Should Business and Political Leaders be Strategic Thinkers?

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Should Business and Political Leaders be Strategic Thinkers?
Bernhard Keim, SIG Leader
Top politicians like to announce bold actions. But will that make them successful when they are not thinking strategically? Thinking strategically does not mean pure action, but taking into account all possible outcomes not just for the plan, but from other parties as well by taking their responsiveness into account. There is always a tradeoff between goals. What serves one social group, might harm another.

Here are some examples of what I mean:
  • Increasing interest rates prevents an economy from overheating, but it affects investments as well.
  • Increasing import tariffs might protect an industry, but it will not help to increase exports, nor does it make companies more efficient and competitive.
  • Every politician wants to make his country greater, generate jobs, increase welfare, but does he really understand what it takes to achieve these goals? Pure intention is never enough.
  • Strategy is about choices. Can a politician succeed, who promises most to most people?
  • What does it take to change the culture of an administration? Only authority and telling the staff that it has to do things the other way round now? Or can administrations be made to optimize their outcome without being commanded?
⇒ What do you think: Should top leaders be strategic thinkers?

Yes, Business and Political Leaders Should be Strategic Thinkers
Dmitriy, Member
I agree with you. Leaders and countries and companies must think and act strategically.
To analyze the positive and negative sides of the influence from the actions of the authorities there is a STEP (PEST) analysis. Note that the same actions in the external market environment can enter the analysis twice, but with different effect signs.

Need for Strategic Leaders
abderrazak, Member
I would start with this "What serves one social group might harm another", that's why all the political leaders must think and act strategically and for that they can learn from the highly intelligent man Nelson Mandela who from his prison cell, assessed all his moves strategically and anticipated reactions until the end of his life.

Political Leadership is a Function of Heart, not Head
Ayele Abdata, Member
I share Bernard Keim's idea. Both business and political leaders can employ strategic methods to achieve their goals.
But a political decision is more of a heart function, unlike a business decision which is more of a head activity.
Politicians must have hindsight, insight, and foresight to be a good leader. The true aim of leaders (who lead by heart) is to turn his followers into leaders.
In business leadership, trade-offs are inevitable. That is normal. That is an opportunity cost. But we cannot apply this economic principle to the public interest and human beings. We cannot lead the complex character, culture and needs of the general public just by head. History is a good evidence to corroborate failed political leaders who tried to lead by head; and successful politicians who led by heart.

Top Leaders Have to Be Strategic Thinkers
Yes, top leaders, including politicians must be strategic thinkers. In politics, the leaders are running the country and they must consider the circumstances so they are able to make realistic promises and meeting the targets that are set in their strategic plan.
By being strategic thinkers they are also able to identify the risks within the various points of interests.

Making a Difference in the Long Run
Bernhard Keim, SIG Leader
One of the challenges with strategy in politics is, that (corporate) politicians like to talk about their strategy to play their tactical games. Using the term strategy for tactics has nothing to do with strategy. Using it that way may give you some short term advantage over an opponent, but it will not serve the entity (party) nor the people it is representing in the long run.
The task of strategy is far more holistic. Strategy is not about a one-time win, but about implementing the best possible value stream for the long-term future. Value stream means that every short-term outcome should have a positive impact on future outcomes. To learn more about it have a look at Strategic Management Dynamics by Kim Warren.

Leaders Should Think Strategically and Act Tactically
dr. muna salim, Member
Yes, they should be thinking strategically in achieving their goals while acting tactically in implementing their plans.
In this way the accomplishments can be visible quickly, and, if the results are evaluated continuously, the tactical plans can be changed if needed.

Brexit Tells It's Own Story
James Graham, Member
Bernhard, before answering the question, one needs to decide what strategy means in this context - is it (a) acting in the best interest of the whole country or (b) in the best interest of a sub-set of stakeholders of the ruling party?
As far as I am concerned, Brexit cannot be justified under test (a), but could possibly be justified under test (b).
I also think that it is too easy to assume that these sort of decisions are taken rationally, when there is a lot of emotion driving them.
For example, how could the UK Government offer such an in/out vote, without presenting financial cases for both options? The whole campaign was emotional, on both sides.
Another challenge is that the world is moving faster and there is less of a strategic horizon for classical strategy - agility of learning is the new strategic planning.

