‘The real challenge in crafting strategy lies in detecting subtle discontinuities that may undermine a business in the future. And for that there is no technique, no program, just a sharp mind in touch with the situation.’

Henry Mintzberg, Cleghorn Professor of Management Studies,
McGill University, Montreal

This chapter covers:

• what a leader needs in order to spearhead the strategic thinking process
• how to use traditional strategic tools
• the best ways to develop your strategic thinking abilities
• the role of trend spotting in strategic thinking.

What lessons can be derived from these two examples?

First, business success comes from innovative ways of approaching strategic thinking. Looking beyond the obvious, finding new and different angles, taking risks (in terms of business models) and not contemplating only the easiest and most obvious ways – these are all ways to increase power. The owners of LAN Chile did this. They used their knowledge of cargo and, by associating the risk–reward equation of a known business model with one they did not know, they created a new model and a solid base for success.

Second, efficient problem solving comes from the ability to immediately react to fast-changing circumstances, as demonstrated by the ant colony. Ants constantly adjust to reassess their priorities based on what results are necessary. They think independently and react in the moment to maximise results.

Most companies have a formal strategic process that will run its course over the year. It will typically start with strategy formulation or reformulation and end with the operational plan. The strategic process is or should be the top priority for all leaders as it is the key translation process from vision to action. Once the strategy has been set, it is cascaded down to all levels of the organisation and measured in different ways. However, it is increasingly important for strategic thinking to be rooted in the here and now while at the same time constantly addressing and adjusting to the immediate future.

From vision to strategy – a translation exercise

Strategy building is the link between vision and execution. It requires the ability to look both inside and outside of the organisation to articulate both what is needed for and what could prevent the vision from being realised. Strategybuilding also means to identify and secure long-lasting competitive advantage by means of a fluid, albeit rigorous, questioning process. Finally, it is a balancing act between short-, medium- and long-term thinking. The translation exercise is only deemed to have been completed when the strategy has been communicated to the wider organisation.

Vision has been previously defined as the ‘what’ – what does the company want to achieve in the long-term future? In turn, strategy is there to answer the following two key questions.

• How are we going to reach this vision?
• How are we going to build long-lasting competitive advantage?

There is a handful of key elements to understand and make the translation process easier:

• the value equation of your company and how to test it against traditional strategic tools
• the strategic process.

In the same fashion as the vision, the strategic thinking is then to be communicated.

Working on the value equation of your organisation

Before being able to build or articulate your strategy, it is essential to understand the value equation of your company – in other words, how your organisation, company or business unit actually makes money and/or creates value.

Drawing up and understanding the value equation forces you to:

• identify the key interdependencies – internal or external – and crystallise what the success factors are – again, internal or external – for your organisation
• take into consideration the different forces that are playing for or against you – they may come from different functions, customers, suppliers or competitors
• create business models efficient enough to establish or sustain competitive advantage
• decide on your best course of action.

These are the real foundations of successful strategic thinking and strategy building. As an add-on benefit, they allow you to create fit-for-purpose metrics and support and track the execution of your strategy.

How to create and understand your values mind map is explained in the first exercise at the end of this section. Appreciating and using traditional strategic tools are also examined. This is a way to improve your abilities in assessing and deciding on the best strategic directions for your organisation. There are several strategic tools that you can use, but the most widely used remain the following.

Porter’s five competitive forces

Porter’s model focuses on understanding and coping with competition by defining it as broadly as possible. The model asks you to think in terms of the value chain and takes into consideration different elements of potential competitive pressure. It encompasses obvious and less obvious elements such as the following:

• The bargaining power of customers They have the upper hand for when it comes to setting price. This power comes about when there is a plethora of offers for a product, there is hardly to no differentiation between one product and another, the customers represent a big part of the turnover or margin of the company (concentration) and there is hardly to no cost for changing suppliers.
• The bargaining power of suppliers The suppliers have the upper hand regarding settings prices. This power is usually associated with highly differentiated products, very high demand or concentration of production or constraints.
• The potential for substitution of products Can the product be easily replaced?
• The possibility of new competitors competing for the same or even a different part of the value chain In other words it is easy to enter the market because there is, for example a low level of investment in the infrastructure to start with, low loyalty from a customer standpoint or low government regulations.

