IESE

UNIVERSITY OF NAVARRA

STRATEGIC THINKING:
STRATEGY AS A SHARED FRAMEWORK
IN THE MIND OF MANAGERS

Esteban Masifern*
Joaquim Vil*

RESEARCH PAPER No 461

March, 2002

* Professors of General Management, IESE

Research Division

IESE
University of Navarra
Av. Pearson, 21
08034 Barcelona - Spain

Copyright 2002, IESE

Do not quote or reproduce without permission

STRATEGIC THINKING: STRATEGY AS A SHARED FRAMEWORK

IN THE MIND OF MANAGERS

Abstract
Even though most academics, business people and consultants recognize that the
purpose of strategy formulation can no longer be to generate strategic plans, critics of formal
strategic planning offer little guidance on how to overcome its limitations and rarely address
CEOs concerns about turning strategic vision into an operational reality.
This paper proposes a managerial approach to strategic thinking and strategy
formulation which takes both process and content issues into account. Strategic thinking is
understood as a deliberate and creative process as well as the resulting state of mind. Strategy
is presented as a shared framework which guides managers daily actions. The approach is
developed in a way that attempts to respond to CEOs concerns regarding the need to manage
by strategy in todays rapidly changing environment. Key building blocks of the new
approach to strategy formulation are presented. Some initial empirical tests provide support
for this approach. The framework outlined here seeks to contribute to top managements
efforts to build a shared understanding of strategic issues and encourage actions at the front
line which are consistent with the strategy pursued by the firm.

(*) (Under review) Managing Strategically in an Interconnected World, edited by M. A. Hitt, J. E. Ricart and
R. D. Nixon, The Strategic Management Series, 1997 Volume, John Wiley and Sons.

STRATEGIC THINKING: STRATEGY AS A SHARED FRAMEWORK

IN THE MIND OF MANAGERS

1. Introduction
Whereas during the 1970s and 1980s many chief executives channeled their energies
towards the development of a strategy for their companies and for individual business units,
in the 1990s the emphasis has shifted to the search for sources of sustainable competitive
advantage and ways of translating strategy into action. Progress in the strategic management
field continuously sheds new light on the drivers of company performance, yet it is hard to
claim that this has had any significant impact on the work of most practicing managers.
A number of factors have been cited to explain why developments in strategic
management are applied so slowly. Some authors (e.g. Prahalad and Hamel, 1994) refer to
the excessive emphasis on analysis to the detriment of creativity and exploration. It is
claimed that analysis inhibits creativity and precludes the chance to regenerate strategy.
Others argue that most models and tools, even when presented as the definitive way of
thinking about strategy, are actually applicable only in very limited settings (Coyne and
Subramaniam, 1996). Still others suggest that the slowness in putting ideas on strategy into
practice may be due to the artificial distinction between formulation and implementation.
When it comes to incorporating strategy into management practice, one of the problems is the
tendency to ignore organizational issues in strategy formulation. This is something that the
defenders of the current state of practice (such as the deductive approaches of Planning,
Programming and Budgeting systems during the 1960s and 1970s) tried to overcome, yet
most failed as a result of political pressures to avoid loss of status and influence with firms.
Also, until very recently academics have looked at company organization and structure in
detail only at the time of implementing a strategy. In short, the source of the problem may
have something to do with the way we approach the notion of strategy and the widespread
tendency among scholars to separate responsibility for thinking within organizational
hierarchies from responsibility for action.
Strategic planning has been the dominant approach to strategy development for more
than two decades. Yet the limitations of formal planning, as understood in the late 1970s, are
amply documented (Lenz, 1987; Business Week, 1984; Wilson, 1994). And in recent years
formal planning has been one of the favourite targets of criticism among leading thinkers in
the strategy field (e.g. Mintzberg, 1994). In many cases, strategic planning turns out to be
driven by techniques, not courageous inquiry. Critics of formal planning as a means of
ensuring a successful strategy advocate strategic thinking as an alternative. Planning has
failed to fulfill management expectations precisely because it has not led to strategic thinking
(Hansen, 1991). Indeed, a number of authors add that strategic thinking often disappears
completely in traditional planning processes. More recently, the claim that strategic thinking

