WHAT? WHY? HOW?

A FRAMEWORK FOR STRATEGIC THINKING

BY KEVIN E. YOUSIE

Today’s directors, CEOs and leaders at all levels, use the term • Relevant decision-making factors will vary depending upon
“strategic thinking” routinely in a wide-range of conversations. This the situation. (i.e. While some organizational strengths and
term has become a common part of our everyday language. Being weaknesses will be relevant in one situation, they will not be
viewed as a “strategic thinker” is critical for advancement in our relevant in another.)
careers. It is a fundamental consideration for search committees • There is an action-orientation that seeks to pro-actively
when filling Board and senior-level positions. Strategic thinking is mitigate risk and create opportunities for the organization.
an essential leadership attribute.
• Strategic thinkers do not operate in isolation. They recognize
What is Strategic Thinking? that there are often systemic implications for other parts of
the organization. They pro-actively develop a broad network
A recent Google search yielded more than two million references
of contacts they can draw upon.
for the term “strategic thinking.” Despite the frequency with which
this term is used, there is no universally accepted definition for it. • Organizations are faced with both internal and external
Based on a review of the literature, one might define strategic constraints. A realistic assessment of these can be very
thinking as: helpful in developing viable action plans.
• There is a culture of open two-way communication enabling
A mind-set, set of processes, and range of competencies the most junior employee to feel safe in elevating perceived
whereby individuals understand the strategic direction in which threats and opportunities of significance to the organization.
their organization is headed, know the relevant and situational
strengths, weaknesses, and constraints especially as they Strategic Thinking Competencies
pertain to their particular function within the organization, and As a leader at any level in the organization, strength in the following
are constantly scanning the environment to identify opportunities three competencies is critical for effective strategic thinking. While
and threats that should be pro-actively addressed. When strengths in one or two of these would be helpful, competency in
important issues are identified, action is initiated often in all three areas is ideal.
conjunction with others from across the organization.
• Having a rigorous process or framework for dealing with
Characteristics of Strategic Thinking strategic issues.
Inherent in the definition of strategic thinking, are a number of • Asking insightful and relevant questions, having the ability to
assumptions. The definition assumes that: understand the answers to those questions, and being able to
• Strategic thinking is applicable to everyone in the apply that information in a meaningful and action-oriented way.
organization, and is not exclusively the domain of senior leaders. • Communicating in a clear, memorable, and compelling fashion
• There is a direct linkage between the strategy of the to assist others in the strategic thinking process.
organization and factors in the external environment (i.e. This article focuses on the first two competencies. Much has been
external opportunities and threats.) written about the third, effective communications. It is an important
• The environment is changing and there is a need to and expansive topic, beyond the scope of this article. [Note that the
constantly scan for relevant trends and developments that theme of this Leadership Compass is “Communicate,” and there are
might be taking place. specific articles in this issue which speak to that competency.]

8
Two Levels of Strategic Thinking Table #2: Strategic Thinking Activities
There are two levels of strategic thinking. At the macro level,
periodically there can be fundamental questioning relative to
whether the mission and vision of the organization are still Primary Strategic Thinking Activity
appropriate. More frequently, however, strategic thinking addresses
situational opportunities and threats resulting from a change in the Issue Identification and clarification of the strategic issue
environment such as a new competitor entering the market,
changes in legislation, or opportunities to lever a new technology or
process. This is described more fully in Table #1. What? Analysis of the situation

Table #1: Two Levels of Strategic Thinking Why? Assessment of alternatives

Level One How? Implementation

Mission / Vision: Best practice indicates that all A Non-Linear Process

organizations should have a mission statement Based upon the information in Table #2, it would initially appear
(i.e. Why to we exist as an organization?) and vision that strategic thinking is a step-by-step linear process. The process
(i.e. What do we aspire to become as an organization?). would begin by identifying the issue, proceeding to an analysis of
From time-to-time senior leaders or the board may the situation, (i.e. the “What”), moving to assessing alternatives in
suggest that there is a need to revisit, validate, or the “Why” stage, and finally implementation in the “How” stage. In
amend the mission and/or vision to better reflect the reality this is not the case. The process is much more dynamic,
realities of the time. While some stress-testing of the iterative, non-linear, and sometimes even chaotic, as depicted by
mission and vision will likely take place at least annually the dotted lines in Table #3.
in conjunction with the annual planning cycle, an in-depth
assessment is not an every day occurrence. Table #3: The What? Why? How? Strategic Thinking Framework