This model helps to create a common framework for any industry. It also helps to identify long-term creators of value. You will gain a complete view of the major players, too, and be able to craft a comprehensive action plan to help either protect or gain the profitability of the company.

Porter’s analysis can be used in any phase of a company’s lifecycle, from start-up to traditional player to leader in an industry. It helps you understand where you stand and what you need to do to be more competitive. It is a must do in any strategybuilding session (see Figure 10.1).

McKinsey’s 7S model¹

This model is usually used with the aim of improving the performance of a company, assessing the effects of future changes or helping in the formulation of strategy. It represents a good questioning framework and allows you to quickly grasp interdependencies.

It is based on the premise that there are seven key aspects that need to be aligned for an organisation to be successful. Both internal and external factors need to be studied. There are hard aspects that are easily identifiable and directly controllable:

• strategy (statements)
• structure (organisational charts)
• systems (IT system and processes).

There are also soft aspects, which are more difficult to assess and influence, namely:

• skills
• staff
• style
• shared values.

The model highlights interdependencies and helps to show how changes in one aspect trigger change elsewhere (see Figure 10.2):

• Strategy In this case, this is the means by which the plan is to be maintained and/or competitive advantage gained.
• Structure The organisational structure.
• Systems The process – what the daily activities and procedures are that are undertaken to create value.

• Shared values The core values of the company. Out of these the company’s mission and vision are developed.
• Style This means the style of leadership in action.
• Staff The workforce (of a particular department or the entire organisation).
• Skill The actual skills and competences of the employees working for the organisation.

To use the McKinsey model effectively, it is recommended to assess all the elements in the model independently by means of a thorough questioning process. This exercise is best performed as a team to benefit from other diverse perceptions and expertise.

It is preferable to start by questioning the shared values, as they are at the heart of the system. Ask if they are consistent with your structure, strategy, investments and if they need to change?

Then move to the hard and soft elements – debating how they support one another or noting if they should be changed.

Once you have gathered all the information, look for gaps and inconsistencies in the different elements to draft an action plan.

The 7S model is a very iterative process as it is built on interdependencies – if one piece moves all the others will be impacted.

The model can be used in a variety of situations (team, project and so on) when the main focus is alignment, and is particularly helpful when embarking on a major change management programme.

The Boston Consulting Group’s matrix

The matrix is based on one principle – that market share and market growth are strongly correlated with profitability. If you have been active in a market for a while and have built market share, you should know how to be profitable and have started to realise what economies of scale can be formed. The market growth element is used to assess the market’s attractiveness and help justify investments.

The Boston Consulting Group’s matrix works as follows (see Figure 10.3):

• Dogs Companies with low market share and low market growth. These will require a lot of hard work to improve the situation. An exit strategy could be used to generate cash to be reinvested elsewhere (in stars or to push the question marks).
• Cash cows Companies with high market share and low market growth. These are usually nice and profitable businesses that should be ‘milked’, typically they require a low level of investment to keep their market share stable.
• Stars Companies with high market share and high market growth. These benefit from a strong presence and can grow with the market. The best course of action here is to think hard in order to fully transform the opportunity with a view to outperforming the market.
• Question marks (problem children) Companies with low market share and high market growth. They usually represent a pool of opportunities and can call for different types of strategies. They can lead to a turnaround if there is a significant advantage to be gained from them and the effort–results ratio is acceptable. It may be decided to do nothing and observe external factors in the market to gear the decision towards a turnaround or an exit at a later stage. Alternatively, an exit strategy may be called for – in other words, the business, organisation or asset may be either sold or closed down, depending on what matters to you and what is a reasonable timeline.

The question marks group should be the core part of your strategic thinking as you craft and monitor an action plan. They actually represent your possibly good strategic bets and may require investment and effort in terms of redefining what business models and alliances are needed.

The Boston Consulting Group’s matrix is particularly beneficial if you are thinking in terms of a portfolio of products and/or geographies. It is instrumental in articulating the best cost–benefit ratio, screening opportunities and helps in the allocation of resources. It helps in the process of deciding where to invest in your business or, similarly, where to divest when in a cost management or productivity mindset. The different strategies are typically action orientated.

SWOT analysis

This is used to help identify a sustainable competitive position in your market. Looking at your strengths and weakness and assessing both the opportunities and the threats that are attached to them helps with crafting differentiated strategies for your market. It can be used at different levels, from corporate strategy to specific product lines or markets. To be effective, it has to be rigorous and driven by facts and figures.

