Social scientist supporting strategic decision making often default to research and recommendations, taking decision makers and a process of decision making out of focus. The following blog post sheds light on the art and science of strategic thinking from the perspective of psychology.
Petteri Niitamo, PhD
The increasingly turbulent environment has made strategic planning an important, even survival determining activity for organizations. However, planning is not thinking. Planning is a goal oriented, rational process practiced on a regular basis and leading to a more or less successful strategic plan. Though strategic thinking is a part of strategic planning, it departs from the solely rational mode. At the same time, it is decisive for the success of strategic planning.
Organizational research on strategic thinking has focused predominantly on macro-level analysis, specific behavioral analysis is all but missing. On the other hand, psychological research has overall shown little interest in it probably because strategic thinking has been seen as remote to its mainstream topics. To make strategic thinking an actionable reality, micro-level analyses of individual and team behaviors are needed. Psychologists should and could step in by identifying and measuring individual and team level elements of strategic thinking. Key ingredients of strategic thinking involve information processing, different ways of thinking or in psychological terms, cognitive styles.
BROAD, ABSTRACT PERCEPTION
The consensually agreed prime element of strategic thinking is broad, abstract perception of complex environments. Perception must also be ”deep”, mere painting with a big brush is often erroneously confused with strategic thinking. Understanding complexity is imperative and in Einstein’s words: any fool can know, the point is to understand. Abstract perception is about developing a systems view, understanding essential details, mechanisms and dynamics of the complex environment.
INTUITION-ANALYSIS
In addition to understanding complexity, the second critical element is creativity, intuition to be more specific. Intuition comes paired with analysis, its diametrically opposite partner. Nobel laureate Daniel Kahneman (Kahneman, 2011) has made the pair popular through the terms “fast” and “slow” thinking. Intuition and analysis make an odd couple: they resist each other but are related together. And, according to another Nobel laureate Herbert Simon, to be effective, strategic decision making must combine analytic and intuitive processes. In other words, successful strategic thinking requires a dynamic balance between the two.
Analysis and intuition hold different views on information. Analysis treats data as information in itself evident in the phrase “let the data speak”. In contrast, intuition emphasizes interpretation of data into information, “the data always speaks in many languages”. Neither one way of thinking is more valuable than the other, their value depends on the particular information processing context. Scholars agree that analysis is more important in well-structured environments while ill-structured environments call for intuition because of its disruption-sensitive property. The story of the cellphone Nokia and Apple serves as an example. Analytical Nokia, the clear cellphone market leader with advanced technology and efficient production logistics was ill prepared for the disrupting consumer environment in early 2000. Intuitive Apple, headed by the wizard Steve Jobs, obsessed with customer experience and aesthetic features of products sensed the disrupting market forthcoming and Nokia’s collapse took place quickly. The metaphor ”fire is a good servant but a bad master” reflects the essence of intuition, to its power when appropriately controlled and its perils if left wholly unmonitored.
WHAT TO DO?
What to do with this assortment of different elements? How to handle this confusing mix of professor-like broad perception, artist-like intuition and engineer-like analytics? A context is needed where the formula, Strategic thinking = Broad perception + (Intuition x Analysis) can be made explicit, accepted and blended into fruition.
The general problem solving sequence offers such a platform. The sequence: approach – perceive – produce solution and implement the solution means that strategic planning can be approached with a mindset that leans either on known facts or seeks for new ideas. Next, the plan or problem becomes perceived, grasped and defined either with emphasis on its visible features or with emphasis on contexts and things that go beyond the eye (broad and deep perception). The third step is production of solution for the strategic plan driven by logic, past experience and what makes immediate sense (analysis). The solution can alternatively derive from hard-to-explain, often non-obvious subtleties looming in the current context or situation, e.g., soon to disrupt consumer environment. This step is driven by intuition. Strategic planning ends to its implementation either by cautious or quick manner. All of the bipolar elements across the four steps are needed, innovation capitalizes on the pre-exiting tension and conversation between the opposed ways of thinking. The more disruption in the organization’s environment, the more leeway should be given to intuition in solution generation.
The afore described sequence can hardly be handled by one single person, individuals with professor, artist and engineer qualities are an extremely rare, practically nonexistent breed. The realistic solution has the (management) team get together and nominate the team’s innovators (idea seekers, broad perceivers, intuitive thinkers) first step in with their inputs. Then the team’s implementers (fact checkers, focused and perceivers, analytic thinkers) have the task of presenting their inputs and, in a civilized manner, challenging the innovators’ inputs. The clue is to appreciate and make explicit the diverse and opposed, often conflictual-appearing ways of thinking. The sequence may also need iteration, reiterating it several times to awaken genuine interest and brush up all latent thoughts.
In this world of facing historical disruption in information processing, strategic thinking deserves to be treated as a competency itself (Goldman et al., 2019). Harvard Business School (2020) presents in their online blog five tips for formulating successful strategies.
Goldman, E. & Scott, A.R. (2016). Competency models for assessing strategic thinking. Journal of Strategy and Management, Vol. 9 Issue: 3, pp.258-280.
Kahneman, D. (2011). Thinking, fast and slow. New York: Farrar, Straus & Giroux.
About the author: Dr. Petteri Niitamo has been chief of psychological assessment unit at the Finnish Institute of Occupational Health, he has written several books on HR topics and served as an Adjunct professor of competencies and psychometrics at Aalto University.
HUMANS 