Tag: strategic thinking

Keep Your Business Strategy Tight with a Ratchet Tool: Here’s How

Like a Ratchet that turns and tightens in only one direction, a strategy should proceed continuously, moving from Identify to Analyze, to Create, and then Implement

Strategy is the cornerstone for business success.
Strategy connects the present to the future.
Strategy brings focus and meaning to your tactics.
Strategy involves making decisions about the future and predicting the outcomes of those decisions.
Strategy is all these and complex too.

Question
If strategy is so important, why is it one of business’s most confusing and misunderstood disciplines?

Answer
Because strategy requires understanding, assessing, and weighing the importance of multiple variables, now and in the future.

Solution.
Reversing these challenges and understanding the strategic process starts with deconstructing the process into its essential elements.

“Simplicity is the ultimate sophistication.”

Leonardo DaVinci.

The Strategic Process progresses from Strategic Thinking to Strategic Planning to Strategic Decisions.

Strategic thinking > Strategic Planning > Strategic Decisions

Since strategy connects the present to the future, there should be a tool that helps guide and connect the parts. The Strategy Ratchet can be a helpful framework for seeing your strategy through to completion.

Like a Ratchet that turns and tightens in only one direction, a strategy should proceed continuously, moving from Identify to Analyze, to Create, and then Implement. With each loop and iteration, the strategy should align more tightly with your Vision.

Identify. (where are we?)

Complete honesty and transparency are needed here. No sugar coating. No Rose-colored glass, just the good, the bad, and the ugly. No problem-solving at this stage; identify where gaps exist. Time to see what’s “under the hood.” Look at products and services, operations, business financials, sales and marketing plans, market share, and IT. How do our products and services compare to our competitors? Is our present direction aligned with our Vision?

Analyze. (how far off are we?)

Time to quantify the problems and gaps identified. Look for sales, revenue, new products and services development gaps, and customer and employee satisfaction scores. Is market share growing or shrinking? By how much? What about financial performance, gross margins, profitability, and net income? How efficient are operations? What are gross margins, net income, and EBITDA?

Create. (what new ideas can close the gap?)

Moving forward requires seeing new possibilities. What future state and results are desired? What steps need to be taken to reach the desired goal? What needs to change to close the gaps identified in the Analyze step? Ideas and possibilities are endless; seeing them requires looking across disciplines to bring new insights and perspectives to problems. Breaking down the silos of conventional thought and replacing it with awareness and observation is a perfect place to start.

“Vision without Execution is hallucination.”
Thomas Edison

Implement. (how is action created?)

Strategies fail to reach their targets due to a lack of action and execution, not a lack of Vision and Mission. Continuous execution is essential. Strategy is a Team effort, so alignment, accountability, and rhythm are needed. Align actions by planning backward and executing forwards. Start with the goal and work backward to milestones and, finally, tasks that are accomplished daily. Accountability is required and can be used as a learning and training process. Celebrate team successes. At the same time, learn why goals were not met so performance can be improved during the next iteration. Finally, let the team establish their rhythm and develop a dashboard with key performance metrics to track progress.

Summary

Give the Strategy Ratchet a try. See if it helps you understand better this complex and confusing topic. Remember, too, your strategy must continue beyond Vision, Goals, and Objectives; execution and action bring it to life. This quote from VanGogh sums it all up the best:

“Great things are done by a series of small things brought together.”
Vincent VanGogh

 

Sharpen Your Strategic Thinking Here

Strategic thinking integrates analytical skills, problem-solving skills, creative skills, communication skills, along with management skills.

 

Strategic Thinking is the hard stuff of business.

If you are looking for a few ideas to strengthen your strategic thinking, sharpen your ability to see new solutions, think more critically, and be more analytical to help impact your business’s growth and competitiveness, then keep reading.

Strategic thinking is critical for all organizations since it charts the path between the present and the future and helps leaders shift their focus from short-term execution to the longer-term needs of the organization. For this reason, strategic thinking skills are highly desirable and worthy of improvement through learning, study, and practice. 

“Knowing the name of something doesn’t mean you understand it.”

Richard Feynman

The Skills of Strategic Thinking

Strategic thinking integrates analytical skills, problem-solving skills, creative skills, communication skills, along with management skills. These skills can tremendously impact a business’s trajectory, growth, and competitiveness in the marketplace. These skills are essential, allowing a business to achieve its objectives, overcome obstacles, and address challenges it faces in the markets.

  • Analytical skills: A strategy starts by understanding objective data from your business, markets, and stakeholders. These inputs include financial statements, KPIs, industry trends, market conditions, and vendor and stakeholder perspectives. This step helps define the current reality facing your business.
  • Problem-solving skills: Strategic planning is often used to solve problems or address challenges, such as missed financial targets, inefficient workflows, or an emerging competitor. Implementing a strategy addressing your central challenge requires understanding the problem and its potential solutions. From there, you can craft a strategy that solves it.

“A real strategy is a coherent mix of policy and action designed to overcome a significant challenge” 

Richard P. Rumelt

  • Creative Skills: An excellent strategist can integrate data analysis with problems and challenges to generate new approaches and ideas. Developing your competitive advantage requires understanding your firm’s unique resources and capabilities and leveraging them in new ways not previously available in the market. These new approaches require one to see “between, around, and through” the obvious to find a new path forward.
  • Communication skills: Implementing a strategy for your company requires exceptional communication skills. Strategy can appear complex making it essential that all stakeholders understand and are aligned, so everyone works toward the same goals and objectives. Building teamwork, consensus, and collaboration make communication critical to strategic success.
  • Management skills: Strategy isn’t just about thinking of solutions; it requires action to achieve results. Once data has been analyzed, the problem is understood, and a solution has been created and communicated, you need strong management skills to bring everything together.

With the core Strategic Skills outlined, let’s work on improving them. The good news, like any skill, your strategic thinking skills can improve with focus and practice.

TO IMPROVE YOUR STRATEGIC THINKING SKILLS…try the following.

  • Ask the hard questions. To improve your strategic thinking skills, ask more challenging questions. These questions can relate to products, markets, management, or any question that points to adding value for the customer. Doing so allows you to become adept at spotting opportunities, and exploiting opportunities is what strategy does.
  • Observe and analyze. Use Reality Testing to see things as they are rather than how you would like them to be. One of the most effective ways of accomplishing this is to observe and reflect on your current situation, ensuring any strategy you conceive is objective and grounded by facts.  

“The first principle is that you must not fool yourself and you are the easiest person to fool.”

Richard Feynman

  • Play the Devil’s Advocate. Before implementation, your strategy requires thorough analysis, evaluation, and testing to ensure other possibilities are noticed. Play the Devil’s Advocate with your ideas, assertions, and analysis will make any weaknesses or shortcomings evident. You need to be able to defend your strategy when questioned by others. Defending your strategy against other Team members further hones your thinking and logic, helping you better communicate and execute the strategy. Considering opposing ideas, perspectives and opinions further enhances your strategic thinking skills by forcing you to step back and look at the short and long-term views.
  • Always keep learning. The body of knowledge related to strategy is massive. Learn from your work and the experiences of others, as well as books, references, journals, society memberships, presentations, and conferences. Be committed to constant learning and self-improvement.

THE TAKEAWAY

Strategic thinking is essential for business today, regardless of your role or industry. Remember, you can practice these skills in your daily life as well. Try exercising these skills as you plan and face challenges in your own life. Finding an effective solution or alternative will be easier.