• Strengths These need to be considered both from internal and external perspectives – that is, asking what the customers see and what the competition says. The identification of real strengths will come from comparing your organisation with the competition and asking how you differ from the rest. If an identified strength does not differ from your competitor’s, then it is not a real strength.
• Weaknesses These also need to be assessed both internally and externally. Weaknesses might be born from a complex organisational structure or a slow decision making process. Try to be as realistic as possible in order to devise the best ways to overcome them.
• Opportunities These should emerge from observing your environment and paying specific attention to the emerging trends and changes in your consumers’ behaviours. You will need to think in terms of technology, the regulatory framework, your growth path and geographical expansion, to name just a few. Ask yourself how you can differentiate from or take advantage of what you know, or mitigate and overcome.
• Threats These should also result from observing the same parameters as for opportunities, but asking yourself what risks are they posing and how it is possible to mitigate or overcome them.

Using the strategic tools

The above tools are useful for building your awareness in terms of your competitors, organisational design strategy, strategic prioritisation and strategy formulation. They are best worked through with your team as part of preparing for a big strategic session, but they can be used on your own as well to help with a wide array of situations.

It can be tricky to know what to use when, so Table 10.1 will help you to navigate the strategic landscape.

Table 10.1 Which strategic tool to use when

Potential issues/problems to solve	Preferred tools
• Investment decision (technology, infrastructure or product development)	• Boston Consulting Group’s matrix • SWOT analysis • Porter’s five competitive forces
• Market entry or exit	• Boston Consulting Group’s matrix • Porter’s five competitive forces
• Organisational change	• McKinsey’s 7S model
• IT system change	• McKinsey’s 7S model • SWOT analysis
• Company valuation for an acquisition strategy	• Porter’s five competitive forces
• Integration in case of merger	• McKinsey’s 7S model • SWOT analysis

In order to come up with the best strategic outcome, always consider using a mix of tools. After a certain period of time, you will naturally switch from one model to another, even creating your own model by cherry-picking the different parts of different models that are most suited to your needs.

Before moving on to the translation process itself, it is important to note that this strategic process can be carried out in two specific ways, which present opposite forces in strategic thinking.

Top down v. bottom up

Top down usually refers to leaders viewing things from the top and assessing the bigger picture. This approach does not necessarily take into consideration all the nitty-gritty implications of any one strategic direction. It can also at times suffer somewhat from the tendency towards oversimplification and overlook the difficulties of execution.

Bottom up refers to the activity of piecing together subunits’ needs to reveal the bigger picture. It can at times suffer somewhat from the tendency towards an overly conservative strategic approach or some level of complacency. However, this approach does help to shed light on the realities of a business.

It is important, instead, to engage both the top and bottom of the pyramid when formulating strategies. Doing so while at the same time, in either a dual or parallel process, undertaking a high-level analysis using the strategic tools described, complemented by some sensing carried out at several levels in the organisation, will result in a much more reliable and workable strategy than would either a solely top-down or bottom-up approach.

Traditionally, strategic thinking has been the remit of the leadership team and what has been produced has then been cascaded down through the rest of the company. Today, being able to adjust quickly and stay, as much as possible, close to the reality of the business is the best way to build long-lasting competitive advantages. Consequently, it is highly recommended to engage and gather input regularly from all levels and parts of the organisation.

Translating vision into strategy

At the core of effective strategic thinking is cutting through complexity. You need to eventually crystallise your direction into a handful of themes. These, in turn, will be broken down into smaller pieces and turned into tangible, concrete actions.

Using the different strategic tools presented above will give you much information to sift through, different pieces to keep in mind and a variety of potential outcomes. How do you then simplify your strategy choice and decide which course of action to take?

The best way is to keep the following three questions in mind:

• What does this strategy mean for the organisation?
• What will get us closer to reaching the vision? Can it potentially do so faster?
• What is required in order for this to become a reality?

These questions need to be assessed using the following filters:

• short term v. long term
• proactive v. reactive
• global v. local.

Short term v. long term

This is the most recognisable source of tension when it comes to formulating strategies – the best analogy is the marketing budget discussion between the finance and marketing parts of an organisation. The former will typically push for tighter controls on the marketing spend to preserve the current bottom line, while the latter will argue, ‘What is planted today will be harvested tomorrow’, wanting to increase the budget.

