009;Pardey, 2007).
The PESTLE elements can be used with a SWOT analysis to check the score of the strength, weaknesses, opportunities and threats of the organization. This SWOT analysis based on the PESTLE forces can make it clear where and how the participants in the industry, also known as competitors, are stronger and where the strategy must take note of. This analysis is therefore very useful when a strategic map must be created and taking advantage on competitors is the goal. The strategic map, mainly based on the PESTLE elements and driven by the SWOT outcomes and embedded in competition thinking, can help focus the strategic thoughts needed to relate the strategic vision to the internal and external reality of the organization (Kaplan, 2001;Johnson et al, 2008;De Witt, 2005;Porter, 1998).
Strategy Models
History
It is useful to place strategy in the context of time. This historical context supports the description of the three models of strategy which is described after this background of strategy in time. Until the 1960s strategy was basically concerned with the role of the general manager. Harvard and other universities had courses mainly concerned about what a student would do when taking over the role of chief executive. Several influences were the origin of the study and teaching of strategy. Common sense prevailed theory and research (Johnson et al, 2008).
Between the 1960s and 1970s the influence of theories around corporate planning became more important. Interesting to mention here is the emphasis on trying to analyze the surrounding elements of influence on the organization and which opportunities or threats were most important for the future of the organization (Johnson et al, 2008).
At first strategy was seen as linear and analytical. Strategy was basically a planned process and from out a well-planned strategic foundation, the organization was guided to well defined goals within tightly formulated boundaries. This kind of strategy was mostly oriented on profitability and productivity. The environment supposed to be well known or the organizations were somewhat disconnected and independent from this surrounding (Chaffee, 1984; Johnson et al, 2008).
Instead of analyzing everything and make strategic calculation on as much parameters as possible, scholars argued that it was more beneficial to look at more adaptive ways of implementing strategy. Not the surroundings alone of the organization, but also the force of competition influenced the strategy of organizations. Attention for economic forces directed some key conceptual frameworks in strategy. (Mintzberg, 1987; Chaffee, 1984; Jonson et al, 2008; Quinn, 1992; Porter, 1998).
The economic competitive view was replaced by a more ‘biological’ one. The organization as a biological entity reacts on its surrounding environment and competes with other ‘biological’ organizations to neutralize threats and exploit opportunities. Strategy became the tool to make these biological organizations healthy and flourishing. These biological organizations analyze their environment and with an adaptive strategy they interpret the changing environment through innovation and change. (Stacey, 2007;Brown and Eisenhardt, 2008)
Linear Strategy
Linear strategy can be called a simple sequential view on the strategy process. It has often to do with planned strategy and logical thinking. The linear strategy is characterized by a top management layer not only responsible for strategic definitions, but also responsible for the implementation and guarding of the strategic choices. Middle management is primarily the execution layer of the strategic landscape defined by the upper layers (Johnson et al, 2008;Chaffee, 1984).
Linear strategy is often combined with transactional leadership. It is not unusual to see this in combination with long-range strategic planning which was common in organizations in the past. It is seen as analytical, linear, verbal, explicit and without emotions and thus objective in nature. Many leaders are well trained in this form of strategy (Johnson et al, 2008;Huges, 2005;Collins, 2001;Chaffee, 1984).
It was concluded in later times that strategy is not just a linear process where only objective and rational numbers play a role. It is almost the same conclusion organizations had with transactional leadership, which is also linear in nature. Transformational leadership was formulated and added to the toolbox of leaders. This was done because only the statistics brought failure and soft factors were needed (Zaleznik, 1977;Bennis and Nanus, 1997;Yukl, 2010;Conger, 2006).
Adaptive strategy
Because linear strategy implementations showed flaws in usefulness on the long term, organizations tried other variations and one of them is adaptive strategy. It is obvious that PESTLE forces make it a tedious task to come up with a static planned sequential strategy. It often occurs that external and internal forces change down the strategic road and flexibility to adapt is needed (Johnson et al, 2008;Beer, 2009;Kaplan, 2001).
Being adaptive to internal and external forces almost automatically brings an organization to the use of incremental strategy; implementing strategy in iterations. After defining the initial strategic vision, the road towards that vision can be done in increments after which single loop or double loop learning can be used to make the next increment, or iteration, more effective than the previous increment (Kaplan, 2001;Johnson et al, 2008;Hooijberg et al, 2007).
