By now, I’m certain you’ve figured out that life is a game of chance that’s impacted by luck (good or bad) and planning (strategy or happenstance). You cannot really “make your own luck” (only lucky people think you can), but by thinking strategically and implementing your strategies, you’ll be able to influence certain variables that may tip the outcome in your favor.

Strategic thinking is an essential skill that promotes success both in the business world and in your personal life. Business owners and leaders rely on strategic thinking to make informed decisions and plan for the future, to promote innovation, respond to changes in the marketplace and recognize good opportunities. Strategic thinking depends on reliable information that you’ll analyze to identify the potential outcomes of a decision and ensure that decisions align with your company’s long-term goals. Strategic thinking can begin when you address three basic questions:

• Where are you now in terms of achieving your preferred outcome (the goal, success)?
• Where do you want to be (the preferred outcome)?
• What actions will you take to bring about your preferred outcome?

Rich Horwath, author of the New York Times and Wall Street Journal bestseller Strategic: The Skill to Set Direction, Create Advantage and Achieve Executive Excellence (November 2023) and founder and CEO of the Strategic Thinking Institute, a strategy workshop facilitator where he is an executive coach and strategic advisor, defines strategic thinking as the ability to Think, Plan and Do. Horwath believes that strategic thinking leads to insights that allow us to recognize or create competitive advantages that lead to success. His coaching experience has shown him that strategic thinking can be learned, that we can assess our own strategic fitness level and apply the skill to create value for the business.

Acumen

Howath points to acumen, the way you think, as the basis of strategic thinking, along with context awareness, insight and innovation. Acumen gives you the ability to size up a situation, see the big picture and generate new ideas that move the organization from its current state to your preferred future. The components he assigns to acumen work in tandem and are what separate strategic thinkers from the rest:

• Context awareness—informs your vision of the big picture and reflects your understanding of both your internal situation (culture, purpose, processes, guiding principles) and external situation (market trends, customer behavior, competitive landscape, business conditions). This awareness and perception informs your choices to allocate the resources you’ll use as your pursue your goals.
• Insight —the ability to learn and draw conclusions, however preliminary, from current conditions and past experiences. This requires curiosity and an exploratory mindset. A key trait of strategic thinkers is their discipline to continuously record, categorize, share and reflect on insights.
• Innovation —can occur when you focus your awareness and insights to create new value. It typically generated by the brainstorming or problem-solving involved in overcoming a challenge or obstacle.

To evaluate your acumen, ask yourself:

• Do I regularly assess my business’s current situation, both from both the internal and external perspectives?
• Do I share valuable insights with my team?
• When problem-solving, do I stick to the tried-and-true, or do I look for new approaches?

Allocation

Howath sees allocation as how you plan. Strategic thinkers set goals, distribute resources, recognize the risk and tradeoffs when making decisions and create advantages that bring value. Where you invest your resources — time, talent and capital — is a primary driver of your effectiveness and it requires the following components:

• Ability to focus resources: Resources are usually limited and should be used judiciously in service to achieving your goals. An effective strategy involves the ability to focus resources, confirming that resources are sufficient to produce the desired impact and confirming how the resource should be applied to achieve the desired effect.
• Decision-making: Strategic thinkers generate and evaluate a range of viable alternatives. Since trade-offs are being made with each decision, they analyze the pros and cons of each alternative, as well as the level of acceptable risk.
• Competitive advantage: A competitive advantage is created when the value created by your resources and actions exceeds the value that prospective customers assign to your competitors. Once an advantage is attained, strategic thinkers continue to refine it in order to stay ahead of the competition.

To evaluate whether you allocate effectively, ask yourself:

1. Do I recognize when it’s time to redistribute resources from underperforming areas to projects that show more potential?
2. Do I spend time on activities that align with my goals?
3. How do I measure myself against the competitors?

Action

Action is what you do, that is, carrying out your plans. Preparing a business strategy is but one step; how you execute your strategies is pivotal to your success. Action requires the ability to collaborate with others and optimize your performance.

• Execution involves using your resources to achieve your goal. It requires focus, discipline and follow-through, as well as monitoring to ensure interim results and a contingency plan to salvage a plan that fails to produce the expected result.

To assess your ability to take action, ask yourself:

• When it comes time to implement a strategy, how prepared am I to take action?
• Do I ask others what their goals are at the beginning of the conversation?
• Do I easily get side-tracked by other obstacles along the way?

Merry Christmas and thanks for reading,

Kim

Image: Jackie Gleason as a fictional pool hustler in The Hustler (1961).