What to do? Make a point of thinking through the interdependencies and the impacts of each decision on each dimension. Keep in mind that any decision will be imperfect as the future may be shaped but is not known.

Proactive v. reactive

The most traditional way to approach the formulation of strategies is based on proactively trying to assess what could and could not happen. However, no one can ever predict the future and, in a fluid and increasingly volatile environment, reactivity or even agility is what will help you prevail.

In his book Loose: The future of business is letting go (Business Plus, 2011), Martin Thomas presents the argument that it is time to recognise the limitations of long-term thinking and slow motion and promote the need to operate in real time and immediately adjust to the circumstances.

Always leave yourself space to improvise and change due to unforeseen yet critical events. Ensure you have some leeway, never be too prescriptive² and empower your team to deliver.

Global v. local

This is the biggest source of tension when it comes to the moment of simplification. There is always a healthy tension between the need for consistency and conforming to a global strategy and the need to adjust to local realities.

Remember that people based locally have a much better understanding of how things are there than you and so have insights that will be valuable for you. Constructively challenge all potential deviations but be open to adjusting to take account of local specificities. What really matters is being able to deliver the vision, which can still happen even when such local adjustments are made.

Translating your vision into strategy should not be a one-off exercise, but be factored into and part of the organisation’s essential way of operating. Make sure you hold sessions throughout the year to help you constantly recalibrate your thinking.

It is also very powerful and somewhat innovative to use social media while engaging in your strategic thinking. You may decide to tweet while in the strategy planning session or even broadcast live while it is underway and allow for everyone to participate in a virtual co-creation exercise.

Keeping in mind the three filters – short term v. long term, proactive v. reactive and global v. local – will enable you to create a flexible strategy, based on deep thinking about potential scenarios, and systematically integrate the unexpected.

This exercise is one of the most challenging yet interesting parts of a leader’s job as it demands that you think from the outside in (from the environment in to the company) and inside out (from the company to the environment) at the same time, plus have a Janus-like face to absorb the past while also looking to the future.

Communicating your strategy – the art of pitching

Chapter 9 covered communicating your vision. More generally, as a leader, you will engage in a variety of activities and situations that will most definitely require you to make some form of presentation (also called a ‘pitch’). Presenting your strategic plan to the Board is one of these, and an important one, as it carries the fate of the business for the coming one to five years.

How do you master the art of presenting your business strategy – or making any other kind of presentation for that matter?

You will find lots of dos and don’ts for how to prepare to make an effective strategy presentation and different opinions about what is appropriate in terms of length, structure, look, feel and so on. However, it can all be boiled down to the following simple set of parameters.

It is a story

As with a speech or when writing about your vision, your presentation needs to tell a story – the story of the business at a certain point in time, now or in the future – and articulate how you will get there.

Keep the following two questions in mind:

• What is the story you are trying to tell?
  • Is it a growth story? If so, it will require a lot of details on the how, qualitative details on market opportunities and action plan.
  • Is it a cost-reduction story? It will require hefty financial information, headcount data paired with a timeline on execution or the main actors to engage with.
  • Is it a run and maintain story or an innovation story … the list can go on.
  • What matters is that you find the angle you are going to use and articulate your story about the strategy around that.
  • Your presentation will have to be of interest to the other parties and address some of their concerns or needs.
• What do you want to achieve by giving this presentation?:
  • If it is to simply inform the attendees, once the strategy has been agreed, particular attention needs to be given to the contexts and fit-for-purpose data (numbers, percentages, statistics).
  • If it is to get commitment and agreement to the strategy, it is critical to articulate fully what specific benefits will be gained and clearly present risks and opportunities.
  • If it is to reach a decision on which potential strategic direction to follow, add information on the alternative solutions, potential lost opportunities or even the cost implications of each. Integrating a decision tree can also be useful.

Focusing on these two questions will guide you as to what level of detail and which content to include.

It is a structured story

A pitch requires a start, middle and end. An effective presentation will definitely include an introductory slide (usually an executive summary or an overview slide) and a summary slide – this can be at the beginning or the end of the presentation or both, to articulate the logic.