will overcome the design and behavioral limitations of formal planning and provide a road
map for creating effective strategies has gained in popularity. There is a widespread view,
represented by several writers (e.g. Ansoff, DeClerk and Heyes, 1979), that strategic planning
leads to strategic management, which then somehow leads to strategic thinking. However, not
much progress has been made in defining what strategic thinking actually consists of, how to
develop it, and what benefits it will bring for managers (Liedtka, 1998).
This paper seeks to bring together the limited research on process and content
approaches to strategic thinking. We believe that, given the nature of the phenomenon,
progress in this area depends on effectively integrating the two, and that the weaker of the
two will shape the prospects of any piece of research. Here, we shall try to go beyond the
notion of strategic thinking as a particular way of thinking about strategy, and see it instead
as a way of doing which is characteristic of a particular style of management. We suggest a
process that will help develop the state of mind that characterizes strategic thinking. This
process involves moving from an ideal strategy (rather like the vision or intended
strategy referred to in the literature) to a possible strategy. One outcome of this process is a
new state of mind, which subsequently guides managers daily actions. We argue that, when
this happens, strategy becomes a shared framework in the mind of managers. Then, selfinduced reflection shapes each individuals response to new information and becomes, over
time, the driver of a refined state of mind built around an agreed-upon scheme, until a
reconsideration of the strategy currently in place is called for.
The approaches to strategy that currently dominate the field (strategy as an ex-post
pattern of decisions, as vision, as positioning, or as revolution, to mention the most frequently
cited) provide only partial responses to practitioners demands for a useful management tool.
We believe that the core of the problem may be the failure to capture the interconnected
nature of strategy creation. Academics have placed great emphasis on either inside or outside
aspects of the firm in the search for strategy, but have rarely proposed a feasible way to
integrate the two. Planners have traditionally looked at outside aspects, underrating the
organizational factors, while most managers have limited their search for implementation
alternatives to the limited range of organizational solutions their companies have had
experience of. The demands currently placed on management require establishing
interconnections between the principles which guide aciton at different levels in the
organization. The need to interconnect the efforts to set a direction, create flexibility and
provide meaning as outcomes of the strategy creation process is now stronger than ever.
We believe that the notions of strategic thinking and strategy presented in this paper
may shed new light on how to link aspects such as aligning efforts within the firm, providing
guidance for managers at different levels in the organization as unexpected threats and
opportunities unfold, and facilitating certain aspects of strategy implementation. If we
succeed in integrating some of these aspects, the viewpoint embraced by this paper and
similar research efforts may conribute to progress in both the academic demand for a deeper
understanding of the phenomenon and managers concern for a practical response to this
highly important issue.

2. Strategic thinking takes shape

While the term strategic thinking has come into wider use in the literature over the
last two decades, it has been used mainly in a generic sense. Until very recently, two basic
conceptions were widely accepted in the field: one identified strategic thinking with thinking

about strategy, and the other with an approach to strategy that could be distinguished from
strategic planning.
In the first view, what determined the nature of strategic thinking was the nature of
the issue under consideration (i.e. strategy). For instance, Raimond (1996) compares the
Western and Japanese ways of thinking about strategy, the former being rigorous, analytical
and quantitative, and the latter creative, imaginative and concerned with values, emotional
commitment and energy. Similarly, strategic thinking has been defined as thinking
strategically. Bates and Dilliard (1993) propose a method for identifying individuals who
have the ability and predisposition to think strategically as well as certain capabilities.
According to Suutari (1993), strategic thinking is the ability to generate ideas and make
decisions based on an understanding of the precepts of strategy formulation and in
accordance with the businesss strategic objectives and direction. Ginsberg (1994) conceives
strategic thinking as the process of resolving critical strategic issues (from generating creative
ideas for solutions to evaluating these ideas).
Practitioners use the term in a similar sense. For Lawrence Bossidy (1988), former
GEC chief executive, strategic thinking identifies and synthesizes the forces that affect ones
business, while strategic management uses strategic thinking to set business objectives and
communicate them to the organization. Kenichi Ohmae (1982), in his book The Mind of the
Strategist, describes strategic thinking as a combination of analytic method (testing out,
digesting and assigning priorities to ideas) and mental elasticity (giving free rein to
imagination and entrepreneurial flair in order to come up with bold and innovative strategic
ideas).
In a second, yet very similar approach, some authors use the terms strategic
thinking and strategic management interchangeably. For example, Wilson (1994) writes,
Having survived its original design flaws, strategic planning has evolved into a viable
system of strategic management or strategic thinking. Nsi (1991:27) approaches it as an
overall concept, a doctrine, a system of propositions and ideas about strategy and strategic
action.
As the limitations of formal planning have become apparent, a third, more concrete
approach to strategic thinking has sought to define more clearly the role of the managers
involved in strategic planning. Over the years, the rigid processes used in strategic planning
were blamed for creating a climate that impeded creative thinking. Strategic thinking has
been proposed as a way to reinstate thinking about strategic issues as the core of planning
discussions. For example, McKinsey partners Morrison and Lee, in an effort to redirect
attention away from the mechanics of planning, refer to strategic thinking as the management
task of dealing with substantive issues in strategy (Financial Times, July 27, 1979, p.21). In a
1987 article in The Economist, Michael Porter uses the term strategic thinking to mean
thinking about strategic issues. He suggests broadening the scope of planning to include
every aspect of competitive analysis, and so avoid falling into the trap of routines.
Finally, the fourth major approach to the concept of strategic thinking, based on the
nature of the process, has become increasingly prevalent over the last decade. Further
insights in the practitioner literature revolve around various aspects of how strategic thinking
relates to strategic planning. Robert (1993) suggests that strategic thinking precedes strategic
planning it generates a unique picture of what the organization should look like in the
future, based on qualitative rather than quantitative variables.

