Monday, March 9, 2009

Al Walsh on Getting Clear on Strategic & Operational Thinking

Strategic and Operational Thinking in Business, Career & Life

Don't get so caught up in the hype that you lose sight of the purpose.

"Strategic Thinking" is a phrase that gets thrown around a lot these days. Job candidates try to impress that they're "Strategic Thinkers". MBA programs tout their complex programs designed to make one a better "Strategic Thinker". IT systems praise the aspects of their offerings that will improve management's ability to “Strategically Manage”. Fancy acronyms and phrases get thrown around freely.

I've found that many people are so caught up in the acronyms, and the systems, and the hype, that they've lost sight of - or never clearly understood - what strategic & operational thinking is about. Some people I talk to don't seem to understand the difference between the two, and tend to look at those who are “Strategic Thinkers” with a "reverent awe"; as if they hold the secrets of the universe.

This article will attempt to discuss the subject from a straight-forward, common-sense approach that leaves the systems, the acronyms, and the hype behind.

Simply-put, operational thinking is primarily concerned with the here & now, whereas strategic thinking is forward-focused and broader in scope. Strategic thinking leads operational thinking by its very nature. Both are focused on goals, but operational thinking is primarily focused on practical "here & now" actions that will achieve the broader goals set by strategic thinking.

Strategic thinkers are almost totally focused on the future, often reaching well-ahead; like a chess player planning several moves ahead to set-up a winning strategy. They're thinking ahead to the next year, five-years, ten-years, and beyond to determine where they want to be; and determining the strategy to get there. Their thinking is broad in scope, and the farther out they reach - the more nebulous the operational aspects become.

Operational thinkers in business are concerned with providing products & services now, obtaining the materials necessary to the job, dealing with current customer needs, dealing with current administrative issues, and so forth. Their thinking takes somewhat of a forward-look, but usually only to the extent of keeping the current processes flowing smoothly, improving on them, and meeting the goals set by the strategic thinkers. Operating thinking is detailed and “now-focused” in nature.

In business, the CEO is usually the primary strategic thinker; with input from others and support from the Board. The COO, Production & Procurement managers, and others usually set the operational modus operandi for meeting the strategic goals.

A new CEO might assess his $20MM firm and decide that he wants to take it to a $100MM firm in five years. Usually, the first place he'll go is Marketing, to assess whether the market is there and necessary sales objectives can be reached. So far, this is strategic thinking. But then the CEO must consult with others - Sales, Production, Procurement, etc. - to determine what resources would be required, and whether or not the various functions could successfully support such a goal. Right away, operational thinking kicks in. Any strategic plan usually involves a back & forth flow between strategic & operational concerns. The CFO is usually steeped in both; being concerned with supporting & sanity-checking the operational thinking, providing adequate capitalization to achieve the strategic goal, and helping the CEO define that goal; plus helping the CEO in his communications with the Board & investors.

There are many IT tools available these days; most of which claim to provide significantly-improved information for business management. My experience is that these tools are still primarily focused on operationally-oriented business process improvement (BPI). Certain strategic inroads have been made in the financial & customer relationship arenas, but when supporting the effort of strategic thinkers I still find that there's lots of spreadsheet & free-form work involved. As IT capabilities continue to grow, this limitation is slowly changing.
Some people would have you believe that both strategic & operational thinking are "new concepts", and that they're going to "enlighten you" - even though both forms of thinking are as old as mankind itself. These people are usually trying to sell some product or service.

Strategic & operational thinking have their place in every aspect of life.
Strategic thinking determines the broad goals to be accomplished, and operational thinking determines how you're going to get there.
Neither approach is exclusive of the other.
By necessity, each mode of thinking must address certain realities presented by the other.
In business, managers at every level should be engaging in strategic thinking to a certain extent. Even if others are setting the major strategic goals for the company, you as a middle-manager should be thinking about intermediate and long-range goals you want to set within your area of responsibility. Don't get so caught up in the day-to-day operational "flak" that you lose sight of "the forest for the trees". Take a step back now & then and look at the big picture.

The same is true for career & life planning. Think of yourself as the CEO of your own personal "company". Who knows, your strategic goal might be to actually someday become the CEO of your own company. Take stock of where you are, where you want to be, and make plans to get from here to there. The "where you want to be" part is the strategic goal. The "how to get there" aspect is the operational plan. Everyone should have goals and be working toward them. As in business, you'll have to periodically review and adjust those strategic goals - and your operational plans - to the realities of the moment. The times we’re currently in provide a classic case in point. Many people are having to adjust their planning to the ugly realities of the moment. But that doesn’t mean you abandon your strategic goals. You just have to make some short-term operational adjustments to “survive and fight another day”. Who knows, you might even find during your “survival phase” that a new & better strategic objective pops up on your “radar”.

So there it is. Businesses and individual humans have been engaging in both forms of thinking since the beginning of time - long before computers, MBA programs, fancy acronyms, and hype. The process is always the same - set goals, and determine how to get there.

Good Luck,

Al Walsh, Owner/Founder
Walsh Enterprises, Business Advisors

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