Include key points on every slide and pay attention to the titles of the slides as they will help you to locate where you are in the flow of the presentation and make it easier for your audience to follow, too.

It is a visual tool

This is a very important point to keep in mind. A presentation of a strategy – any presentation – has to be very visual. Use graphs, images, pay attention to the aesthetics – the size, colours and font matter. Also, minimise the number of words on your slides. The best presentations not only sound great but actually look great, too.

It is only a support tool

The minute slides are put up, the audience’s attention shifts from you to the slides. A presentation is there to act as a support tool for you, so you should be the centre of attention, not the slides. Most of the story will be told by you, so stick to two or three key messages per slide, complemented by supporting data to aid understanding. What matters is that you talk around and about the visuals and make the story come to life, not just read the slides.

If we had to sum up the art of putting a presentation together in one sentence it would probably be:

the ability to translate business challenges into visuals.

Putting a presentation together will require some amount of rework (see also the advice about editing in Chapter 9), so plan accordingly. It is important to make sure that it is as simple, concise and clear as possible, so:

• fight the tendency to use complicated words – if a sentence or a bullet point is not clear, ask yourself, ‘What is it I am trying to say?’ and write down your answer.
• fight the temptation to put too much on the slides or have too many slides by asking yourself, ‘What does this add to the story?’ or ‘Is this relevant?’ – if the answer to either of these questions is ‘No’, either take it out or consider moving these slides to an appendix section
• give the presentation to someone who has not been involved in the process to ask for feedback on its clarity, logic and how interesting it is
• learn to let go and stop fiddling with your presentation – there is no benefit to be gained from endlessly reworking the same presentation.

When it then comes to actually giving the presentation – about your strategy or something else – the three principles of conveying emotion, passion and conviction (developed in Chapter 9) need to be applied.

At a certain point in your career, you will have to guide others on how to deliver a high-quality strategic pitch. Training them at an early stage and guiding them to follow these same principles is a great investment.

The pathway to superior strategic thinking

In a world that is becoming increasingly complicated, modern strategic thinking needs to go above and beyond the translation exercise – from vision to strategy. Becoming an ‘integrative thinker’ is the name of the game. This skill can be developed by building on a solid understanding of traditional tools, constantly challenging ideas by embracing complexity, being in tune with fast-changing circumstances and promoting cognitive diversity.

What is an ‘integrative thinker’? In layman’s terms, this is someone with the ability to hold and explore two opposite thoughts at the same time and, using the resulting creative tension, come up with a superior third option. Integrative thinking requires a frame of reference or knowledge framework that is rooted in accepting complexity, pushing innovation and looking for cognitive diversity.

Embracing complexity and thinking in ‘ecosystems’

In business terms, ‘complexity’ has a multilayered meaning. It alludes to the number of functions and activities in business increasing, each moving with its own dynamics. This causes difficulties when it comes to predicting how one element will react to a specific event and suggests that the same starting conditions may at times yield different results. Complexity also means that, contrary to what we can perceive, unplanned or unusual events are more frequent and have more impact than we can comprehend.

Consciously embracing complexity is the first step towards becoming an integrative thinker. How so? Because it pushes you to look for and assess the entirety of the business universe. In other words, it requires you to look at any question, business model or function to proactively identify recurring or singular events. At the same time, you need to stay grounded in the here and now and be fully aware of your own inability to measure the impact of any decision.

To develop tolerance or the ability to embrace complexity, focus on the following key skills:

• the ability to look at a problem from every angle
• see issues within their context
• agile decision making.

The ability to quickly change perspective

Systematically apply different lenses to the same problem. This could mean applying different functional lenses (marketing, product, finance, consumer, regulator). Some questions that might be useful to keep in mind are, ‘What would it mean to me if I was a marketing person/analyst/chief finance officer/consumer? How would I react to this products/line/strategy/idea?’

Another way to approach this would be to methodically take the opposite view in relation to one specific strategy then apply the 5 Whys technique described in Chapter 9.

Taking the example of American Express v. Google, if you were in the credit card industry and you knew your competition was going to be the Amexs or Visas of this world, what could you do?

If you adopted a traditional strategic thinking approach, you would decide to compete by means of differentiation. However, how much could you realistically differentiate yourself from the competition? You could do so a little, by adding benefits to being a member or increasing your vendors’ database.

