Stephen Sacca, SF ’90
Director, MIT Sloan Fellows Program
Once, when trying to get across the importance of strategic thinking, I heard MIT Sloan Professor Duncan Simester share a bit of wisdom from Einstein: “If I had an hour to save the world, I would spend 55 minutes thinking about the problem and five minutes solving it.” That thinking dovetails with what former Ford Motor Company CEO Alan Mulally, SF ’82, said to us recently. “Reflection is as important as action. It enhances our ability to serve. It’s a tremendous investment in your career to take a break and reflect. Build it into your life. Don’t think of it as giving up one thing for another.”
Like other MIT Sloan Fellows alumni and faculty who have been on the frontlines of major organizations or undertakings, Simester and Mulally believe that if we don’t make time to think, we can lose sight of who we are, where we’re going, and what we really want. For this issue of the newsletter, we reached out to MIT Sloan faculty and alumni around the world who have deep experience with the art and science of strategic thinking. After reading their perspectives, I don’t think I’ll ever wake up and approach my day in quite the same way again.
“Why do managers spend so little time thinking?” asks Duncan Simester, NTU Professor of Marketing at MIT Sloan. “The problem is a relentless focus on execution. Managers in large organizations are promoted for execution, which is useful when scaling a successful business model. However, it becomes an obstacle to success when firms need to pivot to a new model.”
The search for insight, in Simester’s view, starts in the weeds. “Although strategy asks big questions, the answers can be found by focusing on specific problems and concrete examples.” Simester uses the oil-drilling business to illustrate his point. In the past, it was common practice for a company to purchase rights to an oil field and start drilling a lot of wells. One company calculated that, historically, only one in 12 of its wells yielded oil. Drilling is costly, however, so they now start at the surface and think hard about where to drill—a practice that is bringing them closer to their goal of finding oil in half their wells.”
“Delegation is key to finding time for this type of thinking,” says Simester. In his work with managers from large organizations, he calibrates the length of his programs to compel participants to delegate in a meaningful way. “When managers have to rely on their teams to perform in their absence,” he explains, “they often are surprised to discover how well they can execute without them. This epiphany allows managers to begin the transition from acting as mere facilitators to becoming strategic leaders.”
Who should be responsible for strategic thinking? “In startups and small companies,” Simester observes, “senior leaders tend to do the heavy lifting on strategy. That pattern often persists as firms scale up. The problem is that, as a company expands, senior leaders grow more distant from the information they need to make strategic decisions. Enterprises that mature successfully create mechanisms that allow strategy to pass up through the organization, not down.”
“We shouldn’t look at strategic thinking as a special event,” says MIT Sloan Professor Thomas W. Malone. “It’s a mindset that should infuse everything we do, all day every day.” And the essence of strategic thinking, Malone asserts, is prioritizing. “The success of the vast majority of people in business—and in life—can be measured by whether they worked on the things that mattered to them.” Malone concedes that this may sound simple—even obvious—but surprisingly few people and organizations really track to their priorities.
The founding director of the MIT Center for Collective Intelligence and its predecessor, the MIT Center for Coordination Science, Malone was also one of the two founding codirectors of the pioneering MIT initiative “Inventing the Organizations of the 21st Century.” His research focuses on how work can be organized to take advantage of advances in information technology. Strategic thinking is a natural component of Malone’s research, his teaching, his writing, and his consulting.
“Think of strategy as the prioritization of efforts. Strategy is knowing when to say ‘no.’ So often, on both a personal and an organizational level, we tend to do what’s easy, what presents itself, rather than what we really consider a priority,” Malone notes. “We have limited time and resources and must come to terms with those limitations. We need to continually make sure that our time and resources are focused on the things that contribute to the outcome we are working toward.”
Malone recommends making a daily list, prioritizing that list, and sticking to that sequence throughout the day. When making the list, he says, keep in mind your key goals and map the list to the goals. Thinking strategically sometimes forces you to leave behind busywork that makes you feel productive but does not advance your mission.
Unfortunately, Malone notes, the human tendency is to default to reactive behaviors that cause us to lose sight of priorities. He often catches himself not thinking strategically from time to time and tries to course correct. Recently, for example, he realized he had been planning for years to write a book about his work on collective intelligence, but the rest of his life kept getting in the way. He then put the project at the top of his priority list, wrote a successful proposal to a publisher, and is now working on the book, tentatively titled The Age of Collective Intelligence.
