Introduction

I am a professional business strategist with 25 years of experience in strategy, innovation and leadership across listed companies, elite consultancies and the British Army. Apart from my military service I have never served in government. I am writing in a personal capacity.

The objective of this paper is to provide a short outsider’s perspective on the scrutiny of strategic thinking to shape the Committee’s perspective. It is based on personal experience and reflections as well as applied research, with scholars noted.

Executive Summary

Strategic thinking is a capability that can be developed through selection and training. For it to translate into good strategy it must be combined with good teamwork and leadership and a supportive institutional context. Effective execution requires not just good strategic thinking but constancy of intent over an extended period and this in turn requires some level of societal consensus on strategic direction, something that currently eludes us in many spheres.

Scrutinising strategic thinking is a difficult task, and itself requires a certain level of strategic thinking. There are nonetheless several indicators of good strategic thinking that Committee members can look for as well as ways to develop strategic thinking in government that the Committee can encourage.

Definition and Characteristics

Strategic thinking can be defined as the mental discipline of developing strategies and plans by evaluating complex scenarios and potential options.

Strategic thinking has several components:

Foresight to see possible futures (scenarios)
Mental models to make specific cause/effect predictions (including of unintended policy consequences and the decisions of diverse and dissimilar people)
Creativity to imagine strategic options
Frameworks to support making trade-offs consistent with overarching goals
Logic and reasoning to ensure rigour
Flexibility to re-evaluate options as new facts become known or the situation changes
Historical understanding and insight

Several impediments can degrade strategic thinking, including well-known cognitive biases. Hubris, as always, is particularly pernicious. Time and resource constraints, along with poor understanding of good strategic thinking, are two other common impediments.

Strategic thinking can exist at the individual and collective levels. This is important because there is tension between many of its characteristics, making it difficult to find them all in one person; this tension—and many cognitive biases—can be mitigated through teamwork and good management.

Strategic thinking is primarily applied to the process of strategy development. Defining strategy is challenging, but we can synthesise a succinct definition by relying on key thinkers. A strategy is:

Targeted at a high-stakes challenge (Richard Rumelt)
A framework for making choices under uncertainty
A set of operative choices for the context as currently understood (Roger Martin)
Open to iteration and evolution over time (Henry Mintzberg)

Strategic thinking can also be applied to planning (which is distinguished from strategy development by the absence of uncertainty), although this is a less cognitively demand task.

Limiting factors

To the extent that the objective of government is to deliver certain outcomes for the country, strategic thinking is a necessary but insufficient input. It is critical that those scrutinising strategic thinking do not judge it solely by its outcomes as it faces many limiting factors.

Durable consensus

Strategic thinking cannot be translated into action without constancy of intent, and this requires durable consensus. One could argue that the United Kingdom is strategically stuck across myriad issues and rather than solving the country’s most important challenges recent governments have delivered a series of suboptimal compromises. This is because we as a nation do not agree on which trade-offs to make, even within political parties; this is not intrinsically a failure of strategic thinking.

Institutional structure

Strategic thinking is done within an institutional structure and this will impact its quality and effectiveness. The challenge of maintaining a national consensus is replicated and sometimes amplified at the institutional level, where rivalry, politics, personality, incentives and bad structure can styme strategy. In the business context, this dysfunction often results in creative destruction, with the legacy company going bankrupt and being replaced. While the default solution for an underperforming company is to reorganise, a better response to such institutional stasis (as Clayton Christensen describes) is often creating fresh subsidiaries partially separate from the legacy institution—a lifeboat, of sorts. Because government institutions and quasi-NGOs never disappear, such a proliferation of entities is probably unhelpful. This highlights the importance of one of strategic thinking’s more prosaic cousins, institution building and renewal. Good institution builders and renovators could be even more rare than good strategic thinkers.

Leadership

Many of strategic thinking’s biggest impediments relate to human nature, and consequently leadership is another critically important contextual factor. Leaders who ‘add too much value’ (Marshall Goldsmith’s polite way of describing overconfident leaders who trust their instincts and are too directive) are inimical to collective strategic thinking. When such leaders are blessed with a personal capacity for strategic thinking (Amazon’s Jeff Bezos, for instance) they are capable of great things, and there is a reason that venture capitalists now prefer to retain and mentor founder CEOs rather than replace them with experienced CEOs. This is not a good model for government, however, which limits executive authority and requires collective strategic thinking. Unfortunately, our institutions are poor at selecting good leaders because we overweight confidence (as documented by Tomas Chamorro-Premuzic) and struggle to evaluate strategic thinking.

Strategy development and execution

The most impressive examples of strategic thinking come from national security, which often benefits from cross-party agreement and constancy of intent. Project Solarium, wherein Eisenhower arguably created grand strategy for the entire Cold War, is the preeminent example. The Apollo program [sic] and the second offset strategy, which led to the US military showcased in Operation Desert Storm, are other examples. All three were underpinned by strategic thinking of such clarity and rigour that they were successfully implemented by multiple governments over ten or more years.