Another option would be to not compete but collaborate in innovative ways. You could choose, for instance, to create an enhanced value proposition with some of your competitors and for the market. You might consider jointly developing an app for your members to download free of charge. It would enable them to pay not only with their cards but also with their mobile phones and other mobile devices.

You can change perspectives by creating different scenarios, in a ‘What if?’ chain of questions. For this, it is important to have a clear mental picture of what the value equations are and, of course, who the main actors in the market are. Do not overlook the less obvious ones as they may present interesting opportunities.

In order to practise your ability to change perspectives, try the following.

Choose the top three critical elements of your strategy and, for each one of them, play or draw up different scenarios, taking into consideration positive or negative impacts. Assess the impacts of events on each one of them separately, then look at the interdependencies with the others.

If, for example you identified regulators and health and safety regulations as key elements in your strategy, you could do the following.

Contemplating how the regulator is going to move in a particular country and how this could impact the health and safety part of your equation may lead you to make certain decisions or act in certain ways. In a highly regulated market, you may decide to not to grow much or develop a lobbying strategy to have an impact on the regulators. In markets relatively immune to regulation, however, you may decide to move quickly to give yourself a chance to shape the regulatory framework.

By moving quickly from a constrained to an unconstrained environment and looking for different angles, you will strengthen your strategies.

The ability to think in terms of an ‘ecosystem’

That is, ‘ecosystem’ in the biological sense of the word. It means that all organisms living in a particular area interact with each other to, ultimately, create a sustainable and mutually beneficial environment.

Applying the notion of an ecosystem to strategic thinking means that you firstly identify communities, functions or units that share the same ideas about goals, objectives or impacts. This will enable you to identify the sharing and exchanging mechanisms between them and strengthen the model or assess the relevance of it. In other words, thinking in terms of ecosystems will push you to address the ‘Does this make sense?’ question.

Developing your ability to think in terms of ecosystems is mainly achieved by broadening your terms of reference by learning and constantly using your strategic networks (as described in Chapter 8). Complement this by systematically thinking in terms of a value map when presented with different or new challenges or areas of knowledge.

The questions to ask to develop this way of thinking and analysing are these:

• How does this impact my value-creation mechanism?
• What are the interdependencies?

Your innovation skills developed by means of the exercises and practical examples given in Chapter 9 will also be helpful here.

The ability to be agile in your decision making

There are natural human limitations to our ability to understand all aspects of one given business. Keeping that in mind will clearly ground you in the now and push you towards building a healthy observe–assess–adjust rhythm into your strategic thinking process. Keep the following mantra in mind to help you:

I do not know what I do not know, and
what I know today may be obsolete tomorrow.

Figure 10.5 illustrates how we should all be careful about our perceptions of our knowledge.

A useful way to address the perception of knowledge is to systematically conclude any strategic thinking session with the following two questions:

• What do we think we have forgotten?
• If the world changed tomorrow, how much of this would still stand?

Ask for answers to these questions from everyone in the room to capture all potential angles.

In brief, uncertainty is the word to reflect on. Each organisation has an almost infinite number of possible futures available, all resulting from the current situation. Some may be anticipated as a result of certain events and trends. Others are not yet on the map or their beginnings are unnoticed in the present. Finally, there are some possibilities that do not exist because they have not yet been invented.

Developing your ability to pick up and capitalise on mega trends

In 2010, Samsung’s President Boo-Keun Yoon opened the Consumer Electronic Show in Vegas by speaking about a new trend called digital humanism (as opposed to human digitalism). In his speech he predicted and explained the following concept: digital will soon dominate our experiences and ways of thinking.

In 2012, a plethora of virtual lifestyle apps enabling you to recreate your own reality appeared on the market. One of the most striking proponents of this trend is the company Everfeel. Through 3-D role plays with dialogues between players, it proposes to create an intense and immediate social yet virtual experience in real time. This differs markedly from the dynamic of platforms like Facebook, which focus on sharing past experiences and data.

Trends are shaping markets, consumer behaviours and, ultimately, business strategies. To become an integrated strategic thinker, you need to not only spot trends but also deeply understand their potential impact. You also need to be able to see the less obvious ways in which these trends will have an impact on markets and behaviours.

The financial crisis is a great example of an event that brought with it some very different trends and reaction to them from business. Since 2008, the world has been experiencing an unprecedented financial crisis – from the collapse of Lehman Brothers to the uncertainties about Greece’s financial situation and the potential collapse of the European Union. This has had a huge impact on consumers.