Changes in technology and markets demands that organizations are adaptive, flexible and capable of fast transformations. Adaptive learning and the Complexity theory show that complex systems have common and predictable patterns of adaptive behavior. This behavior is sometimes characterized by adaptive persistence where corporate direction evolves from incremental adjustments to unfolding events which are influenced by environmental forces. For this behavior to be most effective some intelligent opportunism is needed or else the organization is less able to adapt new strategies. It is this adaptive behavior that can help organizations face the challenges of the current fast changing competitive world and make the transformations needed to survive (Beer, 2009;Johnson et al, 2008;Grant, 2010;Mintzberg, 1987;Liedtka, 1998).
Interpretive strategy
Lateral thinking is related to problem solving through indirect and creative processes. Lateral thinking makes it possible that identification with external and internal forces is done by thinking outside the box. Lateral thinking can be linked to interpretive thinking in the sense that they both are concerned with the perception of the stakeholders interpreting internal and external forces that influence strategy. It is about orienting metaphors or frames of reference. This is done to let stakeholders understand the organization and its environment to get motivated for more favorable behavior towards the organization. Interpretive strategy is on itself a new approach to strategy and this by definition can be called a lateral oriented strategy (De Bono, 1970;Chaffee, 1984).
Changing your cognitive map is part of lateral thinking because it makes you able to approach problems in a different way. Creative and innovative minds are often capable of changing their cognitive map to think outside the usual box. It is also about creating a shared vision and aligning mental models of several stakeholders. Interpret the environment in combination with the inner processes of the organization and make all elements a part of the strategy (Bono, 1990;Gavetti, 2011;De Witt, 2005).
Systems thinking stimulate the process of trying to understand how different systems are interrelated and depend on each other. Systems thinking as related to interpretive strategy make it possible to interpret the environment of the organization to define how the inner structures can be adapted to it. It is about thinking in time and related to hypothesis thinking. Make inferences based on intuitive analytical interpretations of the organizations present and future strategic possibilities, to be able to adjust the strategy to changing realities (Liedtka, 1998;Mintzberg, 1987;Senge, 2006).
Interpretive strategy is also related to having a holistic understanding of the organization and its environment to create a vision of the future of the organization, which is true systems thinking based on the organization’s values, opportunities, possibilities and values. Associative thinking can be useful for correct interpretation of distant opportunities. It helps to associate with businesses in other industries for better alignment of own strategy and for the interpretation of yet unknown realities which would otherwise stay invisible and under the strategic radar (Bonn, 2001;Gavetti, 2011).
Strategy and innovation
It is reckoned that highly formalized strategic systems of planning tend to be rigid and rather static. When this is combined with detailed mechanisms of control than it can result in an inflexible and hierarchical organization where innovation is made difficult to come to fruitiness. For this to prevent it is important to get people outside their working environment, for brainstorming new ideas which otherwise would stay under the surface (Johnson et al, 2008).
Innovation is needed to go beyond your cognitive map. Your cognitive map guides your priorities during certain situations and determines which issues get priority. It is important that a strategic leader is able to align his cognitive map to the strategic situation of the organization and act accordingly (de Witt, 2005).
There is a tension between logical thinking and creative thinking, which has an effect on innovative strategic decisions which can result in rigid and static behavior that could paralyze the strategic flexibility of an organization. Logical and rational thinking is needed to overcome cognitive maps and to transcend organizational folklore or subjective and personal assumptions. This is in the line of linear thinking, but adaptive and interpretive strategy is on itself more in line with creativity and innovation (Chaffee, 1984;De Witt, 2005).
Pure linear thinking seems to prevent the mind to stay open for other perspectives outside the rational strategic plans. In that sense it is the enemy of innovation and creativity. Systems thinking activate and stimulate the open mind to see the broader perspectives of situations and the context of adaptive and emergent strategy. Systems thinking makes the strategic process more connected to reality and creates a sense of where we are, where we want to go and how we can get there (Johnson et al, 2008;Hughes, 2005;Chaffee, 1984).
