Strategic Thinking– Fit, Alignment, Intent, Stretch: Matching an Organization’s Strategic Imperatives– Strategy and Structure…

Today’s business landscape has changed, fundamentally… tomorrow’s environment will be different, but none the less–rich in possibilities for those who are prepared–strategic thinking is the new normal.

Strategic thinking is about focusing on higher level business strategies by finding, and subsequently, developing opportunities to create value. It’s a way to focus on and understand the fundamental drivers of your business and continuously challenge the conventional thinking about those drivers.

Another way to view strategic thinking is brainstorming and applying ‘possibility thinking’ with the goal of developing a direction and ‘strategic’ goals; it’s a way of thinking that has well-defined, and specific purpose, characteristics.

A Wall Street Journal study found that the most sought after executive skill by corporation was strategic thinking, but that few people have that knowledge and skill set… According to Brian Hill; strategic thinking involves making a series of decisions about the actions the company intends to take to become more successful. At the heart of strategic thinking is the ability to anticipate major shifts in the competitive marketplace, identify emerging opportunities, and dealing also with limited resources; money, people, time…

Strategic thinking is a mindset for change and having plans to deal with it… the ability to embrace the total enterprise by; spotting trends, understanding the competitive landscape, visualizing where the business needs to go, and provide leadership into the future. Thinking strategically is about challenging assumptions about the business– why you do what you do— finding and developing unique opportunities to create value, and breakthrough thinking about the future.

However, before strategic thinking; first, there must be a strong foundation of critical thinking– understanding the fundamental drivers that affect your organization and rigorously challenge conventional thinking…

Strategic Fit– is the degree to which an organization is matching its resources and capabilities with its opportunities. The matching takes place through strategy, and it’s vital that the company have the actual resources and capabilities to execute and support the strategy.

Strategic fit is related to the resource-based view of the firm which suggests that the key to profitability is, not only through positioning and industry selection, but rather through internal focus which seeks to utilize the unique characteristics of the company’s resources and capabilities.

Strategic fit can also be used to evaluate specific opportunities; alliances, partnerships, joint ventures, M&A… For example; strategic fit for M&A refers to how well the potential business acquisition fits with the planned strategy of the acquiring company. A survey conducted by ‘Bain & Company’ showed that 94% of interviewed CEO’s considered the strategic fit as vital for the success or failure of an acquisition…

Strategic Alignment– is the process and result of linking business strategy and objectives with business units, functions, and employees– it’s more than just a top down process. Strategic alignment is the positioning of a business function in relation to other functions, such that the arrangement can lead to an optimum relationship between the functions or parts.

With strategic alignment, it’s possible to improve performance results and gain a competitive advantage. Aligning the organization to external environment requires forethought and proactive actions. Aligning employees’ performance to the strategic direction requires leadership and monitoring. Aligning different functions and resources across the organization requires integration and diplomatic handling of personalities on a variety of levels.

Strategic Intent– is the high-level statement of means by which your organization will achieve its vision. It’s a statement of design for creating a desirable future (stated in present terms). According to ‘Vadim Kotelnikov’; Strategic intent– simply put, is your company’s vision of what it wants to achieve in the long-term: Strategy must be a stretch exercise, not a fit exercise.

The strategic intent must convey a significant stretch for the company; sense of direction, discovery, and opportunity that can be communicated as worthwhile to all employees. A strategic intent creates a picture of the customer’s daily life and describes discontinuities and anticipated changes from the world of today. It describes future customer’s needs and success factors required for meeting these needs. To achieve great things, you need ambitious visions… It does not matter that vision cannot be laid out in details, right now… it’s the direction that counts.

Strategic Stretch– is a goal that cannot be achieved with– what is known, today. Strategic stretch pushes the boundaries of what is assumed to be impossible to strive for… Only when you aim for impossible, something that cannot be achieved with existing practices, is there pressure to come up with radical new ideas, instead of just work harder.

According to ‘Frank Buytendijk’; strategic stretch is very much like working with an elastic band. If you only pull it from one side, the other side will move in the same direction. You can only stretch it if you pull from both sides. And the harder you pull in multiple directions at the same time, the more space you create, which is the objective of strategic management.

The metaphor of elastic band is very appropriate because it implies that you can’t stop pulling, otherwise it goes back to its neutral position. It’s the same with strategy; you need to keep working on creating strategic stretch, otherwise, the organization will fall back to average results.

In the article “From Fit to Stretch: Strategy & Structure for Results in Organizations” by Bruce Elkin writes:  Long-term success comes from consistency of effort generated by focused and shared intent throughout the organization: Strategic intent is not just wild ambition.