Among the suggestions put forward by the high-level executives who took part as
speakers in the Conference Boards 1988 Strategic Planning Conference (reported in
Reimann, 1988) was the idea of moving beyond the traditional mechanical approach toward
a more creative and valuable process of strategic thinking. One finds claims such as
strategic thinking lives through dialogue or dies through writers cramp, or strategic
thinking should occur where insight and knowledge meet. Statements like these are very
inspiring if one has a grasp of what strategic thinking is, otherwise the concept itself becomes
a key missing piece, as if it were the vision of the final picture in the development of a giant
jigsaw puzzle, to borrow an analogy used in the same report.
In summary, up to the early 1990s strategic thinking was dealt with in very general
terms and without a specific meaning. Only recently has management research developed
more concrete approaches to the notion. Mintzbergs work (1994) is an example of a growing
stream of research that considers strategic thinking not merely as a catchall for all sorts of
ideas about strategic management, but as a particular way of thinking, with specific
characteristics of its own. Mintzberg claims that strategic planning is an analytical process
whose purpose is to programme a predefined strategy; the result is a plan. Strategic thinking,
in contrast, is a process of synthesis, using intuition and creativity, that results in an
integrated perspective of the enterprise. Traditional planning tends to drive out strategic
thinking. Nsi (1991) makes a similar comparison, differentiating between the hard line
analytical approach, with its traditional focus on competition, and the soft line approach,
which emphasizes values and culture.
Liedtka (1998) approaches strategic thinking as derived from managerial
competences. She defines strategic thinking as a particular way of thinking that includes five
specific elements: it incorporates a systems perspective, is intent-focused, involves thinking
in time, is hypothesis-driven, and is intelligently opportunistic. Having these competences is
what characterizes the individual strategic thinker.
For Nadler (1994), strategic thinking is a creative process of thinking about,
forming, acting on, and learning about strategy. A collaborative process of formulating
strategy generates shared learning, a frame of reference which constitutes the context for
small decisions made over time.
Some authors suggest focusing on the consequences of strategic thinking rather than
on the characteristics of a strategic thinker. Takur and Calingo conceive strategic thinking as
the conceptual glue that holds the organization together in its pursuit of value creation, and
suggest an illustrative analogy: Strategic thinking can be imagined as the strand of rope in a
string of pearls. The strand holds all the beads without itself being visible. If some of the
beads are removed to measure the breadth of the chain, the beauty or essence of the necklace
would be destroyed (Takur and Calingo, 1992:48).
De Geus (1988) claims, on the basis of his experience at Shell, that the real purpose
of effective planning is not to make plans but to change the mental models that decision
makers carry around in their heads. According to de Geus, planning provides a context that
facilitates team thinking, which has to do with revising each team members view of the
world. Planning becomes a key means to accelerate institutional learning. Hendry, Johnson
and Newton (1993) conceive strategic thinking as the cognitive processes through which
organizations and environments are understood and strategies are developed.
Strategic thinking, as a structure of meaning (schema), is presented both as the
medium of social cognitive action and as the product of such action. According to Boland et

al. (1990), the dynamic engagement [in an ambiguous situation] is the medium of strategic
thought, and a newly reconstructed or enacted schema is the product of strategic thought.
We tend to agree with Hansen, who, based on the experience he gained from
monitoring the development of a company over a 15-year period, concludes, I am inclined
to suggest that strategic thinking is more a state of mind than just another planning process
(1991:129). The following sections describe a possible process that could lead to strategic
thinking, but focus on strategic thinking as a state of mind. This conception provides the
foundation for a new approach to strategy as a derivative of strategic thinking.