Lateral thinking has everything to do with thinking outside the box. It needs some mental creativity to be able to use it. Innovation happens also through using unorthodox think patterns and that is where Lateral thinking can be of help. Strategic planning is closely related to the implementation of strategy whereas strategic thinking is a creative process where innovation has its place and should be used to align the organizational strategy to the changing environment of the organization. Innovation can optimize the strategic flexibility of an organizations inner and outer adaptability. It seems to form a natural combination with adaptive strategy (Mintzberg, 1999;Bono, 1990;De Witt, 2005;Sloan, 2006).
A learning organization is often able to see more than its own perspectives. Through learning and adapting it is putting organizational thinking in a wider context and tries to see the whole picture. This ability for a wider view is perhaps comparable with the systems thinking perspective and also with associative thinking, to create better innovative ideas and stimulate creativity (Gavetti, 2011;Senge, 2006;Liedtka, 1998;Beer, 2009).
Strategy and change
It is being said that today’s leader needs to be that lateral thinker which is better equipped for fast and discontinuous change. The more conventional leader is better suited for command and control and slow and incremental changes. The lateral leader is more focused on initiating the innovative and creative parts of the team by taking some risks and entrepreneurial endeavor. Change is managed by making it happen through innovative subordinates. Followers are important and the vision of change must be constantly communicated to make it a permanent element of the creative and innovative mind of the organization (Kotter, 1996; Sloane, 2003; Johnson et al, 2008).
Change is an important element of strategy. This change is often difficult because of organizational culture and heritage of resources. Change even gets worse when there is a top strategic management layer afraid of taking hard decisions and lower layers with a lack of taking accountability for certain actions. Strategy trees can help to clarify how the elements of the organizational strategy are related to each-other and why they are related in such a way. Furthermore this strategy tree can also make it more clear who is responsible for what and how these responsibilities relates (Beer, 2009; Johnson et al, 2008; Kaplan, 2001).
Transformational leadership is about people and transactional leadership is more concerned with the tasks at hand. It is said that transformational leadership makes people owner of decisions and let them feel more involved. Transformational outcomes of leadership tend to be more endurable than changes resulting from task driven leadership. This transformational leadership is probably also related to transformational strategy and they form the right combination to change and transform companies where the people are not highly committed to the organizational strategic goals (Johnson et al, 2008; Holbeche, 2006; Kotter, 1996).
Creativity is related to hypothesis driven strategy. Through experimentation creating and developing hypotheses and test them during the implementation of a certain strategy. This is both an analytical and creative process and can be used to implement innovative strategic hypotheses. It needs associative thinking and being able to analyze your own and others mental representations. It is comparable to single and double loop learning through and with your own and other mental models (Bonn, 2001;Senge, 2006; Liedtka, 1998;Gavetti, 2011;Hofstadter, 2008)
Conslusion
Strategic thinking and strategic leadership is an essential part of the well-being of an organization. This is true for both the private and the public sector; a strategy is elementary and strategic thinking a key element to make it successful. This must be done within certain well-known boundaries or it will be strategy on the run and hardly effective. For this to take place, it is essential that the context around strategic thinking and strategic leadership is well understood. That implies knowing the types of strategy, some models of strategy and how they are applicable to the organization at hand.
The organization functions as an organism and it need to take proper care to its body as well as its surrounding environment. The body can only be maintained when proper attention is given to the choice and forming of its living space. This means having an internal as well as an external strategy. It is impossible to make this effective without a proper foundation of strategic knowledge.
Strategic leadership is not a phenomenon on its own but it is carried by many related leadership theories and having a good inside knowledge of this building of psychological and business related elements, seems to be an essential part of the success of bringing strategic thinking and strategic leadership to a successful implementation. Many situations and organizations can be used as an example of how this building of essential knowledge is unknown or unheard of or is not used properly.
Strategic leadership models and frameworks should be defined to give the mission and vision of the organization a realistic chance to succeed. Knowledge alone is not enough. It is the mastery level of strategists that seems to be the key element of making the static knowledge dynamically applicable.
Strategic thinking and strategic leadership transcend plain leadership. Leadership is more about directing the organization to some goal and future, which is set by strategy. This strategy is defined and characterized by strategic thinking and strategic leadership which set the stage for leadership within the organization (Yukl, 2006 and 2007;Johnson et al 2008, Kaplan, 2001).
