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The Art of Strategic Thinking

strategic-thinking Strategic Thinking - An Orgtology Perspective

Strategic thinking is the art of keeping an organisation relevant. For Org to survive it needs strategic thinkers within its executive team. They are the guardians of relevance. Therefore, they must understand the flow of strategy well.

The structure of strategy begins as a flow. Purpose is the foundation of any organisation. Without it, Org cannot exist. In so, intent is always fixated on purpose. Intent has three options. These are to increase or decrease the relevance of purpose, or to maintain it. Intent is therefore the strategy. In orgtology we use the 5V Model to define intent. After this we draft the game plan. This will mostly include strategic objectives, programs, and projects. The last thing to do is to assess our strategy. We do that through strategic goals and operational targets. Figure 1 shows the flow of strategy. A strategic thinker constantly has this flow in mind.


Figure 1: The flow of Strategy - An Orgtology Perspective


The basic assumption on strategic thinking

If the aim of strategic thinking is to keep Org Relevant, then a strategic thinker must create change at the minimal risk to operations. This is so since relevance without performance will create change without purpose.

Orgtology teaches that leadership secures relevance whilst managers ensure performance. From the above assumption we can then deduce that a strategic thinker is also a leader. The core task of leadership is to exploit opportunities and to minimise threats. This is always done in line with intent (vision). In orgtology we use the 5V Model to craft the future. Leaders will work with opportunities and threats within the boundaries of 5V. When leaders secure relevance, they take Org to the future.

Through 5V, we change Org. We also minimise threats that will hamper such change, and we exploit opportunities that will enhance such change. In so, strategic leadership is about change.


The velocity of change

The speed at which the world changes is increasing exponentially. We specifically see that through the industrial revolutions over the past ten thousand years. Many estimate that the 20's (this decade) will be one of the fastest changing decades that humanity has experienced thus far.

Our revolutionary journey began about 12 000 years ago with agriculture. It was shortly after the ice age that farming began. At first it was an uncomplicated process of hunting and gathering, followed by finding ways to preserve and distribute food. This was mostly a slow process of genetic food modification, until today where we have already advanced into hydroponic and vertical farming. The industrial revolutions that we experienced during later years would simply not be possible without farming. In fact, farming was the foundation for industry and economics.

During the late 1700's we experienced our first major revolution after farming. It was a time of steam power, iron production, and the beginning of industrial mechanisation. It was thus the beginning of mass production and organised supply chain. In the late 1800's, less than one hundred years after the first industrial revolution, we got electricity. For the first-time humans had easy access to light, motorised engines, and refrigeration. Mass production and assembly lines were now operating with little restraint.

During the late 1960's, also less than one hundred years after the second industrial revolution, the world took a drastic turn towards data organisation. This revolution led to personal computers, e-mail, data automation, operating systems, programming, e-commers, internet, etc. We did not realise it at the time, but this was the beginning of something that could dethrone humanity from intellectual dominance. It was the beginning of artificial intelligence (AI). About 50 years later, in 2019, the effect of AI became real with incredible advancement in cyber-physical systems (robots), which can do most repetitive tasks much better than humans can. We are amidst this new revolution where the effect of machine learning, internet of things, and block chain technology is already irreversible. It seems the genie is out of the bottle and that it will be difficult to impossible to get it back in.

A fifth industrial revolution? If AI continues to evolve at its current speed, then the fifth industrial revolution will be one where humans do not have full control of their organisations. It is an envisaged time where man and machine will co-run organisations. If past algorithms are a good standard for future prediction, then the fifth industrial revolution, like the first and third revolutions, will introduce a new era for humanity. It would be interesting to see how governments deal with this, or rather, whether they would be able to do so.

A strategic thinker must understand where the world is going in terms of industry because that is the engine that keeps us alive. Strategy is about anticipating and manipulating the future. A person who cannot perceive a future world, will find it hard to think strategically.



The relevance of relevance

When does "relevance" stop being relevant? To answer that, one must first understand what relevance is.

Relevance is a collective agreement to the usefulness of a connection or relationship. When the relevance of something becomes repetitive, it becomes certain. At that point, it becomes a matter of efficiency and performance. Before that, it was just a project.

The problem with relevance is that it is mostly not permanent. When Org does something revolutionary, it only stays that way until it is internalised. From there onward, it is common. E.g., the iPod was revolutionary, until electronic downloads and playbacks became common. From there onward, the iPod had to evolve into a prestige brand to stay on top. In terms of algorithm, it is now mostly what substitute products are.

We said earlier that relevance is a collective agreement. I.e., it is a mindset. And since minds shift, things that were relevant yesterday might not be relevant tomorrow. E.g., it was okay to abundantly release carbon emissions about 20-years ago. But today, people protest to its effect on global warming. Minds of people thus shifted. Where this happens, the point of relevance will shift. In so, revolutionary behaviour that is repeated, becomes common and normal. At that point revolutionary activity reaches a point of irrelevance. Beyond that point, it is a matter of time before such activity reaches a point of absolute irrelevance. One can see this effect in Figure 4.