3. Strategic thinking as a process and as a state of mind

We conceive of strategic thinking as a set of ideas, principles, policies, concrete
rules and operational procedures that shape the way managers think about their role and that
guide their daily actions. This set of ideas and rules is more malleable than corporate
ideology or organizational identity, which are more permanent. Also, strategic thinking is
different from operational plans, which represent more concrete commitments and specific
actions at particular points in time.
As Peter Senge (1992) warns, new ideas and insights will never be implemented
unless they become part of a managers mental model. Strategic thinking can guide
managerial action only if it is embedded as a frame of reference. In this sense, therefore,
strategic thinking can be thought of as a state of mind.
Each level within the company sets the guidelines and constraints within which
strategic thinking will develop at lower levels. If aggregate frameworks are clearly
established, and if these frameworks have been thoroughly internalized by the managers
concerned, then they will actively manage the way a shared understanding builds up. Tregoe
and Zimmerman (1980:79) argue that individual managers who can carry their
organizations strategy in their head are always with it. Every plan that must be developed,
every decision that must be made, can be tested against this mental picture. This is day-today implementation in its most basic and important sense.
Strategic thinking, as a structure of meaning, is not only an end product but also a
context of social cognitive action. The process of building the set of ideas and insights that
constitute strategic thinking has to be formally managed as a deliberate process. It can neither
emerge spontaneously nor be the result of the sedimentation of management practices and
habits over time. Yet some of the insights will, of course, come from self-induced reflection
and mental discovery. However, unless a formal approach to strategy is set up, ongoing
decisions are likely to be governed by the unquestioned assumptions, beliefs and values
encapsulated in managers experience and the organizational culture (Johnson, 1992).
Hansen (1991) suggests that strategy be considered an outcome of strategic thinking,
derived from a shared vision and setting a direction for the organization. Tregoe and
Zimmerman define strategy as the framework which guides the choices that determine the
nature and direction of an organization (1980:17). Combining these two views, we conceive
strategy as the output of a process guided to create a shared framework in the mind of
managers. Strategy is narrower and more specific than strategic thinking. Strategy yields
common guidelines at different levels, made up of specific agreements and decisions, which

company employees internalize and follow. Yet strategy does not dictate how these
guidelines are to be implemented in practice. That is for the individual manager to decide.
The process we suggest here differs significantly from more classical approaches to
strategy formulation based on analytic tools and techniques. It starts by creating a gap, then
envisions an ideal (along much the same lines as strategic vision or strategic intent) and then
gradually settles into a feasible position (Masifern, 1984; 1997). The resulting conceptual
framework constitutes a shell which enables managers to make real-time decisions that are
coordinated and integrated under the agreed strategy.
Therefore, strategic thinking contains features of both a process and a state of mind.
It begins with deliberate search, continues with the building of a shared framework in
managers minds, moves on to implementation in daily activity, and finally includes a review
and update of its basic contents as conditions change outside and inside the company.
The following sections address each of these issues by outlining what we believe to
be the key building blocks of our approach to strategic thinking.

4. Strategic thinking as the outcome of downscaling the ideal strategy to a possible

strategy
After reviewing some of the most important works on strategy definition, Hax and
Majluf propose an integrative and comprehensive concept of strategy. They view strategy as
a fundamental framework through which an organization can assert its vital continuity,
while, at the same time, it forcefully facilitates its adaptation to a changing environment
(1991:6). Their multidimensional approach certainly overcomes most of the limitations of
earlier perspectives that centered strategy around a set of decisions and actions oriented
towards the creation of competitive advantage.
However, todays highly dynamic and complex environment places increasingly
heavy demands on managers. All levels of management have to deal with situations that
would have been unthinkable only a short time ago. Fast front-line execution has to be
consistent with the corporate sense of unity, direction and purpose that is central to most
traditional definitions of strategy. The rule that front-line managers must wait for a decision
from above no longer applies. Top managers need to regenerate their companies and build
organizations capable of changing quickly and repeatedly (Masifern, 1984; 1997).
Organizations will gradually give managers greater autonomy, but at the same time demand
greater responsibility from them and expect a performance that justifies their position.
Management procedures should contribute to training people to adapt to new jobs in
constantly changing organizations.
Traditional plans depreciate very fast. Part of the problem is that our analysis
progresses much more slowly than the changes in the environment. By the time the plans are
printed and published, they are already obsolete. A number of authors therefore exhort us to
bring creativity and imagination into the strategy-making process (James B. Quinn, Tom
Peters, Henry Mintzberg, to mention just a few). Yet the literature provides only limited
guidance on the factors involved in the process of moving from creative thinking to action.
Managers need to operate under aligned frames of reference. The state of mind
identified here as strategic thinking is the result of a formal process. A possible systematic

approach to the development of strategic thinking is to involve managers in formal