The characteristics of strategic thinking and strategic leadership are additions to the theories of leadership and they are complementary. These strategic characteristics are described within frameworks and types of strategic leadership and strategic thinking. There exist different models which can be used to describe strategy and how it can be used. It is necessary to make choices out of these models, frameworks and types when trying to give a clear and relative short overview of the concepts of strategic thinking and strategic leadership (Johnson et al, 2008, Kaplan, 2001).
In this assignment these choices are made and from a short overview about strategic thinking and strategic leadership, several types are described. Following this introduction, these elements are used within an analysis of some models of strategic leadership. This context is then linked to change and innovation related to strategy. The focus of this analysis is the place of innovation and change within this strategic process and what characteristics are relevant.
Strategic Leadership
Strategic leadership is more than the process of influencing an organization to understand and agree what needs to be done and how it can be done effectively. Strategic leadership is focused on the external direction of the organization and how the organization must be guided to reach strategic goals. The strategic leader is able to formulate a vision of where to go and how to get there. A good strategic leader knows how to align the formulated strategic leadership style to the context of the organization (Johnson, 2008;Kaplan & Norton, 2000). Strategic Leadership is not a static phenomenon.
The style of strategic leadership must be tailored to the context in which it is used and the most successful leaders are able to do that. Middle managers are more seen as the implementers of the strategy chosen by strategic leaders. These middle managers are well suited to improve and sustain quality, processes and other strategy related activities defined by strategic management. This middle management layer is not on its own strong and well-focused enough to create and align an entire organization on strategy (Johnson et al, 2008; Kaplan, 2001).
Strategy is not a one man show or the sole responsibility of one strategic management layer. Different management layers contribute to implementing, sustaining and exposing the strategy of an organization. Analysis of strategic responsibilities among different management layers within organizations show a fundamental change in how these responsibilities are divided. Strategic leadership is changing and it becomes the responsibility of many people instead of just one strategic top layer. Let middle management do what they are good at and often they know very well how to contribute best to a given strategy (Johnson et al, 2008; Liedtke, 1998; Hughes, 2005; Garrat, 2010; Ghobadian et al, 2004).
Strategic Thinking
It is interesting to investigate how strategic leadership can be improved. Strategic thinking is the foundation of strategic leadership. Strategic leadership is not just leading a company during day to day operations wherein all the members can perform. Strategic leadership is more than just leadership. Strategic leadership is closely bound to visionary guidance, setting goals and head to it. In a sense, strategic leadership is visionary leadership embedded in proper strategic planning to reach the goals. It is understanding and shaping the future in such a way that it secures realizing the vision (De Witt, 2005;Hughes, 2005).
Strategic thinking is closely linked to the cognitive processes that make it possible to collect and interpret information to form ideas which sustain the competitive advantage of an organization. Strategic thinking is not a process on its own. It is an interaction between people and together this can Strategic Thinking and Strategic Leadership result in a collective process. It is besides a process of the head also a process of the heart and partly a matter of intuition. Strategic thinking must be lifted above the visible level of reality and include also the realm of what is not yet visible. Strategic thinking must also include possibilities which only can be defined when the personal mental models are exceeded. In this sense, strategic thinking is a creative and innovative process where thinking outside the box is a key element of successful strategy implementation (Hughes, 2005;Johnson et al, 2008;Beer, 2009).
Different levels of strategy
Strategy can be approached through different views or models. Planned strategy embraces the opinion that strategy can be centrally planned from out a highly analytical analysis. In this sense it is seen as a rational process. Planned strategy is deliberately moving towards a certain goal while emergent strategy is more comparable with moving away from where the organization is now through small incremental steps (Beer, 2009;Johnson et al, 2008;Holbeche, 2006).
In contrast with planned strategy, ideological strategy is often based on emotions instead of rational thinking. It is interesting to see that planned strategy is more related to transactional leadership with its numbers and statistics while ideological strategy is more related to transformational leadership where idealized influence is important (Yukl, 2010;Pardey, 2007;Conger, 2006;Johnson et al, 2008;Mintzberg, 1987).