Leader in an NGO
Mohammad Naeem Arbab, Member
NGO leaders often face extraordinary challenges – both at a personal and organisational level. These challenges are demanding, and distinct from those faced by governments or the for-profit sector. NGO leaders are often isolated and unsupported. There is talk of a leadership deficit, because of the shortage of talented leaders and the growth of the non-profit sector generally. As a result there is some urgency in attempts to develop a new generation of leaders, and to provide relevant support to existing and future leaders. Leadership development programmes designed for NGO leaders must as a consequence incorporate best practice and current experience rather than rehashing tired, traditional approaches to leadership training.

National Differences in Strategy and Leadership
David Harland, Member
I was wondering if anyone had any thought on regional or national differences in approach to strategy. I'm in the UK, so that's where I have gained the bulk of my experience, but I have had a stint working in Paris, and I used to travel to the US a lot, and I have interacted with a number of European firms over the years. My general view is that here in the UK strategy is not understood and assimilated very well and tends to be short term and narrow in scope and context. Whereas on mainland Northern Europe there tends to be a much longer term view and a more holistic approach.
I think strategy is critical to leadership; I also think it requires both head and heart. To be good at strategy and leadership requires huge integrity, the ability to be brutally honest with oneself and everyone else. The ability to put the good of the many before your position, status, etc. When change comes, to minimise the harm and help those negatively impacted, which is almost never done.

Leaders have to be in Touch with Economic Principles
Helen Strong, Member
Whether authentic leaders are in business or politics, it is impossible to operate successfully without having a strategic approach. In our country, questions have been raised around the true intentions of our leaders due to a) their "values portfolio" and b) the policy options that are deemed to be able to achieve the desired objectives.
Leaders have to be in touch with the principles that drive an economy. If they are not, they can adopt strategies that alienate investors (i.e., our rating agency downgrades and falling confidence index). South Africa needs job creation, which should be accelerated by transformation. However the strategies selected for implementation are leading to decisions that generate a lack of confidence in the management of our country.

In Leadership, Strategy Follows Vision
Purna Chandra, Member
Whether we talk about political or business leadership, its objective is to accelerate and sustain growth/welfare of society.
That requires a VISION. This vision is/has to be shared with the stakeholders. It becomes the election agenda of political leaders, and the strategic planning for business leaders.
The true test of success is whether the political leader wins confidence of electorate and whether a business is able to grow and generate profit. Without strategic thinking neither is possible.

Leaders must Continuously Think and Act Strategically
Gandhi Heryanto, Member
A business or political leader must have the ability to think and act strategically.
Thinking and acting strategically require you to not think as a firefighter for the daily issues that you face, but rather look at the broader, long term perspective.
Strategic thinking is an ongoing process and you should constantly observe your external environment in order to evaluate your current strategy as well as consumer, competition and industry trends.
By doing so you will obtain useful information to determine the changes that must be made to achieve your goals.

Differences of Strategic Planning Arise from the Complexity of the System
Dmitriy, Member
@David Harland: Well, if an economy or business or system is complex, contains many interrelated elements and relationships with the external environment, we will need a complex strategy.
However, when confronted with complex systems, people have the temptation to reduce everything to the usual tactical management because of the limitations of the human factor
But the leader who developed the right strategy, whether using analysis or deep intuition, will always have the advantage over the ones relying on banal tactics.

Politicians Must Be Different from Business Leaders
Bernhard Keim, SIG Leader
@Ayele Abdata: I think you have got a point. Voters have a choice. Politicians - once elected - have less as the politician should not be there for the ones only who elected him, but for the whole commonwealth. It would harm the community if he optimizes only the wealth of his voters. Corruption and patronage would be the result. So once elected, the political leader must make sure that he optimizes the outcome of his policy for everyone.
Business leaders on the other hand would fail if they tried to be everybody's darling. The have to make deliberate choices about their target audience. A manufacturer of luxury cars has made the distinct decision to optimise the outcome for a specific target group and not for all people.

Brexit Shows the Difference in Strategic Leadership
Bernhard Keim, SIG Leader
@James Graham: I agree Brexit has been driven by wishful thinking, not by hard facts. But the outcome of the vote demonstrates a significant difference between politics in a company and politics in a commonwealth. Political leaders feel obliged to go on with a decision even if they know that it does more bad than good. It is highly unpopular to challenge the voters' decision.
Sometimes politicians know more and better than normal people do, and it should not be their job to defend baseless, even frivolous claims.

