Strategic thinking

The ability to align strategic decisions with a long-term philosophy

strategic thinking skills and planning steps

If you are looking for the best strategy for a company, you quickly end up with Toyota’s policy. The “Toyota Way” has not only become a bestseller, but also a buzzword for strategic decision-making – a role model, and not just for large companies. Read why strategic thinking can also bring you decisive added value in our article:

  • Complex problems require strategic thinking.
  • A method not only for large companies.
  • A long-term strategy also generates long-term success.

Toyota – one of the largest and most successful companies in the world – has been guided by 14 management principles for decades. From the right workload balance and respect for employees and suppliers to the development of standards and leadership. All principles contribute to Toyota’s success. But the 1st Principle doesn’t just stand above all the others. It also is the base for the other 13 to work at all:

“Base management decisions are founded on a long-term philosophy, even if this must be done to the detriment of short-term financial goals.”

(Toyota Principle #1)

This long-term view is the basis of Toyota’s strategy, the foundation of its success, and also the basis for strategic thinking.

That’s strategic thinking

Basically, strategic thinking is a form of planning. In the language of Dietrich Dörner and his book “The Logic of Failure”, this is called trial action. Thus, several possible paths or scenarios are thought through to their end. The possible consequences of each individual option for action play a role, as does their sequence or order. In the end, there should be a success.

The result is a strategy that describes the path from the current state into the future. The motivation for this can be, for example, a long-term competitive advantage.

Strategic thinkers look at their company’s actions from a certain distance. By developing various possible courses of action, they reflect on success and action. In addition, they learn to find ways to the envisaged goal – and to do so faster and more purposefully than before.

This is why many forgo strategic planning

Perhaps the most important message: Strategic thinking is not just for large companies. Smaller companies may feel they can’t take the time to develop a long-term strategy. They are supposedly under time pressure and can’t afford “that kind of thing.” After all, it only makes work initially if you look at it in the short term.

For this reason, many small and medium-sized companies do without a strategic plan. The reasons for this are manifold:

  • Business is currently going well and the need is not recognized.
  • Some think that the success of a business model cannot be planned.
  • Or a strategy is dispensed with because it has worked quite well “by instinct” over the last few years.

Last but not least, many experience in their environment that challenges are approached in the same way – short-term and without a plan. And what the competition or competitors do can’t be bad for their own company. In such an environment, relying on strategic thinking is seen as a risk and the opportunities are unfortunately not perceived.

How strategic thinking works

Strategic thinking works first and foremost through practice – regular practice. By practicing strategic thinking, approaches and problem-solving methods become second nature and thus become part of daily business activities.

The central content is thinking in causal networks. This recognizes that one action can always produce several effects. This is a point that keeps most people away from strategic thinking. Because this approach is complex and makes more work than thinking in causal chains. After all, in a chain, an action also produces only one effect, and so on. Complex problems, however, are characterized by the fact that even action on one part of the system can have an impact on other parts of the system.

Complex problems, however, are anything but unsolvable. Dietrich Dörner describes an ideal process in this context:

  1. clearly define the goal
  2. model and collect information about the state of the company
  3. describe the status quo and current direction of the company
  4. planning the course of action
  5. selection of appropriate courses of action
  6. execution of the plan

Important here: Regular control and reflection of the actions and effects of his plan. Thus, strategic thinking will help your company avoid mistakes and follow a course into the future.

Strategic thinking in practice

Strategic thinking can thus be described quite simply. At the same time, this means that there is no template that can be placed over one’s own challenges. However, there are elements that promote daily implementation:

  • Invest the necessary time in thinking about the current state.
  • Think about the long-term goals.
  • Have the confidence to create a vision!
  • Design your mission and formulate it.
  • Identify the people and departments that are relevant to achieving your goals.
  • Try to visualize complex issues in an understandable way.

Help, especially when it comes to developing your own production site, is provided by model-based strategic planning. Above all, because it makes complexity visible and tangible and thus makes it easier to manage. Software models are a good way of capturing relevant information and key figures so that they can be evaluated in strategic scenarios. Such models then also serve to monitor success. In this way, you keep an eye on the current situation and long-term goals.

Application example for model-based strategic planning of production sites

Please see the blog:

How do factory layouts depend on the value stream?

Application of a short (left) and long (right) value stream to the layout of a central storage

The best strategy solves complex problems in the long term

Strategic thinking gives your organization the ability to solve complex problems, rather than shimmy from one problem to the next. After all, a lack of a plan is not a method, but a risk factor. With a long-term philosophy – as exemplified by Toyota – you succeed in implementing future plans. By doing so, you also position your company to respond flexibly to unforeseen challenges.

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Thomas Weber
Thomas Weber

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