Frame the issue

Level Two Reassess Define and clarify
(Regularly reassess) the issue

Situational Opportunities and Threats: More frequently What?

External Analysis What does our anyalysis Internal Analysis
the need for critical strategic analysis and thinking of this situation tell us
arises through events such as reading the morning Opportunities Strengths
Threats Weaknesses
newspaper, listening to the radio, attending a trade Constraints Constraints
show, thinking about a new technology, etc. This kind of Why?
thinking very frequently takes place outside of the work Why do the alternatives
make sense, or do they?
environment. Strategic threats and opportunities evolve
daily as do changes with respect to internal resources
or capabilities. Some of these changes may be of How?
organization-wide significance while others pertain How will we implement?
solely to a particular line of business or to a
department. Regardless, of their origin, important Monitoring
external or internal changes will prompt a strategic (Monitor progress)
thinker into analysis and possible action.

Steps in the Framework

Frame the Issue
Regardless of the level of strategic thinking being undertaken, Having a clear understanding of the issue is a critical element in
having a logical, disciplined, and rigorous approach to identifying strategic thinking. The manner in which the issue is defined will
and assessing strategic situations is a tremendous asset for every determine the type and scope of analysis that will be required. If the
leader. It enhances both the speed and the quality of strategic issue cannot be articulated in two or three short, concise
decision-making. The “What? Why? How? Strategic Thinking sentences, then chances are it won’t be satisfactorily analyzed or
Framework” is one such approach. addressed. This is either because the issue is not adequately
understood, or because those involved in the decision-making
The What? Why? How? Strategic Thinking Framework process are seeing it differently. Attempting to define an issue and
In every strategic thinking situation, there are three primary clearly articulate it is important to achieving a successful outcome
activities. For simplicity these can be depicted as “What”, “Why”, at the end of the process.
and “How” as shown in Table #2. continued on page 10