Brexit Shows the Difference
James Graham, Member
@Bernhard Keim - although I see your perspective, note that the Brexit referendum was not binding and thus not a 'decision', but it has been played that way by some politicians as it suited their purposes - it does more bad than good, but to whom? Some stakeholders might hope that, for example, some EU consumer protections will be abolished or at least diluted.

Preparing the Strategy is Most Important
Mohammad Naeem Arbab, Member
@David Harland: Thanks, actually I think we should spend more time on preparing the strategy than on implementing it. Because sometimes our strategy plan does not work well, like when we are facing many problems by creating a policy or when some unexpected event means a strategy plan has to be changed.
Here in Afghanistan we have such problem as I see in governmental organization whenever, a new person assigned for the higher position like Minister, he is responsible to prepare his strategic plan and then send it to president for approval. I think a person who is assigned for a new position should not prepare the strategic plan, he should follow whatever already exists in the ministry and follow the strategy by applying some contingency plan and finding new ways to implement the strategy plan.
Anyhow, I appreciated to let me know an idea about how to prepare a good and measurable strategy plan.

Let's Sharpen the Discussion!
Jaap de Jonge, Editor
This is turning out to be a very interesting thread. So far we seem to agree that:
1. Strategy is important.
2. Strategy is important in both business and politics.
3. Strategy is important for leaders (business and political).
That's not rocket science 😃. But there is yet another aspect of Bernhard's question that is interesting yet difficult:
4. Is the ability to think strategically (visionary) an important personal trait for leaders themselves? Or can a leader with moderate or even poor personal strategic thinking capability be equally successful, provided (s)he builds a strong strategic staff and uses their ideas well?
I am curious for your points of view….

Does a Leader have to be a Strategist Personally?
Dmitriy, Member
@Jaap de Jonge: The answer to your question depends on which organizational structure we are considering.
If we are talking about a classical hierarchical structure, then the role of the leader/manager will be great. Accordingly, the importance of his qualities of strategic thinking will be great. If we are talking about modern flexible organizational structures that are similar to a network in which the manager acts as a facilitator, the role of the whole team will be high, and the leader/manager will only need the qualities of a good moderator/regulator, but not a strategist.

Why are Leaders not Thinking Strategically while they Should?
Dmitriy, Member
Colleagues, undoubtedly, organizations (commercial, political) and their leaders should use strategic planning in their work. Is this to be discussed?
But then why are strategic planning tools not used in practice?
The gaps in strategic planning mentioned by @James Graham (about Brexit), @Mohammad Naeem Arbab (about the lack of talented leaders), @Ayele Abdata (about making strategic decisions in the heart, emotionally, and not the head) are all proof and consequences of bad and shallow strategic analysis.
Many problems in the world accumulate over the years, and the interests of many parts of society remain unaccounted for. This leads to increased stress for human kind. And when the lid of the steam boiler breaks down, we are talking about the fact that politicians and leaders do not know how to think and act strategically. We say when it's too late to talk about it.

The Best Very Rarely Rise to the Top
David Harland, Member
In the Washington Post, July 2015, in an article on Accenture's move away from staff performance appraisals, the following appeared:
“Employees that do best in performance management systems tend to be the employees that are the most narcissistic and self-promoting,” said Brian Kropp, the HR practice leader for CEB. “Those aren’t necessarily the employees you need to be the best organization going forward.”
That agrees well with the words of a very experienced occupational psychologist who said to me: "The brightest and the best rarely get to the top."
People at the top are rarely the thinkers, the strategists, the philosophers, but the biggest narcissists. That’s the problem. Strategic failure is just a symptom.
People talk to me about virtual reality technology being a significant part of the future; I laugh for we have been living with virtual reality crafted into the news we read, the films we watch, the rhetoric of politicians for a very long time. We’re already in the MATRIX.

Leaders Need Strategic Wisdom and Tactical Human Skills
Mike Allen, Member
I live in both business and political worlds and the leader who lacks wisdom can do all the strategy and tactics he or she can do, but without the wisdom of experience and the shrewdness of calculation then failure will result… Watch Trump.