According to ‘Gary Hamel’; ‘strategic intent encompasses an active management process that includes: Focusing the organization’s attention on essence of winning; motivating people by communicating value of the target; leaving room for individual and team contributions; sustaining enthusiasm by providing new operational definitions as circumstances change; and using ‘intent’ consistently to guide resource allocation.’

Once strategic intent is established resources can be leveraged by focusing them on key goals, acquiring them efficiently, combining one with another to add value, carefully conserving them, and recycling them in the shortest possible time. Hamel is not alone in thinking strategic planning has failed because companies trim ambition to match available resources.

‘Peter Senge’, talking about the importance of maintaining visionary goals, says ‘… the dynamics of eroding goals… lies at the heart of the demise… of many U.S. manufacturing industries….’  Companies who trim ambition find themselves at the mercy of circumstances, and without leverage. Senge draws heavily on the work of ‘Robert Fritz’ who has developed an approach to creating high-level results that bears a remarkable similarity to strategic intent, which Senge says ‘forms the cornerstone to help leaders and managers deal productively with complexity and change.’

In the article “Strategy as Stretch and Leverage by G. Hamel and CK Prahalad write: Global competition is not just product-versus-product or company-versus-company. It’s mindset-versus-mindset. Driven to understand the dynamics of competition, we have learned a lot about what makes one company more successful than another. But to find the ‘root of competitiveness’– to understand why some companies create new forms of competitive advantage, while others watch and follow– we must look at the strategic mindsets.

For many managers, being strategic means pursuing opportunities that fit the company’s resources. This approach is not wrong, but it obscures an approach in which ‘stretch’ supplements ‘fit’, which  means creating chasm between ambition and resource… and where leverage complements the strategic allocation of resources.

Managers at competitive companies can get a bigger-bang-for-the-buck in five basic ways: Concentrate resources around strategic goals; accumulate resources more efficiently; complement one kind of resource with another; conserve resources whenever they can; and recover resources from the market-place as quickly as possible…

In the article Stretch– How Great Companies Grow in Good Times and Bad by Graeme Deans writes:  Only a few companies in the world are able to stretch their business and capabilities along several dimensions simultaneously to achieve growth… Most business build their growth strategy based on solid; operations, organization, and strategic growth initiatives, however, there are places in business where a stretch growth idea might take root. For example, you can  look at your product offerings to see if you have opportunities to stretch your customer base, your customer service levels, or level of convenience and customization you provide.

You might stretch your value chain or business model, your geographic reach, or your partnership and risk-sharing approach to improve growth. You might stretch the way you go-to-market through your distribution channel strategy, or branding. You might look to new technologies to stretch your entire company. Or, you might try to stretch in several directions at once and find the ideal combination of growth ideas that will boost your company to the next level of performance. The path to getting there isn’t flashy or quick, but with flawless execution and unwavering focus, sustainable, superior growth is a goal that any company can reach.

Traditional strategic development is a process that involves auditing a business’ current markets, competitors, resources… followed by strategic formulation and implementation. However, ‘Hamel and Prahalad’ proposed a broader view of strategic formulation, called strategic intent, focusing instead on; business capabilities, collaboration, and innovation to achieve revolutionary improvement.

According toGadi Ben-Yehuda’; organizational decisions in companies that employ strategic intent differ from traditional strategy planning methods: They communicate a supportable goal, establish criterion to measure progress, and create active management processes. For example; Toyota’s hoshin kanri system has successful incorporated the  strategic intent principles.

According to ‘Eton Lawrence’; strategic thinking … is not only critical to the survival of the organization in these times of rapid and accelerating change, but more importantly, can be effectively accommodated within a progressive strategy-making regime to support strategic planning … strategic planning and strategic thinking work in tandem, rather than when strategic planning impedes the flourishing of strategic thinking.

As ‘Jeanne Liedtka’ suggests; strategic thinking is about disrupting alignment to create a view of a preferred future, while strategic planning is about creating alignment and dealing with current realities.

As ‘Loizos Heracleous’ suggests; the purpose of strategic thinking is to discover novel, imaginative strategies which can re-write the rules of the competitive game; and to envision potential futures, significantly different from the present.

Bottom line: The goal for strategic thinking is to develop strategies that align an organization’s future direction (or vision) with the future environment to gain competitive advantage.

Think of strategic thinking as the ‘what you want’ component and strategic planning as the ‘how can I get what I want’ factor.