The most obvious resulting trend has been austerity and cost-cutting measures. Most consumer businesses have considered lowering their prices as the ultimate adjustment strategy. Only a few companies thought differently and realised that, with austerity, consumers would also be looking to be inspired, to do something to lift them out of the situation. These few also realised that during hard times people need to laugh, to dream, be energised and have fun, so undertook some different strategic positioning activities.

To develop your ability to detect trends, answer the following question.

• What are the themes I recurrently observe in my environment?

Try a mix of passive and active approaches.

The passive approach – the ‘off time’ phase

Our brains can take in limitless amounts of information, although we are only conscious of a small percentage of it. Switching off and relaxing helps us absorb and then access all the unconscious knowledge we have stored.

In an ‘off time’ phase, your mind is left to wander freely, so it can find clues and patterns – essential for trend spotting. Meditation or walking in nature may maximise this effect. Consider regularly adding such activities and times to your schedule. You can also keep a sketchpad or notebook with you to jot down your random thoughts and observations as you go about your day, including drawings or schemes.

Putting aside 20 to 30 minutes at the very end of your day to pause and process your observations is also an effective discipline.

Leonardo da Vinci’s sketchbooks are a famous example of this idea. They evidence a wide range of interests and preoccupations and are a mix of deep thoughts and interrogations, innovative breakthroughs and mundane activities. They can be found at the Royal Library at Windsor Castle, the Louvre and the Victoria and Albert Museum.

The active approach – the framework phase

This should complement the passive, off time phase. It consists of setting up specific actions and sessions aimed at gathering and sharing data, followed by analysis of what trends to follow and what actions to take next.

As a preparation stage, the following is a good mix:

• Subscribe to strategic or business sites, such as McKinsey Quarterly, Harvard Business Review, WGS, BCG perspectives, Accenture’s latest thinking in its podcasts – all of these are good sources of information.
• Regularly take a wander through bookshops to see what is being written about in various subject areas such as philosophy, theology, sociology or demographics.
• Pay attention to the messages and themes appearing in advertising. This is a good way to do some trend spotting. For example, British Airways’ ad featuring the history and innovative spirit of aviation and Burberry’s campaign set in the 1940s are indicative of a desire to go back to the stability of the past.

More generally, the work of thought leaders in academic circles is a good place to start to look for trends as they are always at the forefront of any major changes. The preparation stage can be complemented by developing an in-depth knowledge of one particular sector.

Strategic thinking should be a shared and collaborative exercise, so encouraging your team to also do the following will help you to create a more strategic community.

Next comes the analysis stage. At this point, it is useful to identify the trends that are significant, so asking the following questions is a powerful way in which to do this:

• Are changes occurring in multiple areas or environments? For instance, the advent of social media had an impact on both professional and personal lives.
• Are changes having an impact on people’s priorities or their perceptions of their roles in society? For instance, a concern about the environment is shifting people towards organic or Fairtrade products.
• Is the trend impacting a particular group, population or type of consumer? For instance, a concern about social justice is being adopted by wealth management institutions.
• Are there signs that the trends are there to last? For instance, environmental concerns are leading to an increasing number of major European cities proposing rented bicycle schemes as an alternative to cars.
• Is there a particularly negative or positive perception of the mega trend? For instance, the development of video games for children led to an increased concern that children were reducing their participation in physical activities.

Finally, there is the action phase, which will help unleash the power of your newly discovered mega trends.

In their article, ‘Are you ignoring trends that could shake up your business?’ (Harvard Business Review, July 2010), Elie Ofek and Luc Wathieu propose the following three ways to shape strategies based on a deep understanding of mega trends:

• Infuse and augment The purpose is to incorporate into your traditional offerings some of the most pressing needs established by the trend. You are not inventing something new, but adding some elements to create a stronger value proposition.
• Combine and transcend This requires the merging or meshing of both the traditional value proposition with all the attributes and potential impact of the mega trend. In this case, the potential impact is creating a new offering or experience that can open completely new markets for the company.
• Counteract and reaffirm The purpose here is to build on the positive side of the products versus the perceived negative aspects of the trends.

Figure 10.6 illustrates the three activities you need to grasp to make the most of trends.