9
 A FRAMEWORK FOR STRATEGIC THINKING
continued from page 9

An approach that can be helpful in testing whether or not the issue including the strengths and weaknesses of competitors who may
is appropriately defined is by asking how success should be want to achieve the same goal. The graphic in Table #4 illustrates
measured with respect to that particular issue. This is particularly the TOWS model.
effective in a team environment. If all members of the team Table #4: TOWS Analysis
characterize the measures / metrics of success in a similar fashion,
then there is a greater likelihood that they understand the issue in
the same way. If the proposed measures / metrics are not the same,
then members of the team likely view the definition and scope of
Strategic Issue: _______________________________
the issue differently from one another. This could prove problematic
if not resolved early in the process.
There are two types of issues, those that are strategic, and those External
that are operational (i.e. tactical) in nature. The following definitions Consider
may help. these
Threats?
first Opportunities? Relative to what
you are trying to
A Strategy: “Strategy is the direction and scope of an Constraints??? achieve,
organization over the long term, which achieves advantage for and
the organization through its configuration of resources within a
changing environment and to fulfill stakeholder expectations.”1 Internal Relative to others
who may want
Weaknesses? to achieve the
An Operational Tactic: An operational tactic is a plan for same thing.
attaining a particular goal with respect to short-term objective. Strengths?
Constraints???
This distinction is important as the scope of analysis, the analytical
tools employed, as well as the eventual outcomes from the analysis,
Ask “So What”? Fit? Misfit?
will be very different. As per the diagram in Table #3, the assessment
of strategic issues is a very outward-looking process and will always
involve an analysis of environmental trends and developments. As
operational issues are generally inward-focused a different One pitfall that many leaders experience in undertaking either a
approach to analysis is required. TOWS or a SWOT analysis is focusing on developing lengthy lists
A shortcut frequently used for quickly determining whether an issue of threats, opportunities, weaknesses and strengths without a clear
is strategic or not is to assess whether it is in some way directly focus as to “what” they are trying to achieve or without an action-
linked to trends and developments in the external environment. If it orientation. An experienced team should be able to quickly identify
is not directly linked to external environmental forces (e.g. political, the key threats, opportunities, weaknesses and strengths. The
economic, social, technological, environmental as in depletion of the majority of their time and focus should be devoted to addressing
the question “so what?” The question “so what?” focuses attention
forests for example, or legal2), then it is not strategic.
in a number of critical areas such as:
Up front discussion and probing can be an excellent investment of
time to ensure the issue is well understood and that there is a • How do the threats, opportunities, weaknesses and strengths
shared view of it. Without this clarity, a costly and time-consuming identified in the TOWS analysis specifically relate to the issue
process could be undertaken that ultimately wouldn’t yield any benefit. at hand?
• Does the analysis indicate that a particular solution is a better
What? fit for the organization? Is the organization well-positioned, well-
This phase involves a rigorous analysis of the situation including an configured, and well-aligned given the situation in the external
assessment of external opportunities, threats and constraints, as environment?
they relate to the specific issue. These factors are external to the • What are the risks? How serious are they? How can they
organization and beyond the control of management. The be mitigated?
organization’s internal strengths, weaknesses, and internal • What makes us think we can address this issue better than
constraints are also taken into consideration at this stage. This our competitors?
analysis results in potential solutions being developed to address
• What specific alternatives might we pursue?
the issue. Potential risks are identified and possible methods for
mitigating these are considered. • Thinking ahead, what will we have to do well in the
implementation phase in order to be successful?
In assessing “what” it is useful to employ a TOWS analysis (i.e.
threats, opportunities, weaknesses and strengths). This is similar to There is an plethora of well-known analytical tools and theories that
a SWOT analysis however our preference for the TOWS model is can be used in conjunction with the TOWS model in order to
due to the fact that it places the assessment of external threats and deepen the level of analysis (e.g. Porter’s Five Forces model, value
opportunities before an assessment of internal strengths and chain analysis, blue ocean, demand and supply analysis, value
weaknesses. This is important because strengths and weaknesses proposition analysis, life cycle analysis, market attractiveness /
must be examined not only relative to the issue under consideration, strength matrix, stakeholder analysis, market research, economic
but in relation to the opportunities and threats in the environment analysis, environmental scanning, values analysis, etc.).

