Whatever the level at which it is applied, whether it is a corporate strategy, a strategy to become the market leader, to ensure the sustainable success of a product or to launch it on the market, whether it is a strategy to win over a customer or to capture a project, the need for strategic thinking is everywhere. But what exactly is strategic thinking and how can it be applied at all levels?
Strategic thinking
Strategic thinking, which precedes and prepares for execution, is always based on a sequence of analysis of the situation –> reflection –> decisions –> preparation for implementation. It can be applied whenever one finds oneself in a situation characterised by an existing position, one or more adversaries or competitors, limited available resources, and one has to set goals, establish precise objectives, decide how to achieve them and allocate resources and means.
As such, strategic thinking is not restricted to the field of corporate strategy (which is only one of its fields of application) or to management committees. It concerns all the players in the company, each at their own level, whether as decision-makers or as contributors.
It is worth noting, with regard to the very common distinction between strategy and tactics, that strategy at a given level of decision frequently constitutes the tactics of the higher level. To take a famous example, it was obviously necessary to take ‘strategic’ decisions during the Allied landing in Normandy on 6 June 1944, such as the decision to build a ‘floating harbour’, but the landing itself was tactical if we look at the higher level of Allied strategy in the context of the Second World War, much of which was played out in the Pacific.
An analogy can also be made here with a chess player (some may prefer to think of business as a game of go or even poker!) who must both have a strategy to checkmate his opponent and constantly decide on the coordinated movements of each of his pieces on the board according to the strategy he is pursuing, the number of pieces left and their position on the board.
Prerequisites for strategic thinking
On what concrete elements is strategic thinking in business based? This can be presented in a very simplified way:
Strategic reasoning presupposes first of all the clear definition of “market/competition perimeters”. This is the challenge of two types of segmentation: strategic segmentation, which will decide which “strategic areas of activity” are relevant to define, and marketing segmentation, which will decide which “market segments” are possible.
It then presupposes a general knowledge and understanding of the “rules of the game” of these competitive perimeters. These rules of the game are of three types
- what is permitted or prohibited by regulation in a given market
- the key success factors in a given market: for example, a price market does not have the same SIF as a differentiation market
- two types of “rules of the game” derived from experience which generally lead to success or failure
- the general rules applicable to any strategy. In the same way that books on chess describe typical strategies, there are several for business. For example, it is well known that in any strategy, in business as elsewhere, dispersion of resources and effort leads to failure whereas concentration produces much better results.
- Other rules from business experience show, for example, that it is just as important to arrive at the right time on the market, i.e. to manage the “time to market”, as it is to have a good product. Or that the best product in terms of technical performance is not necessarily the winner in a market
It should be noted that in technical companies, too little attention is often paid to these rules, which are sometimes more the result of practice than of irrefutable proof. This is particularly true for some of the points mentioned above: the difference between “price markets” and “differentiation markets”, the role of time to market and the role of technology alone in market success.
Finally, strategic thinking presupposes an accurate analysis of one’s situation. This includes:
- the analysis of its competitive position with its strengths and weaknesses: one can find oneself in very different competitive situations depending on whether one is strong or weak in a market and whether the market is embryonic, growing or declining
- the state of available resources
- the detection of opportunities
- the nature of possible movements for oneself and for each of the competitors according to one’s own situation and resources and those of the competitors
- We can also link it to the anticipation of the evolution of the rules of the game of the “market” (which is not found in the game of chess)
The decision
The decision is to set the ultimate objectives, determine how the objectives will be achieved, assign priorities, determine how the available resources will be allocated and concentrated.
The strategic decision therefore answers “what are our objectives and priorities?”, “how are we going to achieve them?”, “what resources are we going to allocate to them” and “how are we going to prioritise our money and effort”. For example, the objective may be to enter or become the leader in a particular market segment, the means may be to build on an existing, particularly advanced product family, or to proceed by acquiring a technology or a company while dedicating a team to this project and allocating a defined budget.
Preparation for implementation
Preparation for implementation or preparation for execution consists, on the external level, of specifying the successive decisions that will have to be taken in the service of the strategy (e.g. launching a promotional campaign for a new product) and, on the internal level, of putting the company “in battle order” to be able to execute them by informing and mobilising internal resources.
Implementation
The actual execution will consist of carrying out the decisions taken by adapting them to the context of the moment, to changes in the market or to the movements of competitors for example.
It should be noted that, according to Napoleon’s famous phrase “strategy is a simple art but all about execution”, execution itself will often lead to changes in strategy according to circumstances and opportunities. Without going so far as to say, according to the title of a famous book, that “everything is in the execution”, it is clear that there is a permanent dialogue between strategy and its execution and that the quality of execution of a strategy is just as important as its conception in obtaining the expected results.