deliberation on how to move from the ideal strategy to a possible strategy for the business
unit concerned. The ideal strategy is the strategy that responds best to external impacts (1)
(Masifern, 1984; 1997). It is a distant target, a mental image of a utopian future state of the
business unit concerned. It is unconstrained by any feature of the existing internal situation
(position, capabilities, organizational design, etc.). The ideal strategy can originate at any
level of the organization, created by teams of managers in the focal unit, and does not come
from high-level executives (apart from the institutional and corporate levels of strategy). The
ideal strategy conveys an image of the best possible position for the company or business unit
in the changed circumstances it is likely to find itself in in the future. In a sense, it represents
what we would like to do, in much the same way as Andrews and other authors have used the
concept in the past.
The possible strategy is the result of scaling down the ideal strategy to a feasible end
point. From the largely utopian image, we descend the steps created by limitations in
resources, organizational culture, legislation, current market trends, etc. Internal analysis
plays a major role in arriving at the possible but not the ideal strategy. From an initial
position of what we envision, we gradually reduce our ambitions by considering issues such
as internal and external acceptance, the level of costs involved, the risks we are willing to
assume, and so on. This process modifies the conceptual framework of the people involved
and generates a new state of mind: the content of strategic thinking.
Conceiving the ideal strategy is mainly a creative process, driven by logical
reasoning, imagination and the will to transform reality. This deductive process yields
specific sets of goals, ideas and insights. One could argue that an inductive procedure,
deriving a general view from particular aspects of organizational life, would be a valid
approach. However, we believe that nowadays the deductive method offers more immediate
results and original solutions, so long as one has some experience in using it. We suggest that
analytic tools and procedures play a critical role in validating conclusions and can also
generate insights by raising interesting questions from different angles.
What we have expounded so far has a number of implications. We shall just touch
briefly on a few of the conceptual implications here and leave the more practical ones for a
later section.

First, the popular academic debate over the dominant direction of influence
between strategy and structure (2) can be seen in a new light. Structure is not
only a means of implementing strategy, but also a determinant of the possible
strategy (though not of the ideal strategy).

Second, it is the possible strategy that is implemented, not the ideal one. Yet
implementation aims not only to command the organizational resources and
arrangements to attain the possible strategy, but also to reduce the gap between
the possible and the ideal strategy. This method of articulating strategic

(1) Although various concepts have been proposed to tackle the notion of an ideal (e.g. Hamel and Prahalads
strategic intent, Collins and Porrass vision, Ackoffs idealized design, or Holyoak and Thagards
target analogue), we believe that none of them captures the full meaning of the ideal strategy as presented
in this paper.
(1) We use the notion of structure here in its broader sense to include management structure, management
systems, management style, and people and job design; this is a key aspect of implementation that has
gradually been introduced in the field as organization.

thinking may bring new insights regarding the usefulness of gap analysis in
management, building on the work of Andrews (1987), Hamel and Prahalad
(1989), Liedtka and Rosenblum (1996), and others. Building an area of
agreement on the ideal strategy will help create a common purpose in the
company. The effort to achieve a consensus in resolving the tension between
the ideal and the possible strategy generates shared understanding. The desire
to close the gap between the two drives organizational learning.

A manager is unlikely to delegate to a subordinate unless the two share an

understanding of purposes and priorities. Strategic thinking may help bridge
the gap between strategy formulation and implementation, which in the
academic field have been treated as separate areas of concern, even though
practicing managers claim that they act while they formulate and think while
they implement.

Finally, Masifern (1997) and Vil (1997) describe how the failure to make the
distinction between the ideal and the possible strategy may be an important
factor in explaining strategy incrementalism. Managers often admit that the
strategies of consecutive years tend to look very alike, which is surprising
given the tremendous changes taking place in and around most companies and
the fact that one of the most important functions of strategy is to enable
companies to adapt to changing conditions. We suggest that the failure to
appreciate the need to change a companys strategy may be due to a behavioral
limitation, not a rational one, in the way we use techniques such as SWOT
analysis.

5. Strategic thinking as a specific frame of reference

Managers can approach information processing in two dominant ways (Walsh,
1995). They can either let past experience guide current information processing, or they can
let the current information context guide the process. Walsh claims that, in the former case, it
is the cognitive structures generated from experience that affect individuals abilities to
attend to, encode and make inferences about new information. In the latter case, the new
information itself shapes individuals response to it, which will include developing amended
knowledge structures to be used in the first fashion.
Empirical researchers tend to link strategic thinking to mental representations of
strategic decision makers (see Huff, 1990). Frame of reference is a general term for the
knowledge structure that an individual draws upon to guide his/her interpretations, inferences
and actions in any given situation. However, we argue that the mere existence of a mental
scheme does not make the actions of a manager or team strategic.
We can categorize these frames of reference in four types, according to the content
and drivers for modification of a managers mindset and whether the state of mind is singular
or shared, as shown in Figure 1 below.
[1] This represents a state of mind that is updated solely on the basis of
accumulating personal experience, along with the values and beliefs resulting
from immersion in a given organizational culture. These individual
characteristics result from the sedimentation of practices and have an enduring

