Strategic Thinking

Ask almost any CEO in America to list their three biggest challenges, and the likelihood is high that near the top will be “devoting enough time to thinking about strategic challenges and opportunities and new strategies to deal with them."


Most CEOs are besieged by meetings, unanticipated events that are often urgent but not important, genuine crises: an intractable email inbox, an endless series of speeches and events. The list goes on and on. But is it really a question of time? Or is it a matter of process?

 

Strategic thinking at the leadership level can be broken down into a two-stage process. Stage 1 is often that solitary experience of identifying far-out opportunities and threats. While those insights often seem intuitive, they are usually the product of both depth and breadth: deep knowledge of your own sector or industry and myriad conversations with others in entirely different areas and wide-ranging reading, all leading to a broader understanding of changes in your markets and the world at large. Just setting aside time for deep thinking does not do it if the hard work of expanding your horizons hasn’t come first. But if you have done that, then isolating yourself from day-to-day obligations and interruptions is often necessary to process the mass of information and achieve a new understanding of changes in prospect.


I knew one CEO of a major company who became the head of an important government agency. He was also a trustee of a large nonprofit which had an annual board meeting in a wonderful spot in the American West. Every year he would commit to spend a week there at the time of the annual meeting; every year he would cancel at the last minute, telling only his chief of staff; and every year he would spend that week alone in his home office thinking through longer-term challenges and threats.


 

Defining changes in direction are among the most important functions of the CEO. They are also among the most difficult to think about because this stage of the process is so lonely and unstructured.


Recently, while reading an account of the speech that Xi Jinping gave earlier this year of to a gathering of Chinese scientists and engineers (as reported by Xinhua, a Chinese Government news agency), I thought of Stage 1 :


“Xi required integration of the internet, big data, and artificial intelligence with the real economy, advance fundamental transformations of the industrial pattern and enterprise forms in the manufacturing and move Chinese industries up to the medium-high end of the global value chain…

“Noting that independent innovation is the only path for China to climb high in global science and technology, Xi urged courageous moves to reach for the ‘commanding heights. in scientific and technological competition and future development.”


Xi Jinping’s speech clearly summarized a major change in direction. Notice how crystal clear he was about what is to be achieved: “moves to reach for the ‘commanding heights’ in scientific and technological competition and future development.” He has set a goal of winning the scientific and technological competition.


 

Stage 2 of the strategic thinking process is testing both the new direction and establishing the route to get there. Some CEOs regularly schedule brainstorming sessions or formal strategy sessions a few times a year. While these sessions are characterized by the design of identifying new opportunities and new threats, these sessions are usually most useful when the CEO has settled on a new strategic challenge, and the issue is what strategies to adopt to deal with it. Or when there appear to be a number of new strategic challenges on the horizon and the issue is which is the most important to the future of the organization.


In a recent book by John Doerr (Measure What Matters), Bill Gates is quoted as saying,


“In philanthropy, I see people confusing objectives with missions all the time. A mission is directional. An objective has a set of concrete steps that you’re intentionally engaged in and actually trying to go for…

Having a good mission is not enough. You need a concrete objective and you need to know how you’re going to get there.”


While Gates emphasized the importance of goals and milestones, mission and direction (Stage 1, as I think of it) must come first. If you do not know where you are going, defining goals and milestones is not purposeful; instead, they become the product of negotiation between different power centers in the organization and the result is often a set of inconsistent compromises. In contrast, if you know the direction, the steps to get there become clear. Having understood the direction that Xi Jinping marked out, China’s objectives become easy to identify: artificial intelligence, quantum computing, anti-satellite missiles, blue water naval technology, etc.

 

When Ivan Seidenberg became CEO of Verizon, he made company-transforming and very expensive decisions to deploy high-speed fiber broadband direct to homes and to expand Verizon’s global Internet network around the world. Those decisions were the product of a 30-year career in telecommunications beginning at NYNEX, the Baby Bell which grew into Verizon after the mergers with Bell Atlantic and GTE, and a broad understanding of where the new technologies were likely to take the telecommunications business. I have no doubt that his decision and the board’s approval were accompanied by extensive analysis and examination of alternative scenarios. But I also believe that the first step was a decision by Mr. Seidenberg alone that the company needed a major shift in strategy to lead in a world of technology-driven disruption.


As with Ivan Seidenberg and Xi Jinping, clarity of direction is a precondition of progress. One of the major responsibilities of CEOs is to identify and broadcast that direction in spite of the many other demands on their time and attention. It goes to the core of leadership.


 

I welcome your thoughts, comments and reactions.

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