Malone’s research in collective intelligence spotlights the need for strategic thinking—in the C-suite and across an organization. “From the mailroom to human resources to the boardroom, every individual should be thinking strategically every day, prioritizing the activities that will support overarching goals that the organization shares.”
Malone notes that just because people need to continually think strategically doesn’t mean they don’t need some quiet time for doing so. “Sometimes, it’s good to take time out. Go sit on a park bench by yourself to make that list of priorities—especially if you have several competing goals that require careful consideration. It’s definitely useful to take an hour or two away from day-to-day demands every now and then to think about strategic questions on a higher level and develop a mission statement for your job—and your life. Mission statements that you live and work by keep you on track.”
“We probably have never lived in a time when strategic thinking was more crucial,” says MIT Sloan lecturer Otto Scharmer. “We live in a period of continual disruption and reinvention. In such a climate, strategic thinking matters deeply. Yet, the currency and quality of strategic thinking is actually plummeting. It’s an interesting—and frightening—contradiction.”
One of MIT’s most innovative and influential experts on strategic thinking, Scharmer is cofounder of the Presencing Institute. This revolutionary action-research community creates holding spaces for strategic thinking around profound societal renewal. Along with the frantic pace of 21st-century business, Scharmer believes that a key reason that leaders aren’t taking the time for conventional strategy work lies in its intellectual roots: abstract and often de-contextualized thought. Managers often can’t wrap their heads around such a vague concept. “What exactly is strategic thinking, anyway?”
Scharmer has been demystifying key elements of business throughout his career. He is the founding chair of the MIT IDEAS Program, which takes leaders from civil society, government, and business from Indonesia and China on nine month action-learning journeys to co-create profound social innovation in their communities. Scharmer has worked with governments across cultures and led leadership and innovation programs at corporations like Daimler, Alibaba, ICBC, Eileen Fisher, Google, and PwC. He currently runs his MIT Sloan U.Lab class via edX.org as an online offering with 42,000 registered participants from 183 countries.
Scharmer suggests reframing strategy from abstract thought to sensing and actualizing the emerging future. That new framework breaks down into three core activities:
1. Co-sensing: Get out into the world. Scharmer recommends venturing outside your field to gain a wider pool of experience. “Look at your own business from the edges. Look at what other industries are doing. If you’re in government, look at what companies are doing. If you’re in the corporate world, take a look at innovations in government. Challenge your status quo. If you think you know your own environment inside out, it’s time to step outside of it and into the wider world. You won’t learn by staying within the margins of your own sphere. The world is out there changing without you.”
2. Presencing: Know thyself. Scharmer says that you can’t have an effective plan if you don’t really know who you are and what you want. Deeper self-knowledge, he says, is key to success and thinking strategically. He recommends taking time out for quiet reflection and says he has found that mid-career leaders like Sloan Fellows, as well as millennials around the world, are more receptive to asking themselves, “What is my purpose? What am I here for?” Scharmer says that we must ask the same questions of our organizations. “When thinking strategically about your organization, you should consider your role in society. What are you contributing? Why are you here?”
3. Co-creating: Explore the future by doing. Part of strategic thinking, Scharmer says, is to learn by doing. Reach out for feedback to refine your idea. “When you live in a time of disruptive change, you can’t think strategically in a sealed room. You have to understand the bigger picture, how you and your organization fit into the larger world.”
Strategic thinkers, Scharmer says, are not necessarily born. They grow from a place of disciplined awareness and a willingness to explore. “We live in a world of collective intelligence. We need to tap into that. We should embrace our networked world and integrate the knowledge and experience of stakeholders into our strategies. In other words, strategic thinking is not something we can do alone. It’s in the dialogue with people who live outside our own bubble that strategic opportunities are born.”
José-Maria Fernández, Director General of the Spanish Treasury, devotes a major share of his working life to strategic thinking. “At the Spanish Treasury, most of what we do requires in-depth analysis and strategizing,” Fernández says. “All our thinking translates into a relatively small number of decisions and actions. These actions, however, have wide-ranging effects and potentially long-term consequences.”
Fernández believes that an overwhelming emphasis on strategy is appropriate to the public sector, in general, and the Treasury’s financial management, in particular. “As you would expect, we think a lot about how we finance the country and what that implies for our credit and our taxpayers in the short, medium, and long terms,” he says. “But we actually conduct a very limited number of deals. For example, we raise approximately 240 billion euros a year selling bonds and bills globally to investors while executing only 50 or 60 funding transactions annually. We probably spend 90% of our time designing, evaluating, and revising our financing strategy in light of market, economic, and budgetary conditions. That means roughly 10% of our activity is devoted to execution.”