Pestle, SWOT and competition
External factors are important for an organization and are of influence on the strategic choices. There are two main characteristics of strategy and they are free choice or imposed. It is an interesting question if free choice strategy even does exist. A free chosen strategy is also based on internal and external forces and these forces cannot be neglected even if it is a ‘free choice’ strategy. Imposed strategy is forced upon the organization by external factors like important stakeholders or Political, Economic, Sociological, Technological, Legal and Environmental (PESTLE) elements (Johnson et al, 2008;Beer, 2009;Pardey, 2007).
The PESTLE elements can be used with a SWOT analysis to check the score of the strength, weaknesses, opportunities and threats of the organization. This SWOT analysis based on the PESTLE forces can make it clear where and how the participants in the industry, also known as competitors, are stronger and where the strategy must take note of. This analysis is therefore very useful when a strategic map must be created and taking advantage on competitors is the goal. The strategic map, mainly based on the PESTLE elements and driven by the SWOT outcomes and embedded in competition thinking, can help focus the strategic thoughts needed to relate the strategic vision to the internal and external reality of the organization (Kaplan, 2001;Johnson et al, 2008;De Witt, 2005;Porter, 1998).
Strategy Models
History
It is useful to place strategy in the context of time. This historical context supports the description of the three models of strategy which is described after this background of strategy in time. Until the 1960s strategy was basically concerned with the role of the general manager. Harvard and other universities had courses mainly concerned about what a student would do when taking over the role of chief executive. Several influences were the origin of the study and teaching of strategy. Common sense prevailed theory and research (Johnson et al, 2008).
Between the 1960s and 1970s the influence of theories around corporate planning became more important. Interesting to mention here is the emphasis on trying to analyze the surrounding elements of influence on the organization and which opportunities or threats were most important for the future of the organization (Johnson et al, 2008).
At first strategy was seen as linear and analytical. Strategy was basically a planned process and from out a well-planned strategic foundation, the organization was guided to well defined goals within tightly formulated boundaries. This kind of strategy was mostly oriented on profitability and productivity. The environment supposed to be well known or the organizations were somewhat disconnected and independent from this surrounding (Chaffee, 1984; Johnson et al, 2008).
Instead of analyzing everything and make strategic calculation on as much parameters as possible, scholars argued that it was more beneficial to look at more adaptive ways of implementing strategy. Not the surroundings alone of the organization, but also the force of competition influenced the strategy of organizations. Attention for economic forces directed some key conceptual frameworks in strategy. (Mintzberg, 1987; Chaffee, 1984; Jonson et al, 2008; Quinn, 1992; Porter, 1998).
The economic competitive view was replaced by a more ‘biological’ one. The organization as a biological entity reacts on its surrounding environment and competes with other ‘biological’ organizations to neutralize threats and exploit opportunities. Strategy became the tool to make these biological organizations healthy and flourishing. These biological organizations analyze their environment and with an adaptive strategy they interpret the changing environment through innovation and change. (Stacey, 2007;Brown and Eisenhardt, 2008)
Linear Strategy
Linear strategy can be called a simple sequential view on the strategy process. It has often to do with planned strategy and logical thinking. The linear strategy is characterized by a top management layer not only responsible for strategic definitions, but also responsible for the implementation and guarding of the strategic choices. Middle management is primarily the execution layer of the strategic landscape defined by the upper layers (Johnson et al, 2008;Chaffee, 1984).
Linear strategy is often combined with transactional leadership. It is not unusual to see this in combination with long-range strategic planning which was common in organizations in the past. It is seen as analytical, linear, verbal, explicit and without emotions and thus objective in nature. Many leaders are well trained in this form of strategy (Johnson et al, 2008;Huges, 2005;Collins, 2001;Chaffee, 1984).
It was concluded in later times that strategy is not just a linear process where only objective and rational numbers play a role. It is almost the same conclusion organizations had with transactional leadership, which is also linear in nature. Transformational leadership was formulated and added to the toolbox of leaders. This was done because only the statistics brought failure and soft factors were needed (Zaleznik, 1977;Bennis and Nanus, 1997;Yukl, 2010;Conger, 2006).
Adaptive strategy
Because linear strategy implementations showed flaws in usefulness on the long term, organizations tried other variations and one of them is adaptive strategy. It is obvious that PESTLE forces make it a tedious task to come up with a static planned sequential strategy. It often occurs that external and internal forces change down the strategic road and flexibility to adapt is needed (Johnson et al, 2008;Beer, 2009;Kaplan, 2001).