10
Why? will sometimes indicate that a minor tweaking of the implementation
In the “Why” phase, the various alternate solutions that emerged as plan or strategy is required. On occasion however, feedback will
a result of the earlier analysis are systematically evaluated. The pros indicate a serious flaw. In these cases a major reassessment
and cons of each are assessed drawing upon information involving various stages of the framework will be required.
generated during the TOWS analysis. Some questions that will Best practice suggests that all strategies and plans should be
assist in assessing the alternative might include: revisited and reassessed on a regular basis, at least annually. The
environment is constantly changing and without the discipline of a
• What level of risk is involved? Are we certain we understand regular formal review critically important trends or developments
the risks? What is the risk-return trade-off and is it could go unnoticed. Strategic thinkers are constantly scanning the
acceptable? How might we mitigate these risks? environment to identify these types of situations, however given the
• What is the degree of “fit” with the organization’s current complexity and heavy demands of everyday life, it is still possible to
strategy, configuration, strengths, and weaknesses? (Generally miss important developments. Regular reassessment of key
speaking, the lower the “fit” the higher the risk involved.) strategies and initiatives is recommended.
• What financial and other resources will be required to ensure
successful implementation of this alternative? Can we afford them? The “Issue-to-How Pitfall”
• Is there sufficient stakeholder support and commitment for this It is well accepted that organizations with a bias for action have
option? What would need to be done to obtain sufficient support? greater success than those that don’t. Results happen through
actions, not by merely thinking about things. While a bias for action
• Is there sufficient readiness for the change within the
organization to be able to implement this? is generally a good thing, it can also lead to flawed strategic
thinking or what might be called the “Issue-to-How Pitfall.” This is
• What sort of timeframe would be involved in implementing this? one of the most common strategic thinking pitfalls. Individuals and
Can we afford that much time? organizations with an action-oriented mind-set have a tendency to
• How will our competitors and other key stakeholders react if we move directly from identification of the issue to “How” with little or
do this? Can we live with that? virtually no analysis as to whether this may make sense. While
• Do we fully understand the assumptions behind this alternative? speed of execution and time-to-market considerations are
(i.e. What would have to be true for this to be successful?) important especially in a competitive environment, more than a few
• Is this in keeping with our values and ethical standards? organizations have experienced serious and unanticipated
consequences by moving forward to action without adequately
• Is this alternative truly viable? How does it compare vis-à-vis
analyzing the situation.
other options that we have?
The “Old Paradigm / Old Mind-set Pitfall”
How?
While a particular strategy or approach may have worked well in the
The “How” focuses on superior execution of the activities required past, that does not necessarily mean it will be successful in the
to achieve successful implementation. Ideally implementation will be future and yet, many leaders tend to rely almost exclusively upon
done in a manner that will assist in further differentiating the their previous experiences. Given the pace of change and types of
organization in a positive way from its competitors. Most of the fundamental changes taking place in the external environment, this
essential tactical activities as well as a number of other factors such can be a very risky approach. Strategic thinkers learn from the past,
as timing and pace of implementation, stakeholder persuasion however they do not rely on previous solutions and approaches.
strategies, etc. that are required for successful implementation will They recognize the value of creativity, imagination, and innovation in
be identified during the analysis undertaken in the “What” and developing “real-world” strategies and solutions.
“Why” phases.
Strategic thinkers recognize that while most key success factors Conclusion
are knowable at the outset, others are unknowable. Some factors Whether you sit on a board of directors, are a senior leader within
that are unplanned and unknowable when the strategy and an organization, or the most junior employee in the department, the
implementation plan is initially developed, will surface during the ability to think strategically is important. It ensures continued focus
implementation phase. Some of these will be pleasant surprises, on relevant trends in both internal and external environments which
most will not. As a result, strategic thinkers anticipate the is key to effective decision-making at a personal, team and
unexpected and put monitoring systems in place to identify early- organizational level. Tools such as the “What? Why? How? Strategic
warning signs in the event the implementation plan begins to falter. Thinking Framework” and the TOWS model can prove very helpful
in further enhancing one’s competency in strategic thinking, a key
Monitor and Reassess attribute of leadership.

Approaches to monitoring success in implementation can vary

widely depending upon the nature of the specific situation. Kevin Yousie H.B.A, M.B.A., F.I.C.B., ICD.D is a faculty member at
Examples of some monitoring tools include: pro-forma financial The Banff Centre, and President of Crosswater Partners.
targets, quality control parameters, market-share metrics, progress Crosswater Partners helps boards of directors and senior leaders
against planned critical-path, and timeline activities. The key point is initiate, plan for, and implement change, while strengthening strategic
that strategies are built upon assumptions. Some assumptions may planning and implementation capabilities. www.crosswaterpartners.com
ultimately prove to be incorrect. Strategic thinkers are aware of the
assumptions that are inherent in their strategies and establish 1. PESTEL Model of Environmental Analysis – Exploring Corporate Strategy,
appropriate monitoring systems to test the validity of their key Sixth Edition, by Gerry Johnson and Kevan Scholes, Prentice Hall, 2002.
assumptions as implementation progresses. Monitoring of results 2. Ibid

11