Within the Spanish Treasury, much of the strategic thinking originates at the more senior levels of the organization. “But our strategizing doesn’t stop with top executives,” notes Fernández. “It is also our job to promote a culture of research-analyze-evaluate-act and, when necessary, reconsider. If we are successful managers, the process cascades down to different levels of the organization. This enables a much wider group of professionals to generate ideas and contribute insights that help us achieve our goals.”
At the Treasury, Fernández says, “everyone is expected to be a part of this process—to observe and absorb how we analyze and conduct our activities. When you are assigned a department or a project, we encourage you to apply what you’ve learned and to speak up if you believe we need to explore new options. Having this well-established process gives me a trusted cadre of colleagues, good access to information throughout the organization, and most important, time to think. Without that, I can’t possibly imagine how I could do my job.”
Brigadier General Stacey Hawkins, SF ’11, has taken to calling it “death by PowerPoint.” It’s the tendency to organize all thinking around a canned presentation, leaving little room for collective, creative brainpower. “A slide show presentation should kick off thinking, not substitute for or define the boundaries of thinking,” he says. “Ideally, carve out at least 20 minutes of a 60-minute meeting for open-ended discussion.”
Now in his 24th year of U.S. Air Force service, General Hawkins has earned a reputation as a strategic thinker. Director of Logistics, Engineering, and Force Protection of the Air Mobility Command, he is an alumnus of the legendary School for Advanced Air and Space Studies (SAASS). As an indicator of their elite skill level, SAASS graduates are frequently referred to as the “500 pound brains” of the Air Force. General Hawkins has been recognized for his efforts with such distinctions as the Legion of Merit and the Bronze Star and has served as special advisor to the Vice President of the United States for defense policy and intelligence programs.
Despite the plethora of PowerPoints—a standard operating tool in most business and government settings—General Hawkins has found the Air Force an organization of voracious strategic thinkers. “It’s in our DNA,” he says, “in part, because we have always had to stay at the forefront of technological innovation in aeronautics and other technical realms.” He points to strategic reports like the “Air Force Future Operating Concept: A View of the Air Force in 2035,” a new scenario-driven strategy document that focuses on the need for operational agility in an increasingly complex global environment.
General Hawkins notes that in the Air Force, such master plans are shared with even the youngest airmen. “The strategic thinking accomplished at the highest level is shared with everyone across the organization for two reasons. It enables the entire force to get behind our core mission and, just as important, allows all personnel to see strategic thinking at work and encourages them to adopt the practice themselves.” He believes that limiting strategic thinking to mid-career officers would stifle the prevailing culture of innovation. “We encourage young airmen to participate in the thinking process. They are bringing in fresh ideas from the world, new technologies, new knowledge. Our goal is for them to make strategic thinking a living, breathing part of everything they do right from the start.”
Are strategic thinkers born or bred? General Hawkins believes it’s a little of both. “Yes, many of the tools of strategic thinking can be and should be taught, but there’s a raw character trait that strategic thinkers are born with that is vital to the process—intellectual curiosity.” He notes that when he was at SAASS, he read a book every day, from the work of military theorists to case studies of successful startups. “We need forward-thinking people in the Air Force who have an insatiable interest in solving problems on a global scale. With the work we do, we never know what skill set will be invaluable to the situation at hand. Every single member of the force needs to embrace strategic thinking as an essential component of developing enduring operational frameworks that will enable mission success.”
For Anupam Nayak, SF ’10, scaling up a tiny startup into a large quasi-government organization required some serious strategic thinking about strategic thinking.
Nayak has spent a significant portion of her career launching products in semiconductor and consumer markets. After MIT, she teamed up with Lucas van Ewijk, former head of the radar department at TNO, a leading Dutch Research Institute. She and a small group of entrepreneurs decided it was time to break radar out of its military cocoon. Radar is a powerful, versatile tool, they said, so where else might it be a game changer?
One of the areas where they saw great promise was healthcare. “We realized we could install a radar device the size of a business card in a patient’s room—either at home or in the hospital—to monitor respiration and other vital signs without any contact with the patient,” Nayak says. The company she led, Applied Radar Technology, successfully navigated three years of regulatory trials before attracting attention in the marketplace. She and van Ewijk decided to set up a new entity, VDisha, that can expand radar research and commercialization into healthcare for continuous patient monitoring to predict adverse events and to build miniature radar sensors for smart cities and industrial automation. In collaboration with government-funded radar research groups in the Netherlands, the aim is to expand the startup into a multimillion-dollar international initiative, bringing in partners from research groups around the world.