Being adaptive to internal and external forces almost automatically brings an organization to the use of incremental strategy; implementing strategy in iterations. After defining the initial strategic vision, the road towards that vision can be done in increments after which single loop or double loop learning can be used to make the next increment, or iteration, more effective than the previous increment (Kaplan, 2001;Johnson et al, 2008;Hooijberg et al, 2007).
Changes in technology and markets demands that organizations are adaptive, flexible and capable of fast transformations. Adaptive learning and the Complexity theory show that complex systems have common and predictable patterns of adaptive behavior. This behavior is sometimes characterized by adaptive persistence where corporate direction evolves from incremental adjustments to unfolding events which are influenced by environmental forces. For this behavior to be most effective some intelligent opportunism is needed or else the organization is less able to adapt new strategies. It is this adaptive behavior that can help organizations face the challenges of the current fast changing competitive world and make the transformations needed to survive (Beer, 2009;Johnson et al, 2008;Grant, 2010;Mintzberg, 1987;Liedtka, 1998).
Interpretive strategy
Lateral thinking is related to problem solving through indirect and creative processes. Lateral thinking makes it possible that identification with external and internal forces is done by thinking outside the box. Lateral thinking can be linked to interpretive thinking in the sense that they both are concerned with the perception of the stakeholders interpreting internal and external forces that influence strategy. It is about orienting metaphors or frames of reference. This is done to let stakeholders understand the organization and its environment to get motivated for more favorable behavior towards the organization. Interpretive strategy is on itself a new approach to strategy and this by definition can be called a lateral oriented strategy (De Bono, 1970;Chaffee, 1984).
Changing your cognitive map is part of lateral thinking because it makes you able to approach problems in a different way. Creative and innovative minds are often capable of changing their cognitive map to think outside the usual box. It is also about creating a shared vision and aligning mental models of several stakeholders. Interpret the environment in combination with the inner processes of the organization and make all elements a part of the strategy (Bono, 1990;Gavetti, 2011;De Witt, 2005).
Systems thinking stimulate the process of trying to understand how different systems are interrelated and depend on each other. Systems thinking as related to interpretive strategy make it possible to interpret the environment of the organization to define how the inner structures can be adapted to it. It is about thinking in time and related to hypothesis thinking. Make inferences based on intuitive analytical interpretations of the organizations present and future strategic possibilities, to be able to adjust the strategy to changing realities (Liedtka, 1998;Mintzberg, 1987;Senge, 2006).
Interpretive strategy is also related to having a holistic understanding of the organization and its environment to create a vision of the future of the organization, which is true systems thinking based on the organization’s values, opportunities, possibilities and values. Associative thinking can be useful for correct interpretation of distant opportunities. It helps to associate with businesses in other industries for better alignment of own strategy and for the interpretation of yet unknown realities which would otherwise stay invisible and under the strategic radar (Bonn, 2001;Gavetti, 2011).
Strategy and innovation
It is reckoned that highly formalized strategic systems of planning tend to be rigid and rather static. When this is combined with detailed mechanisms of control than it can result in an inflexible and hierarchical organization where innovation is made difficult to come to fruitiness. For this to prevent it is important to get people outside their working environment, for brainstorming new ideas which otherwise would stay under the surface (Johnson et al, 2008).
Innovation is needed to go beyond your cognitive map. Your cognitive map guides your priorities during certain situations and determines which issues get priority. It is important that a strategic leader is able to align his cognitive map to the strategic situation of the organization and act accordingly (de Witt, 2005).
There is a tension between logical thinking and creative thinking, which has an effect on innovative strategic decisions which can result in rigid and static behavior that could paralyze the strategic flexibility of an organization. Logical and rational thinking is needed to overcome cognitive maps and to transcend organizational folklore or subjective and personal assumptions. This is in the line of linear thinking, but adaptive and interpretive strategy is on itself more in line with creativity and innovation (Chaffee, 1984;De Witt, 2005).
Pure linear thinking seems to prevent the mind to stay open for other perspectives outside the rational strategic plans. In that sense it is the enemy of innovation and creativity. Systems thinking activate and stimulate the open mind to see the broader perspectives of situations and the context of adaptive and emergent strategy. Systems thinking makes the strategic process more connected to reality and creates a sense of where we are, where we want to go and how we can get there (Johnson et al, 2008;Hughes, 2005;Chaffee, 1984).