A remarkable source of strategic thinking during this period was Andrew Marshall in the Pentagon’s Office of Net Assessment, who served eight presidents over forty years. Marshall benefited from many of the factors described above: a keen intellect able to ask piercing questions; deep experience; a durable consensus on strategic direction; and a semi-independent structure, among others. His longevity may have been further supported by his excellent networks and lack of executive authority.

Outside of national security, it is often smaller states that are capable of the societal consensus and constancy of intent to enable strategic thinking, strategy development and strategy execution. Singapore is renowned for its economic development strategy; Israel for its start-up success; Norway for its oil industry regulation and sovereign wealth fund. Deep strategic thinking led to strategy development and institution building, all underpinned by a society collectively willing to make the requisite trade-offs.

That said, it is important not to overstate the importance of strategic thinking and strategy generally. Business strategy is often taught through case studies and many give the impression that success comes as a result of strategic thinking when in fact it often comes from tactical adaption and perseverance. For instance, IKEA is a paragon of strategy but its success is not the result of intelligent design. It was forced to build its first showroom when it was prevented from joining a trade show. It allowed customers into its warehouse when the queue into the front door got too long. It developed flatpack furniture when an employee got frustrated trying to fit a table into his car. Similarly, Southwest Airlines—one of the world’s most successful airlines, and the precursor to Ryanair and easyJet—developed its fast-turnaround strategy when it was forced to sell one of its planes to make payroll and had to cover four routes with its remaining three planes. In these cases, good leadership and agile organisations (now exemplified by the Silicon Valley model) substituted for good strategy. Executives often admit in private that their strategic success felt random and chaotic at the time. Few are keen to recognise the importance of timing and luck.

Developing strategic thinking

Strategic thinking is a generalist skill that must be applied in specialist domains. This is somewhat problematic as our system encourages labour specialisation, suggesting that rather than creating a standalone profession the government should have (if it does not already) a short training course and centre of excellence to develop strategic thinking.

Good strategic thinking requires high mental processing ability and a mind that can alternate between process and content, structure and creativity, and detail and abstraction. It also requires a temperament of humility and openness. This constellation can be selected for with psychometrics but is not common. However, it can be achieved collectively rather than individually.

Good strategic thinking requires a toolbox, but not a complicated one. Although the great thinkers do not require checklists and frameworks, they are vital in a thinker’s early development (and, based on Atul Gawande’s work, probably more valuable than most experienced professionals are comfortable admitting). The British military uses Allied Joint Publication-5, Allied Joint Doctrine for the Planning of Operations, which is an excellent guide to strategic thinking and options development that can be tailored to non-military contexts. Surprisingly, one of the most powerful tools is simply knowing how to use a whiteboard and Post-It notes. These can all be taught on a short course.

What is hard to replicate is deep experience, typified by Marshall (although experience can of course ossify). The first mitigation is reading: it is simply remarkable how little most professionals leverage books—a fact of the British character that Erwin Rommel is reputed to have appreciated. Beyond individual study, thoughtfully assembling teams is critical.

Scrutinising strategic thinking

There are so many confounding variables at the strategic level that determining whether an institution’s leaders are doing a good job is one of the most difficult challenges in management. This is no different for evaluating strategic thinking: it is fundamentally difficult. However, there are both process and content clues that can indicate the presence of good strategic thinking. Committee members should:

Check background work. Strategic thinkers should employ frameworks and scenarios to develop their thinking. These should be auditable, and strategy development processes should be defined and strategy assumptions recorded.
Test for cross-party and cross-department engagement. As constancy of purpose is so important, strategic thinking cannot translate into outcomes without some level of consensus. Equally, groupthink can be detrimental. Strategic thinkers should be able to document engagement with people from other parties, departments and groups, and those with different perspectives.
Ask easy and hard questions. Uncertainty is inherent to strategy, and strategic thinkers should be comfortable discussing alternative scenarios and options. They should also be capable of applying different mental models, red-teaming or playing devil’s advocate, and ‘steelmanning’ counterarguments. Good questioning can test these, and often it is the big ‘easy’ questions that are most testing.
Identify bad strategy. Richard Rumelt argues that good strategy should have a ‘kernel’: a diagnosis of “what’s really going on” (the core, underlying challenge); a guiding policy (a lucid solution); and a set of coherent actions (a plan). Good strategic thinking should generate such a kernel. Rumelt further argues that bad strategy is typified by buzzwords and jargon; not being clear or candid about the challenge; focusing on abstract goals and not concrete actions; and using prefabricated templates and frameworks without interpretation.
Develop an intuition for good strategic thinking. As Daniel Kahneman and Gary Klein identified, individuals can trust their intuition when they are experienced and operating in a high-validity environment. Over time, Committee members should be able to achieve this, starting with receiving the same training as those they are scrutinising.
Compare to a working hypothesis. A powerful way to assess strategic thinking is to develop one’s own working hypothesis on the topic to compare it with (without becoming close-minded).
Record predictions. Strategic thinking requires making predictions, even if implicitly, and over time these should have a reasonable accuracy rate. As is practice among The Good Judgment Project’s superforecasters, these should be recorded for assessment.

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