Embracing and promoting cognitive diversity

As human beings, we have limited cognitive abilities and these prevent us from assessing or grasping all potential aspects of any business. Bringing together different ways of thinking, different backgrounds and perspectives is a way to overcome this – it is a step towards becoming a truly integrated thinker.

Cognitive diversity – knowing how different people think – is what leaders should look for. Embracing and promoting it requires the following.

Awareness of your patterns and natural biases

See Chapter 3 to remind yourself of techniques and exercises you can try to build your self-awareness. You can complement these by creating a two-columned table with a list of your strengths, weaknesses and attributes on one side and, on the other, the opposite words or phrases. Use this mental picture to proactively look inside or outside your work environment for people who appear to be your complete opposite. Make a specific point of exchange ideas and debating things with them as part of your networking strategy.

In order to help crystallise the above, keep Figure 10.7 in mind.

The prioritising of complementarity over excellence

The purpose of a team is to execute and deliver a strategy to realise a vision. From a leader’s perspective, this means being clear about what types of resources, competences and attributes it would be most appropriate to gather in order to reach specific objectives. It requires you to proactively go after them using a gap analysis approach, matching what is needed with what you are looking for and filling gaps by trying to find the best candidates for these jobs. The methods and exercises described in Chapter 7 concerning how to build rapport will help with the matching exercise by giving you the information you need to choose wisely.

When you throw the notion of cognitive diversity into the mix, what matters is not only finding the best candidates but finding complementary ones. You might even think of it as actually looking for the ‘odd’ person. When interacting with your peers, teams and others, systematically look for the person who is different or with whom you do not feel particularly at ease. Try to either recruit him or her to your team or use as a sounding board when engaging in high-level strategic thinking. You can integrate this dimension into all your exercises in stakeholder mapping and network building.

You might also wish to cascade this approach down to make it part of all recruitment activities. Scott E. Page in his book The Difference: How the power of diversity creates better groups, firms, schools and societies (Princeton University Press, 2008), proposed a simple method to ensure cognitive diversity in the hiring process. Draw up a questionnaire that will address the skills you need and, when analysing the results, look for the mix of people who, between them, will give you all the right ones (see Table 10.2).

To fully embrace cognitive diversity and excellence, you would hire Candidates 1 and 2 from these results.

Summary

Strategic thinking and developing strategies should be at the top of any executive’s ‘to do’ list. Almost all their time should be spent on vision and strategy.

The underlying principles are rather simple when it comes to developing strategic thinking. The first is to build a solid knowledge of strategic tools, the second to always keep abreast of the complexity of your environment by constantly sensing and observing, while the third and final one is to integrate strategic thinking into daily activities – not reserve it for the strategic planning cycle but also include it in less formal situations, such as a weekly catch-up with individuals and your trend team as all of these times are important. This will all be helped and accelerated by finding and working with smart people who think differently.

Here’s a reminder of some of the key points from this chapter:

• strategy translates vision into tangible steps, focusing on the how, how to, where to and when to
• successful strategic thinking should lead to long-lasting competitive advantages if it is rooted in a deep understanding of your organisation’s value chain and observation of its environment
• understanding and adequately using traditional strategic tools will give you a head start and allow you to adapt and develop your own strategic recipes
• the best strategy is derived by assessing, exploring and balancing short v. long term, proactive v. reactive approaches, global v. local, top down and bottom up.
• To grow as an integrated strategic thinker, you need to train yourself to see things from different and opposite perspectives, think in terms of ecosystems – that is, in terms of interdependencies – and be fully aware that you cannot always and entirely predict anything in business.
• Proactively looking for trends and analysing them deeply to go beyond the obvious is also a competitive skill in strategic thinking.
• Embrace cognitive diversity by hiring and adding to a diverse team. This will enable stronger strategies to be developed.
• Looking for diversity will also allow you to identify your natural bias and patterns and increase your level of self-awareness.

¹ Developed by Tom Peters and Robert Waterman while working for McKinsey and further explored in their management book In Search of Excellence.

² An interesting article to look at in relation to this is ‘Strategy as simple rules’ by Kathleen Einshenhardt and Donald Sull (2001) Harvard Business Review, January.

³ By Jeremy Bentham, Vice President Global Business Environment and Head of Scenarios Team, Royal Dutch Shell