The central problem that Nayak and her team faced was a pervasive prejudice that radar is a military technology inextricably associated with war—not a tool that belongs in a patient’s room. “In terms of strategic thinking, our challenges were broad and multifaceted. We had to convince medical personnel of the value of radar and make it less intimidating. We needed to explain to them the difference between science fiction and reality. We had to create a device that was appealing and didn’t bear any resemblance to military devices. We also had to change the mindset of investors to recognize that radar is a versatile tool, not just a part of military defense strategy. And we had to persuade other research organizations around the world to join the exploration.”
The team realized that strategic thinking could not happen in a silo. They would have to guide the thinking of groups in many areas—engineering, marketing, fundraising—since each function would have its particular challenges. “We realized we were looking at a distributed model of strategic thinking. We would have to work with individuals in every functional area to think innovatively about advancing this vintage military technology in the healthcare realm—each overcoming the reservations of their particular constituency.”
Nayak also discovered the importance of environment in the practice of strategic thinking. She and her team noted that they accomplished the most when they conducted strategic thinking sessions with small groups in friendly, intimate settings outside each group’s usual environment. “Getting high-tech radar engineering experts out of their laboratories into a hospital for testing patients, for example, made it less likely that they would revert, by rote, to their usual thinking.”
Nayak observes that “the strategic thinking process was not unlike what MIT Sloan Professor Andrew Lo refers to as ‘the wisdom of crowds.’ We integrated the strategic thinking of all the many subject expert teams into our own strategic thinking to develop a ten-year master plan.” Nayak and her team expect to unveil VDisha to the world by the end of 2015.
As Director of Network Strategy for gas distribution at National Grid UK— a government-regulated energy monopoly— David Parkin, SF ’12, faces a strategic trilemma. “Our performance,” Parkin explains, “is measured by the security of the supply, affordability for consumers, and the extent to which we are minimizing greenhouse gas emissions. We have to balance all three within an eight-year price control structure. Regulators set our revenue based not on what we spend to provide natural gas service but on what we achieve for our customers on those three criteria.”
This recently established regulatory framework exerts a strong influence on National Grid’s strategic thinking. “Historically, we were driven by the same imperatives propelling most large companies—minimize expenditures and maximize revenue,” says Parkin. “Now, we have to identify and develop innovations that deliver beneficial outcomes across several performance metrics through an eight-year cycle.”
While these might seem like stifling constraints to many energy companies, the UK’s regulatory environment works as an innovation incubator for Parkin and his team. “The government’s mandate explicitly funds research and development,” he says. “Our financial incentives motivate us to collaborate on new technologies with other networks, contractors, SMEs—even a global corporation from outside the energy sector. Because our success isn’t strictly market-driven, we can recruit our erstwhile competitors to join us in strategic collaborations.”
The shift hasn’t been painless. When Parkin worked for a natural gas startup earlier in his career, carbon footprints and renewable sources didn’t figure into his strategic vision. “There’s a bit of irony in my current position,” says Parkin. “Here I am with the UK’s largest natural gas provider in a strictly regulated environment, and I have to be more nimble and innovative in my thinking than when I was with a startup.” Parkin also had to change the trajectory of his innovation team. “We’ve undergone a fundamental change in our strategic mindset. We no longer measure our productivity by how much we spend on R&D. Instead, we gauge our impact by how much actual benefit reaches the consumer.”
To some extent, this new strategic thinking was forced on National Grid by regulators. But the dynamic has created new and promising opportunities for the company—and made Parkin’s colleagues across the pond a bit jealous. “When I visit National Grid offices in the U.S.,” Parkin explains, “they confess a bit of envy. They would be overjoyed to operate with the type of innovation incentives we receive from the regulator. They also appreciate that our strategic thinking is driven by goals that transcend pure financial performance: enhanced safety, greater customer satisfaction, and a healthier environment.”
We’re already at work on the next MIT Sloan Fellows Program Newsletter. Please drop us a line at email@example.com if you have ideas about themes and news items for future issues.
Stephen Sacca, Director
Libby Dilling, Marketing Associate
Mary Marshall, Associate Director
Marc O’Mansky, Assistant Director
Michelle Pierce, Program Coordinator
Stacey Lantz, Program Coordinator
Wendy Scott, Program Assistant
Laurel Aroian, Associate Director
Cathryn Noyes, Admissions Associate
Saul Horowitz, Program Coordinator
Davin Schnappauf, Program Assistant II
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