character. An individual mindset which is modified on the basis of experience,

values, beliefs and habits we shall call a drifted frame of reference. It is not
modified through deep decisions and reconsiderations on the part of the focal
person, but mainly through external stimuli (such as new company values or
new organizational rules) and ongoing personal incidents. The individuals
innate gifts and personality traits have considerable influence on the meanings
and connections that make up the actual content of the individual mindset.
Leaders who have held a position of power in the organization for a certain
length of time may have little incentive to deviate from [1], since they are
likely to have adopted a way of behaving which they find comfortable and
which fits their own set of ideas. The fact that the corporate leader is settled in
[1] may explain, in part, why most organizations automatically resist new
truths, and why it is so difficult to change the corporate mind. This topic has
been extensively covered in the literature; for instance, Chris Argyris has
written about how individuals in companies engage in what he calls
organizational defensive routines to preserve their status and abiding sense of
security. The feeling of comfort is a major obstacle to moving to frame [2].
[2] This represents a frame of reference that is updated on a continuous and
deliberate basis. In light of new events that catch his/her attention, the manager
ponders the circumstances and adjusts his/her mindset to fit the new reality.
This mindset is driven by insights and formal decisions. Skills of reflection, as
defined by Peter Senge, shape the mental model. This kind of person is
genuinely interested in finding flaws in his/her internal logic and corrects
his/her view of the world accordingly. We can characterize this as a reflected
frame of reference.
The boundary between the drifted and the reflected frames of reference is thin.
It is reasonable to question whether a reflected mindset can be sustained if it is
merely an individual, isolated effort. Frame [2] can easily regress into [1], as
the significant activities are frequently shortchanged in most organizations
because resources, people and management attention are directed towards
short-run demands. Cognitive limitations, such as our tendency to see mainly
what we believe in, and facts of organizational behavior, such as the difficulty
of challenging accepted wisdom and the established order, all contribute to
make [2] anything but a stable state of mind. We maintain that a manager needs
to be equipped with a formal procedure in order to reach the idiosyncratic
mode of reflective thinking. Even though there may be such a thing as an
isolated strategic thinker, building the cognitive structure that characterizes
strategic thinking will achieve the best results when it is conducted by teams of
managers, made up of people who have to coordinate their activities and
integrate their efforts.

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Figure 1. Types of frame of reference

Individual

Collective

Habits
values

Insights
decisions

Drifted
frame of
reference

Reflected
frame of
reference

(1)

(2)

(3)

(4)

Enduring
organizational
mindset

Strategic
thinking

[3] This is best described as an enduring organizational mindset, an essentially

inflexible collective mind that changes only gradually. It is cultural in nature,
insofar as it is the deeper level of basic assumptions, values and beliefs shared
by the members of an organization that shape the individuals state of mind.
Common patterns of behavior operate below the level of awareness and define
the central taken for grantedness of the managers role and worldview. The
realm of organizational culture (Schein, 1986) belongs to this cell. However,
other characterizations also capture aspects of this sedimented collective mind.
For example, Albert and Whettens (1985) organizational identity defined as
managers beliefs about what is central, distinctive and enduring about their
organization may have some value here. Prahalad and Bettis (1986) introduce
the notion of dominant logic as mental maps developed through experience in
core business. They suggest that managers conceptualize the business and
make critical resource allocations on the basis of representations that are likely
to be of historical environments rather than of current circumstances.
It is certainly possible that organizational members will act according to the
leaders set of beliefs, or those of their immediate boss. Yet these people will
not grasp those beliefs as their own. In the move from [1] to [3], the key ideas
that shape mindsets belong to those who generated them, not to those who
receive them. This situation differs from [4], where all organizational members
have to give up some personal preference in order to reach a common ground
of shared understanding, consensus and commitment.
(4) This constitutes what we refer to as strategic thinking. As mentioned above, it
represents a flexible frame of reference which is refined as a result of
reflection, reconsideration and new insights, and which places objectives and
priorities as the common ground with the frames of reference of the other
managers with whom the focal manager has to interact. Some organizations
facilitate strategic thinking by putting in place a formal process aimed at
producing a conceptual shell that is shared in the minds of managers. The