Strategy is the Core of Leadership
Bernhard Keim, SIG Leader
@Dmitriy: A good leader is always a strategist. To understand this claim, think of an organisation where the CEO suddenly vanishes. If the organisation is well set-up, no one will even realize that the boss is not there anymore. The salesmen will still sell, the developers still develop, the delivery department will still deliver and so on as every one (still) knows what to do.
So why do we need a CEO? Because nothing stays that way. Things will change and they will change all the time. There will be new threats and opportunities. The question: „What do we have to do today to be ready for an uncertain tomorrow?" can only be decided by the boss and only in the present. This means „Strategic planning does not deal with future decisions. It deals with the futurity of present decisions.“ But even the best strategy fails, if it is not understood by the employees, as they are the ones who have to put strategic decisions into action.
Citations from: Drucker, Management, Chapter 11.

Leaders Cannot Alway Take the Strategic Decisions they Would Like
Bernhard Keim, SIG Leader
@Dmitriy: What leaders do depends on how they are seen and measured. Strategic decisions help the company to stay in business in the long run, but some CEOs might be measured by last quarter's results.
  • If this is the case the CEO may cut down on R&D or Marketing. The immediate effect will be higher profits.
  • If on the other hand he doubles his investments in R&D or Marketing, there might be no profit left for today even if future profits might be significantly higher.
Whatever the leader does: when there is a stakeholder around which does not like what he is doing, he has to take this opponent into consideration if this stakeholder has enough power to interfere with the business. In such circumstances, the leader might not do what is best for the company, its employees or its customers, but what outside stakeholders force him to do to survive. That way the organisation becomes corrupted and will not be as successful as it could be.

Why Leaders Should Have a Convincing Long-Term Strategy
Jaap de Jonge, Editor
@Bernhard Keim: I agree that measuring and judging Politicians by last news event / media poll and CEOs by last quarter financial results is disastrous. We have seen the results of doing that many times in the political and economic crises we suffered from.
An interesting thing in this respect is that leaders / CEOs are getting the voters or shareholders they deserve. What I mean with this is:
  • If a political leader or CEO is able to present a convincing and realistic long-term vision/strategy, (s)he is going to attract voters, stakeholders and shareholders looking for the best results in the long run. The leader then acquires a license to invest and to improve things in the course of time. Note that he will still have to prove now and then to be on the right track.
  • On the other hand, if a leader can't communicate a convincing long-term strategy, he will attract voters or shareholders looking for quick, short term results. He is digging his own grave, because the public / shareholders / stakeholders will increasingly press him for results he can not deliver since he did not invest properly. To make things worse, some of those leaders might even consider it necessary to take dramatic decisions to distract the attention from their failure.
That's why I think having a long-term vision and strategy is so important for top leaders.

So Maybe the Whole Problem is in Methodology?
Dmitriy, Member
Can the root of the problems lie in the methodology? I'll share the story. When we decided to develop the strategy of our organization in the Russian Marketers Guild, I was amazed at the variety of views on strategic planning, even among the professionals of their business.
Colleagues began to talk about different approaches in developing strategies, about different schools of strategic planning. The names of the theoreticians flashed before me:
  • Soviet school of the theory of control of systems - Birman, Kasitsky, Lisitsyn;
  • Western School of Business Planning: Chandler, Ansoff, Levitt, Drucker, Porter and so on.
  • Dynamic concept of Schumpeter's competition,
  • Evolutionary theory of the firm from Nelson and Winter and so on ad infinitum.
I was just discouraged. They remembered about the SWOT-analysis only at the very end.
In short, the development of an organizational strategy has become a real puzzle for the multi-wise professionals.
So maybe the whole problem is in methodology?

Editor: I once read: "A fool with a tool is still a fool". I think the issue is not the methodology, but it's that formulating a vision and strategy is extremely complex and requires considerable know-how, effort, collaboration, experience, tools, thinking and time.

Theories and Methods are not Immutable Laws
David Harland, Member
@Dmitriy like you I know lots of people that can recite all the theories and methods. But few understand them; even fewer critique them in terms how they operate given different contexts. A theory or method is just a tool they are not immutable laws. These should be input to your thinking, and you should come out at the other end with your approach based on the context in which you find yourself.
But in modern times, reading and regurgitating what others think has replaced deep thinking for oneself.