Lateral thinking has everything to do with thinking outside the box. It needs some mental creativity to be able to use it. Innovation happens also through using unorthodox think patterns and that is where Lateral thinking can be of help. Strategic planning is closely related to the implementation of strategy whereas strategic thinking is a creative process where innovation has its place and should be used to align the organizational strategy to the changing environment of the organization. Innovation can optimize the strategic flexibility of an organizations inner and outer adaptability. It seems to form a natural combination with adaptive strategy (Mintzberg, 1999;Bono, 1990;De Witt, 2005;Sloan, 2006).
A learning organization is often able to see more than its own perspectives. Through learning and adapting it is putting organizational thinking in a wider context and tries to see the whole picture. This ability for a wider view is perhaps comparable with the systems thinking perspective and also with associative thinking, to create better innovative ideas and stimulate creativity (Gavetti, 2011;Senge, 2006;Liedtka, 1998;Beer, 2009).
Strategy and change
It is being said that today’s leader needs to be that lateral thinker which is better equipped for fast and discontinuous change. The more conventional leader is better suited for command and control and slow and incremental changes. The lateral leader is more focused on initiating the innovative and creative parts of the team by taking some risks and entrepreneurial endeavor. Change is managed by making it happen through innovative subordinates. Followers are important and the vision of change must be constantly communicated to make it a permanent element of the creative and innovative mind of the organization (Kotter, 1996; Sloane, 2003; Johnson et al, 2008).
Change is an important element of strategy. This change is often difficult because of organizational culture and heritage of resources. Change even gets worse when there is a top strategic management layer afraid of taking hard decisions and lower layers with a lack of taking accountability for certain actions. Strategy trees can help to clarify how the elements of the organizational strategy are related to each-other and why they are related in such a way. Furthermore this strategy tree can also make it more clear who is responsible for what and how these responsibilities relates (Beer, 2009; Johnson et al, 2008; Kaplan, 2001).
Transformational leadership is about people and transactional leadership is more concerned with the tasks at hand. It is said that transformational leadership makes people owner of decisions and let them feel more involved. Transformational outcomes of leadership tend to be more endurable than changes resulting from task driven leadership. This transformational leadership is probably also related to transformational strategy and they form the right combination to change and transform companies where the people are not highly committed to the organizational strategic goals (Johnson et al, 2008; Holbeche, 2006; Kotter, 1996).
Creativity is related to hypothesis driven strategy. Through experimentation creating and developing hypotheses and test them during the implementation of a certain strategy. This is both an analytical and creative process and can be used to implement innovative strategic hypotheses. It needs associative thinking and being able to analyze your own and others mental representations. It is comparable to single and double loop learning through and with your own and other mental models (Bonn, 2001;Senge, 2006; Liedtka, 1998;Gavetti, 2011;Hofstadter, 2008)
Conslusion
Strategic thinking and strategic leadership is an essential part of the well-being of an organization. This is true for both the private and the public sector; a strategy is elementary and strategic thinking a key element to make it successful. This must be done within certain well-known boundaries or it will be strategy on the run and hardly effective. For this to take place, it is essential that the context around strategic thinking and strategic leadership is well understood. That implies knowing the types of strategy, some models of strategy and how they are applicable to the organization at hand.
The organization functions as an organism and it need to take proper care to its body as well as its surrounding environment. The body can only be maintained when proper attention is given to the choice and forming of its living space. This means having an internal as well as an external strategy. It is impossible to make this effective without a proper foundation of strategic knowledge.
Strategic leadership is not a phenomenon on its own but it is carried by many related leadership theories and having a good inside knowledge of this building of psychological and business related elements, seems to be an essential part of the success of bringing strategic thinking and strategic leadership to a successful implementation. Many situations and organizations can be used as an example of how this building of essential knowledge is unknown or unheard of or is not used properly.
Strategic leadership models and frameworks should be defined to give the mission and vision of the organization a realistic chance to succeed. Knowledge alone is not enough. It is the mastery level of strategists that seems to be the key element of making the static knowledge dynamically applicable.