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drivers of these coupled frames of reference are new insights and formal
decisions made through discussion, as a result of the managers involvement in
a deliberate reconsideration of the shared understanding which guides their
actions.
Strategic thinking is put together and reshaped as a team formally develops
consensus and commitment. The rules governing progress are not derived from
hierarchy or command-and-control styles of management. There is no
imposition of ideas by a leader or boss; instead, contributions to find the best
solution for the unit of interest are made by all. Every member of the team has
to give up some personal preferences. The final outcome enhances the capacity
for action of all those involved, yet it also curtails their freedom, to the extent
that everybody is committed to the agreements reached. Commitments are
made on the basis of purposes and priorities, not according to specific courses
of action, as discussed below.
Strategic thinking represents a context where strategy and organization are to
be developed taking into account aspects of both outside-in and inside-out
approaches to strategy. Initially, external factors drive the willingness to
transform reality. However, the realm of strategic thinking takes us into a
dynamic setting where frequent changes are made to organizational
arrangements in a continuous attempt to move the company in the direction of
the ideal strategy. New operating procedures are to shape habits and ways of
working. Yet emergent values, beliefs and personal experiences per se do not
create strategic thinking. For the resulting frame of reference to constitute
strategic thinking, it has to be the outcome of a deliberate process, with
intentional and active participation of the focal manager. During this process,
the major principles, basic assumptions and key rules of organizational action
are validated and/or reconsidered. Subsequently, self-induced reflection will
shape the individuals response to incoming information. These are the main
reasons for the assertion that not just any state of mind amounts to strategic
thinking. This is also the rationale behind our claim that strategic thinking is
the result of formal decisions that guide daily activity, and not just any mental
frame that precedes action.

6. An alternative approach to strategy as derived from strategic thinking

Tregoe and Zimmerman address a critical aspect of the link between formulation and
implementation when they claim that Strategy as a framework must be carefully integrated
into the thinking of managers, otherwise, strategy will simply not happen (1980:98). This
notion of strategic thinking leads us to conceive strategy as a shared framework in the mind
of managers. This represents an outcome crystallized as a conceptual shell that enables
managers to make decisions in real time and, more importantly, coordinates and integrates
individual efforts under a single agreed-upon strategy. The authors add, If key strategic
choices are made in the absence of a [shared] framework, top management abdicates control
and runs the risk of having a direction which is fragmented and in the hands of whoever is
making these choices (Tregoe and Zimmerman, 1980).
Strategy lies at an intermediate level of specificity between strategic thinking and
plans (whether strategic or operational). Strategic thinking is far removed from clear-cut

12

specifications. It will not be actually written down, so it leaves a lot of room for operational
freedom. Plans are very specific; they represent concrete and clearly spelled-out
commitments. Codifying strategy, writing it down, is not a necessary goal, and we argue that
it should not be so. Strategy is about guiding action without close fastening or afflicting ties.
Nevertheless, a team may wish to write out a few aspects of the strategy and make them
clearly explicit in order to ensure that proper deliberation has taken place. Traditional
approaches to strategy have suggested that it needs to be articulated, converting tacit
knowledge into explicit knowledge. In todays environment, the critical task is
internalization, using tacit and explicit knowledge to refine ones own mental framework and
knowledge base.
The collaborative process of arriving at strategy generates shared learning, an
agreed-upon reference which clarifies the context in which small decisions are to be made
over time. The shared framework does not impose concrete courses of action on managers.
This is very much in line with Robert (1993), who calls on strategic thinking to provide a
road map for creating an effective business strategy without dictating specific details. He
adds that this would create a common direction, a shared vision that all company employees
could understand and follow. It would enhance communication and generate a set of filters
through which day-to-day decision making could be rationalized.
During the 1970s, it was generally agreed that strategy should be approached in
adaptive, contingent and operating modes. Today it is imperative that strategy leave ample
degrees of freedom, so that managers can accommodate their daily action to unforeseeable
events. In doing so, it would respond to Suutaris more recent suggestion that strategic
thinking should provide a bridge between the planned and the adaptive modes of strategy
(Suutari, 1993).
In the past, planning significantly hindered the autonomy of the lower levels of
management. Today, top managers have to avoid specifying the tasks to be performed by
their subordinates. Middle managers use their intelligence in deciding how to attain the
agreed-upon targets. Faced with unexpected events, they assess whether it is possible to act in
the spirit of the shared framework. Eventually, significant challenges to the common logic
will call for a collective revision, and a new, deliberate process of strategic thinking will start.
Until this happens, however, decisions in real time will have followed the dictums of a
strategy in an ongoing process of adaptation. We believe that this is a major advantage of the
approach to strategy derived from strategic thinking when compared to other ways of
conceiving strategy-making.
Mintzberg proposes viewing strategy as a perspective, its contents consisting of an
ingrained way of perceiving the world (Mintzberg and Quinn, 1992:16). In an earlier paper,
the same author suggests that managers either consciously, though more often unconsciously,
build an emergent strategy through their daily actions. In our opinion, to the extent that a
shared framework is internalized in the minds of strategists, strategy turns out to be a guide
for daily action which nevertheless permits on-the-spot adjustment to circumstances. Once
new developments unfold, a deliberate strategy fosters learning, as alternative courses of
action are compared. Some options stem from the previously formed strategy, others from a
process of reflection which extends the shared mindset, while others may demand a more
profound reflection since they imply deviating from the agreed-upon framework. A reflected
pattern of decisions guided by the deliberate strategy (a shared framework in the mind of
strategists) will foster organizational learning before and after the strategy is formulated,
whereas a purely emergent strategy would preclude it.