Figure 2 showed us that change takes place at high velocity. As seen in Figure 5, mind-set changes much faster than time. The effect is that organisations and leaders will reach the point of irrelevance much sooner. Constant change is no longer a choice. It is what Org must do to remain relevant. The best advice to a strategic leader in this regard is to know when a project is done. Nelson Mandela, Bill Gates, Gandhi, Socrates, and many other leaders knew this. They did what they came to do, and then left. In the words of Henry David Thoreau, "Do your work, then take your hat."



Projective vs. receptive activity

An endeavour to stay relevant should never stifle performance. The operational engine of Org must always keep going. This is a tricky situation since operations and strategy draw from the same resource pool.

Running and changing the business do not have a linear relationship. They co-exist, but through different rules. Running Org is a mathematical repetitive operation. Changing Org is an abstract non-repetitive strategy.

From an Orgtology perspective, any dual relationship has a receptive and a projective parts. This rule is explained through Hypothesis 2x. Operations presents the receptive part of Org. It gives certainty and control and defines our performance. To run Org is always a matter of efficiency through management and communication. Strategy is the projective part. It induces disruption and change, and it drives our relevance. To change Org is then always a matter of leadership and negotiation.

Figure 6 shows differences between projective and receptive elements. It is always a matter of equilibrium and never a "either or" situation. A strategic thinker should know that projective activity always takes place within the boundaries of receptive elements. In so, we must always define strategy within the boundaries of operational purpose. High efficiency of receptive elements will enable effectiveness of projective elements. I.e., efficient operations will enable effective strategy.

Operations define performance, whilst strategy creates relevance. The strategic thinker is thus a person who can manage equilibrium between performance and relevance. Hypothesis 2x separates receptive from projective elements. Performance is the receptive part that evolves through time. Relevance is the projective part that we induce through calculated revolutionary change. In so, the strategic thinker is a person who can practically apply Hypothesis 2x to organisational performance and relevance.


Figure 6: Projective vs. receptive activity - orgtology


The structure of strategy

Strategy is the plan that we put in place to close the gap between a current and a desired reality. If we do close the gap, then our strategy was successful. The boundaries within which we execute strategy are purpose, assumptions, values, and beliefs. Jointly these elements give structure to strategy. Figure 7 shows this relationship.

In terms of the strategic leadership process, it begins with purpose and values. This is an understanding of who we are and how we must behave. It thus frames our current reality. A next step will be to define the future. We do this though the 5V Model. This is a process whereby we create a strategic ladder towards an ultimate dream. We thus define a detailed vision. At the same time, a leader must continuously engineer the operations of Org to achieve optimal efficiency. To know whether things are working well, we do a ROET analysis. ROET stands for Relationships, Opportunities, Efficiency, and Threats. This analysis will help us to know what processes to adjust and what change is needed. Lastly, it is the task of any leader to ensure that we can quantify our achievement so that we can measure both the performance and relevance of Org. Figure 8 shows the strategic leadership process.



The effect of strategic thinking

Org has a life cycle. It is born, grows, and then dies. Somewhere in the process it peaks in terms of performance. After this, it begins its up and down decline, until it loses all its relevance. This is where Org dies. Figure 9 shows this cycle.

Leaders can prolong the life span of Org if they know where to exit the current life cycle. This should always be just before Org reaches its performance tipping point. I.e., the point of no return – where Org has reached its highest point of performance during a life cycle. There is unfortunately no math for this, since we mostly understand the tipping point after the death of Org. This leaves Org highly dependent on the insight, innovative ability, and influence of the leaders who protects its relevance. A good leader is a person who knows when to change. Figure 10 shows how good leaders know when to move out of a current life cycle. In so, they ensure a consistent evolutionary slope.

However, its not a matter of moving out at a perfect point. It is more a matter of knowing when to avail resources for strategic work. To date, most organisations create change within a strategic period. This is a good default position, with the precondition that one remains aware that the world does not change according to the rhythm of your strategic period. Covid-19 was a good example of that. The Sigmoid curve in Figure 11 shows strategic activity in red and the performance line in blue. The curve clearly shows where leadership becomes important and where we need to manage more. Red showing leadership activity, whilst blue shows the management activity.



Conclusion

The strategic thinker is someone who can conceptualise the parts of the strategic process. A strategic leader is someone who executes the strategic process. This is an academic distinction since a strategic leader and thinker are mostly the same person.

Strategic thinking begins with a deep understanding of purpose, and then creating intent around that. Why do we exist and what is our intent with such purpose? That is the question with which the strategic thinker is concerned. Performance is an issue of purpose whilst relevance is a matter of intent. You cannot separate these items since they co-exist. One cycles a current reality whilst the other secures a future. Strategic thinking manages an equilibrium between the two.


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© Derek Hendrikz: 2021-10-09

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