Strategic Thinking and Change

Change. It is a stark reality that every organization has to deal with at some point in its life cycle. It has been said that only constant is change itself, and if you have been a leader of any organization for very long, you will likely agree with that statement. As a leader, one of the most stressful times that you will encounter in your career is when the organization that you lead goes through changes. If change is unavoidable, then the only question to ask is what is the best way to handle change? How can you lead your organization through a time of change and come out on the other side smarter, in a stronger position, with greater market share, or in some other way better off than you were before?

One of the most important things that you can do to make the most of the inevitable change that you will experience as the leader of an organization is to adopt a mindset of strategic thinking. Before we look at the reasons why strategic thinking is important, let us first make sure that we completely understand all the terms being used. Often we use terms either without fully understanding their meaning, or we use the same terms to describe different things, confounding their meaning. Such is the case with the terms strategic thinking and organizational change. First, when discussing strategic thinking, we are not talking about planning for the future, vision-casting, strategy meetings, strategic initiatives, or strategic planning. All of these things are important, and many of them naturally are a part of strategic thinking. However, these things are not the same as strategic thinking.

Put simply, strategic thinking is a permanent state of mind which constantly evaluates goals and direction, selecting those which best fit the needs of the organization (Wimberly, 2007). Unlike strategic planning, which is a linear process with finite beginning and ending points, strategic thinking is a never ending process of decision making and goal setting with a strategic direction in mind. Closely related is the concept of strategic foresight, planning for and reacting to an anticipated future. When a leader adopts a strategic thinking mindset, they are constantly looking ahead, preparing plans to lead their organization into the future and react to possible obstacles before they happen, not after (Switzer, 2008).

Organizational change is a process, whether revolutionary or evolutionary, which changes the strategy, direction, processes, culture, or other characteristic of an organization. Revolutionary change is the one which most often comes to mind when we think about change. It is change that is sudden, often drastic, and has far reaching impacts within and without an organization. Evolutionary change is less obvious, but just as powerful, and is generally more gradual and easier to handle than revolutionary change (Burke, 2014). No matter the degree and intensity of the change that your organization experiences, you can benefit from maintaining a mindset of strategic thinking.

One of the most obvious and common changes that an organization goes through is a merger and acquisition. The leader of an organization who practices strategic thinking is always looking for new ways to gain market share, acquire new products or services, expand into new markets and acquire intellectual property or proprietary processes that may provide an advantage over the competition. Any of these business needs can be met by merging with or acquiring another company. The leader who thinks strategically decides to pursue a merger or an acquisition as a means to achieve the goals that have been set for the organization.

Strategic thinking not only decides a course of action, it constantly reevaluates conditions and environments to determine whether course corrections are needed in order to stay on track (Wimberly, 2007). It searches for early signs of change, what is often called an emerging initial condition (Sanders, 1998), something in the environment or system of an organization that signals the onset of change. In the early 1990’s, Apple computers saw the emerging initial conditions the precipitated the personal computing boom. America Online reacted to the emerging initial conditions that resulted from the expansion of personal computing in order to provide dial-up internet access in millions of homes.

Apple computers stands as a success story to the necessity of strategic thinking. By remaining vigilant of environmental changes and making decisions that furthered organizational goals, Apple was able to grow from a single person operation in a garage to one of the largest and most successful technology companies in the world. None of their successes would have been possible without the strategic thinking exercised by the late founder and CEO of Apple computers, Steve Jobs.

AOL on the other hand demonstrates what can happen when an organization’s leaders fail to maintain a mindset of strategic thinking. In the mid 1990’s, AOL was the primary internet service provider (ISP) in the United States. They dominated the markets of residential internet service and email hosting. For anyone who remembers the latter half of the decade, the phrase “you’ve got mail” is a powerful reminder of how prevalent AOL was as an ISP. But as developments in broadband and DSL internet connections began, bandwidth and residential connectivity increased, and start up tech firms challenged the status quo, AOL did not see the signs until it was too late. Following a less than successful merger with Time Warner cable in 2001 (Malone & Turner, 2010), AOL saw its stock prices plummet and market share drop in the wake of the internet bubble burst. The ISP market had changed, leaving AOL a distant memory. Likewise, easy to create free email accounts with intuitive features led many former AOL customers to begin hosting their email accounts through other tech companies like Google and Yahoo. A failure to reevaluate the environment and respond accordingly relegated the once dominate company to the sidelines in an industry that has yet to stop changing and expanding.

While few industries have experienced the constant and drastic revolutionary change the technology sector has over the past sixty years, every industry has been affected by the tremendous technology boom of the twentieth and twenty first centuries. As change continues to be a natural part of leading any organization, it is imperative that we as leaders adopt a mindset that safeguards our organizations from becoming the next story of failure, an example of what happens when an organization fails to notice the inevitable and react in time. In order to this, we must think strategically. It is not enough to have planning sessions and committees tasked with strategic execution. Leaders must constantly be engaged in a cyclical evaluation of our organizations and the environments in which they operate. Only then can we provide our organizations the information and direction they need to succeed.

References:

Burke, W.W. (2014) Organization change: Theory and practice. Thousand Oaks, CA: Sage Publications.

Malone, D., & Turner, J. (2010). The merger of AOL and Time Warner: A case study. Journal of the International Academy for Case Studies, 16(7), 103-109.

Sanders, T.I. (1998) Strategic thinking and the new science: Planning in the midst of chaos, complexity, and change. New York: The Free Press.

Switzer, M. (2008) Strategic thinking in fast growing organizations. Journal of Strategic Leadership, 1(1). Retrieved from http://www.regent.edu/acad/global/publications/jsl/vol1iss1/JSL_Vol1iss1_Switzer.pdf

Wimberly, D. (2007) The strategic triumvirate: How to increase your organization’s value and avoid future extinction. Leadership Advance Online, 10(1). Retrieved from http://www.regent.edu/acad/global/publications/lao/issue_9/pdf/strategic_triumvirate.pdf.