13

7. Implications for managers

Even though most academics, business people and consultants have recognized that
the purpose of strategy formulation can no longer lie in generating strategic plans, critics of
formal strategic planning have offered little guidance on how to overcome its limitations and
address CEOs concerns about turning strategic vision into an operational reality.
The managerial approach outlined here is developed in a way that tries to respond to
the concerns of top management on how to spread in their organizations the ability to manage
by strategy in todays rapidly changing environment. Strategic thinking can contribute to this
goal by aiding top management efforts to build a shared understanding of strategic issues and
by encouraging actions at the front line which are consistent with the strategy pursued by the
firm. While more definitive conclusions require further empirical testing, it is nevertheless
possible to single out a series of potential advantages associated with strategic thinking on the
basis of the authors experience of work completed for a few companies and the rationale
advanced in this paper:

Daily actions are easily integrated, since they are born of the same framework.
Managers make decisions in the light of a shared understanding of objectives
and priorities, not of preconceived plans. Each manager can adapt strategy,
from the time it was created as a shared framework, to accommodate external
and internal changing conditions (to the extent that these are not radical
changes and do not call for a re-evaluation of strategy). As a consequence,
daily decisions are integrated under a shared understanding without having to
wait until the next strategy meeting takes place.

Decisions stemming from different departments display a higher level of

coordination, since managers have a better understanding of their common
purpose. Any manager follows at any given time both the premises of his/her
basic discipline (e.g. finance, marketing, logistics, purchasing, and the like) and
the guidelines of the strategy of the unit he/she serves in.

Strategic thinking translates into speed, since it facilitates decision making. It

also guarantees flexibility, since it makes it possible to change plans and tailor
actions to specific changing conditions. An organization which has developed
the capacity for strategic thinking among its members can locate decision
making close to where the action takes place. Freedom to decide enables swift
responses.

Strategic thinking may provide a common language that invites employees at

all levels to engage in strategic conversations. Shared understanding depends
on open communication, which both requires and contributes to aligned mental
models and a common language. Conversations articulate individuals thinking
and so become a central vehicle for developing a coherent and evolving motion
picture of strategy and organizational design.

Strategic thinking makes delegation easier, since expectations are aligned and
become more foreseeable both from the viewpoint of a manager and from that
of his/her collaborators. It can also become a vehicle for self-control, since it
facilitates self-evaluation of progress without having to resort to hierarchical
means of supervision.

14

To the extent that it is generated by a deductive approach, strategic thinking

breeds innovation. It facilitates the emergence of ambitious objectives, which is
the essence of escaping from the inertia of current strategy to enable drastic
changes in the way the firm builds its future. Strategic thinking entails a
process of creatively searching for alternative ways to close the gap between
the ideal strategy and the possible strategy for the company as a whole and for
its different units.

If strategic thinking contributes to a common language, a shared understanding and

organizational learning, it may become an important ingredient of the glue that will hold
together the organizations of the future.

8. Conclusions
In line with the emerging stream of research in the strategy field that regards
strategic thinking as a better way to approach the question of strategy than traditional
strategic planning, we argue that one of the most significant sources of competitive advantage
for companies in the future will be their ability to build a shared understanding. The approach
outlined in this paper sheds new light on the mainstream approach to strategy making.
Strategic thinking, as described here, may provide the necessary context to align strategy
formulation, certain aspects of implementation (such as integration, coordination and
delegation) and daily action. This notion of strategy leads to a fundamental issue in
management, namely the fact that organizations are instruments for accomplishing
collectively what cannot be done alone.
When strategy is regarded as an internalized scheme, it may add to a series of
concepts introduced in the management literature which attempt to identify the glue that
holds an organization together. To mention only the work of a couple of seminal authors,
Peter Drucker (1994) refers to the theory of the business as the set of fundamental
assumptions that shape any organizations behavior, dictate its decisions and define what are
considered meaningful results, and argues that this construct should be treated as a hypothesis
subject to continuous testing. And Philip Selznick speaks of the character of an
organization (1957: 47), conceived as distinct and integrated commitments to ways of acting
and responding that are built right into it.
The way one approaches strategy has major implications for putting it into practice.
Implementation will not happen unless managers are involved in the strategy formation
process and feel the resulting strategy as their own. This would certainly be desribed as an
intangible asset in academic terms, yet we argue that Strategic thinking feels almost tangible
when one has it.
Successful business strategies result not from rigorous analysis but from a particular
state of mind (Ohmae, 1982:4). The essence of strategy formation is not creating plans, but
building a shared framework in the minds of strategists. Given the persistence of change, it
may be that in the near future, in strategically managed firms, good managers will not be
those who meet plans, but those capable of changing plans according to strategy.

15

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