In 2023 and beyond, the capability of Strategic Thinking will be more important to business leaders
than ever before. Everything in business has changed and without foundational strategic thinking skills, leaders, decision-makers, and decision implementors have no direction. Without strategic direction, business failure is almost guaranteed sooner rather than later.
It is my pleasure to share with our readers fresh content and ideas about the 6 levels of strategic thinking. We use this framework and approach in our core business acumen content that supports our business simulation-centric approach to learning and the insight shared here is the same that I discussed with senior leaders during a high-level program delivered for a global 1,000 company’s high potential leaders.
Here is a narrative of the 6 elements of the framework:
Business Acumen
Understanding how your company makes money, how your customers make money, and how your competitors make money is the first level of strategic thinking as knowing these elements helps formulate strategy. Inherent to understanding how a company makes money is understanding how to read and interpret the Income Statement, Balance Sheet, and Cash Flow Report. Foundational business acumen is something that everyone in your organization should know and there are so many different ways of developing those skills in 2023 and beyond.
Value Proposition
The value proposition is your offer of value to your customer. It can be company-based, business unit-based, or product-based. Most successful companies have one overarching value proposition. Think Apple for Product Leadership. Think Walmart for Operational Excellence. Think Nordstrom for Customer Intimacy.
What is the impact on the customer of your products and services? How do they perceive that value relative to the costs associated with purchasing the products and services? The higher the perceived benefits relative to the perceived costs, the greater the value proposition.
Market-Based Systems Thinking
Business markets are complex systems. Understanding things like supply and demand, what drives revenues and profits, how you create a value proposition, and the relationship between suppliers, competitors, and customers are critical capabilities that comprise the skill of strategic thinking.
Strategic Insights
Strategic insights are gathered through deep financial analysis. The ability to conduct percentage change analysis, common size analysis, industry structure analysis, product life cycle analysis, and voice of customer analysis are critical skills that provide the story behind the markets. Once the analysis is complete, the data insights tell a story that drives decisions and investments.
Execution
It’s one thing to have a great strategy, and another thing to be able to execute it. Execution is the process of implementing your strategy through people and systems. It is by far the hardest part of the strategic thinking framework. The best companies in the world establish a culture of execution that is related to strategy through:
- Alignment of vision and culture
- Consistent goals and objectives
- A culture of achievement
- Consistent coaching and feedback
- Positive conflict resolution
- Agility to change
- Psychologically safe environment
Persevere or Pivot
The final level of strategic thinking is the ability to persevere with your strategy or pivot to a new one. Perseverance is difficult. It takes rigor and grit to be able to stick with the strategy through the transitions and changes that naturally occur in business. And at the same time, it also takes a lot of rigor and grit to change strategy if a new strategy will yield stronger results.
In summary, understanding and mastering the 6 levels of strategic thinking takes a lot of hard work and dedication of an organization to provide its employees with the skills and tools they need to formulate and execute their value proposition. The key to success is investing in the capabilities needed to execute through people.