Editor: Haha, sometimes business managers I meet ask me what I do for a living. Explaining my role in 12manage, I then like to ask if they happened to know a management method? Most of them can mention only a couple after I give some hints.

All Models are Wrong, Some Models are Useful
Bernhard Keim, SIG Leader
@David Harland: Edwards Deming (the father of the “Quality movement”) once uttered: “All models are wrong, some models are useful.” It’s important to keep this in our mind to prevent ourselves from becoming “too attached” to one of our models. Every model abstracts reality, it is not the reality. It represents what we regard as crucial in a given situation.
Nevertheless, despite the fact that all models are "wrong", we have no choice but to use them. Working with models and applying tools based on these models will deliver meaningful results only if we understand what they pretend.

Leaders Must Be Visionary
Ayele Abdata, Member
Leading with a vision is an intrinsic personal trait. A leader who has a vision knows what to do and where to go. People cannot learn vision. Vision is inborn. If you have a vivid vision to do something, at the same time, you have also proportional potential to fulfill that vision. A leader who has no such kind of vision cannot be successful as he does not have the required potential. In short, being visionary is important in leadership.

There is no Striking Definition of Strategy
Bernhard Keim, SIG Leader
@Dmitriy: Don't be surprised by your findings, but there is no clear and enlightening definition of strategy.
If it were "an action plan to achieve a long term aim", most well intended long term planning would qualify as sound strategy. Command and Control would be enough to achieve what has been intended. The failure of planned economies proves otherwise. You cannot control outcome on the long run as you cannot control developments taking place outside the realm of the company. Long term plans are just means and measures of, but they are not the strategy.
Maybe, strategy can be best described as insight into the driving forces of dynamic development and how to take advantage of them. You need a falsifiable model (≠ ideology), that describes your model of reality. Then search for the weak spot, the brick in the wall, to overcome it. Test your assumptions. Test your means. Test your methods. If it works you might have a strategy.

Vision is not Enough
Bernhard Keim, SIG Leader
@Ayele Abdata: Having a vision does not prove it right. A vision is important for communicating intentions, but it does not tell whether it is valid nor how to implement it. Maybe it is just wishful thinking not based on facts and reality. Think of the many people who became victims of visions.
Even if you have a sound vision it still needs a strategy and managers who know how to lead. Otherwise even the best vision will fail.

In our 21st Century it is Possible to Formalize the Algorithm of Strategy Development
Dmitriy, Member
@David Harland: I do not believe that in our 21st century, the age of high digital technologies, it is impossible to formalize the algorithm of strategy development (for a firm, non-profit organization, region, state, country). Search engines based on user requests can now even determine not only the interests of the person, but gender and age.
And we have more than 100-year history of the theory of systems, management, strategic planning. If you keep a record since the time of the Chinese generals and philosophers, then 1000 years.
I believe that methodologists, engineers and computers are already ready to, for example, make the development of the commercial strategy of the company a routine affair.
Indeed, the algorithm is simple enough. Analysis of external and internal environment, ranking by sign and force of influence, confrontational matrix of SWOT-analysis and, perhaps, this is all. Then the work of man on the articulation of strategy.

Strategy is Sensitive to Context
Bernhard Keim, SIG Leader
@Dmitriy: I have been in the business of strategy formulation for quite a while and I have never found two companies to be alike. There might be similarities, but that's it. Even if two companies are serving the same market, they still will need different strategies to defy the other. Companies are grown entities with different histories. Therefore they have different resources and strengths. (see Kim Warren's Strategic Management Dynamics).
Don't get blinded by buzz-words like Artificial Intelligence. There is no AI. It is always people who set up the models and do the reasoning. If you don't understand the models, they will not deliver meaning.
There is no copy and paste in strategy. Working out a good strategy is hard work. Tools will support this kind of work. A tool like a car will make you just move faster, but it is still your decision which vehicle to choose, how to use and where to go.

Strategy by Computers? Impossible
Eugene Laslo, Member
@Dmitriy: I can assure you that what you say is simply impossible and never, not even in 1,000 years from now, will it be possible to generate a strategy for a company through computers. They may be helpful to collect and sort through some data (hopefully not too much), and be helpful in letting people communicate with each other, and a few more other supporting things, but that's about it.
One reason for this is in strategy there are an unlimited number of variables involved and there are so many dependencies and feedback loops between them that computers as we know them are useless.

Past not Necessarily and Predicate of Future Outcomes
David Harland, Member
@Dimitriy: Bias and false assumption is a significant issue in much of the work around data process, big data, predictive algorithms, etc. There was a lot of hype around predictive policing based on analysis of crime patterns, etc. It does not work. Why? The past as a basis for predicting the future only works if the actors don't modify their behavior and the parameters remain essentially the same, which of course is rarely the case. As the chair of one of our local police advisory groups, it became clear that attempts to use this approach were a disaster. Big data and AI is more hype than substance. That is not to say that it can not be used productively. Currently, there is lots of talk about the dangers. The danger is not the technology, but the people that have the means to deploy it on a large scale.

Let Me Say a Few Words in Defense of my Point of View
Dmitriy, Member
Gentlemen, I give up 😃.
But still I want to say a few words in defense of my point of view.
@ Bernhard Keim: I did not mean copying. I agree with you. There are no two absolutely similar companies even in one market. However, if you interview a dozen teachers from different business schools on how to develop a strategy, they will tell you the same list of steps. This is the algorithm. It can be digitized.
@ Eugene Laslo: You are right. There are a lot of factors in the strategy. However, even the most complicated partial differential equations have approximate numerical solutions. Just modern methodologists do not want to formalize the process of developing a strategy, as physicists have long done.
@ David Harland: You touched on the most painful topic. Indeed, the past is not the best basis for strategy. But it is all that we have, as you yourself noted it.

Bounded Rationality
Bernhard Keim, SIG Leader
@David Harland: You might have a look on the article on Bounded Rationality to go further into the details of humans' bias on decision making. The problem you describe is treated there more deeply.

Defining Strategy is Applied Philosophy
Bernhard Keim, SIG Leader
@Dmitriy: You don't need an algorithm do develop a strategy. Just keep the following "Golden Questions" in mind:
  1. Who are we? To answer this is important for the strategy process as every company is path-dependent. These paths limit your choices.
  2. Where do we want to go? You have to make a decision based on the choices you have. Qualify your choice with appropriate tools.
  3. How can we get there? Even a valid choice does not mean that you know how to go there. If you don't see the hurdles, you cannot overcome them.
These are the questions you have to answer in every strategy formulation process.
Sometimes it is just helpful to keep such fundamental questions in mind to avoid becoming lost.
  • The 1st question helps you to understand the biography of the company, its culture, capabilities, behavioural traits, assets and burdens.
  • The 2nd question provides insight into opportunities and threats. But more important the answer tells you, what you want, why you want it and how valid the task is.
  • The 3rd question is the search for means, measures, a clearly defined strategy and an action plan. Its based on the answers to the first two questions.

If Only it Were True
Ivan Kohlinsky, Member
Unfortunately both business and political leaders need to show 'wins', 'action' to appease their electorate, shareholders, investors, backers etc etc. This means that to keep in power/place, they have to take numerous short-term tactical actions & 'spin'.
I won't open up any debate regarding motivations - 'doings things for the long term good' versus 'self serving' actions. If grand, long-term strategic thinking were the top item on their agenda, keeping in power and where they are is probably also pretty high up the list.

Things are Changing
Bernhard Keim, SIG Leader
@Ivan Kohlinsky: Short term wins - albeit causing troubles on the long term - are indeed enticing. On the one hand, you need the everyday income to stay in business. On the other hand, these are not enough to stay in business on the long term as things are changing. The question that can be raised might be: How long can we go on to earn our money this way? You start to investigate how sustainable your money-generating-mechanism is.
From what I see things are changing. Especially institutional investors start to raise these questions as they do not want to shift their assets to often. Sustainability has become a major issue.
There are populistic voices around telling us, that we can go back where we once belonged to, the past. But the past is history. There is an overwhelming change going on. The future will be different. Let's make the best out of it instead of betting on the past.
Find viable ways for better business modes and models. As value chains become more complex, sustainability is a superior way to protect future income streams, mitigate risks and generate acceptance.


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