Advertising

Last Updated on December 1, 2020

How to Build Strategic Thinking Skills for Effective Leadership

How to Build Strategic Thinking Skills for Effective Leadership
Advertising

Have you been thinking of how you can be a more strategic leader during these uncertain times? Has the pandemic thrown a wrench at all your carefully laid out plans and initiatives?

You’re not alone. The truth is, we all want some stability in our careers and teams during this disruptive pandemic.

However, this now requires a bit more effort than before and making the leap from merely surviving to thriving means buckling down to some serious strategic thinking and maintaining a determined mindset.

Is There a Way to Thrive Despite These Disruptions?

Essentially – yes, although you need to be willing to put in the work. Every leader wants to develop strategic thinking skills so that they can enhance overall team performance and boost their company’s success, but what exactly does it mean to be strategic in the context of the times we live in?

If you happen to be in a leadership position in your organization right now, you are most probably navigating precarious waters given the disruptions caused by the pandemic. There’s a lot more pressure than before because your actions and decisions will have a much greater impact these days not just on you, but also to the people who are part of your team.

Companies often bring me in to coach executives on strategic thinking and planning. And while pre-pandemic I would usually start by highlighting the advantages of strategic thinking, nowadays, I always begin these Zoom coaching sessions by driving home the point that this pandemic has now made strategic thinking not just an option but an absolute must.

Advertising

Assessing and making plans through the lens of a good strategy might require significant work at first. Nevertheless, you can take comfort in the fact that the rewards will far outweigh the effort, as you’ll soon see after following the 8 strategic steps I have outlined below.

8 Steps to Strategic Thinking

As events unfold during these strange times, you’re bound to feel wrong-footed every now and then. Being a leader during this pandemic means preparing for more change not just for you, but for your whole team as well.

As states and cities go through a cycle of lockdowns and reopening, employees will experience the full gamut of human emotions in dizzying speed, and you will often be called on to provide insight and stability to your team and workplace.

Strategic thinking is all about anticipation and preparation. Rather than expending your energy merely helping your company put out fires and survive, you can put the time to better use by charting out a solid plan that can protect and help you and your company thrive.

Take the following steps to build solid initiatives and roll out successful projects:

Step 1: Step Back, Then Set the Scope

One of the things that leaders get wrong during their first attempt at strategic thinking is expecting that it is just another item on a checklist. The truth is, you need to take a good, long look at the bigger picture before anything else. This means decisively prioritizing and stepping away from tasks that can be delegated to others. Free up your schedule so you can focus on this crucial task at hand.

Advertising

Then, proceed with setting the scope and the strategic goals of the project or initiative you plan to build or execute. Ask yourself the bigger question of why you need to embark on a particular project and when would be the right time to do so.

You need to set a timeline as well, anywhere from 6 months to 5 years. Keep in mind that your projections will deteriorate the further out you go as you make longer-term plans.

For this reason, add extra resources, flexibility, and resilience if you have a longer timeline. You should also be making the goals less specific if you’re charting it out for the longer term.

Step 2: Make a List of Experts

Make and keep a list of credible people who can contribute solid insight and feedback to your initiative. This could range from key stakeholders to industry experts, mentors, and even colleagues who previously planned and rolled out similar projects.

Reach out to the people on this list regularly while you work through the steps to bring diverse insight into your planning process. This way, you will be able to approach any problem from every angle.

Bringing key stakeholders into this initial process will also display your willingness to listen and empathize with their issues. In return, this will build trust and potentially pave the way for smoother buy-in down the line.

Advertising

Step 3: Anticipate the Future

After identifying your goals and gathering feedback, it’s time to consider what the future would look like if everything goes as you intuitively anticipate. Then, lay out the kind and amount of resources (money, time, social capital) that might be needed to keep this anticipated future running.

Step 4: Brainstorm on Potential Internal and External Problems

Next, think of how the future would look if you encountered unexpected problems internal and external to the business activity that seriously jeopardize your expected vision of the future. Write out what kind of potential problems you might encounter, including low-probability ones.

Assess the likelihood that you will run into each problem. To gauge, multiply the likelihood by the number of resources needed to address the problem. Try to convert the resources into money if possible so that you can have a single unit of measurement.

Then, think of what steps you can take to address these internal and external problems before they even happen. Write out how much you expect these steps might cost. Lastly, add up all the extra resources that may be needed because of the different possible problems and all the steps you committed to taking to address them in advance.

Step 5: Identify Potential Opportunities, Internal and External

Imagine how your expected plan would look if unexpected opportunities came up. Most of these will be external but consider internal ones as well. Then, gauge the likelihood of each scenario and the number of resources you would need to take advantage of each opportunity. Convert the resources into money if possible.

Then, think of what steps you can take in advance to take advantage of unexpected opportunities and write out how much you expect these steps might cost. Finally, add up all the extra resources that may be needed because of the different unexpected opportunities and all the steps you committed to taking to address them in advance.

Advertising

Step 6: Check for Cognitive Biases

Check for potential cognitive biases that are relevant to you personally or to the organization as a whole, and adjust the resources and plans to address such errors.[1] Make sure to at least check for loss aversion, status quo bias, confirmation bias, attentional bias, overconfidence, optimism bias, pessimism bias, and halo and horns effects.

Step 7: Account for Unknown Unknowns (Black Swans)

To have a more effective strategy, account for black swans as well. These are unknown unknowns -unpredictable events that have potentially severe consequences.

To account for these black swans, add 40 percent to the resources you anticipate. Also, consider ways to make your plans more flexible and secure than you intuitively feel is needed.

Step 8: Communicate and Take the Next Steps

Communicate the plan to your stakeholders, and give them a heads up about the additional resources needed. Then, take the next steps to address the unanticipated problems and take advantage of the opportunities you identified by improving your plans, as well as allocating and reserving resources.

Finally, take note that there will be cases when you’ll need to go back and forth these steps to make improvements, (a fix here, an improvement there) so be comfortable with revisiting your strategy and reaching out to your list of experts.

Conclusion

A great way to deal with feelings of uncertainty during this pandemic is to anticipate obstacles with a good plan – and a sure road to that is practicing strategic thinking.

Advertising

In the coming months and years, you’ll need to continue navigating uncharted territory so that you can lead your team to safe waters. Regularly doing these 8 steps to strategic thinking will ensure that you can prepare for and adapt  to the coming changes with increasing clarity, perspective, and efficiency.[2]

More on Thinking Smarter

Featured photo credit: JESHOOTS.COM via unsplash.com

Reference

More by this author

Dr. Gleb Tsipursky

Cognitive neuroscientist and behavioral economist; CEO of Disaster Avoidance Experts; multiple best-selling author

What Is Loss Aversion And How To Avoid This Bias What Is Abstract Thinking And How To Develop It 8 Effective Ways To Make Hard Decisions Easier 8 Daily Habits To Develop Emotional Intelligence How to Cope with COVID Anxiety And Stress

Trending in Brain Power

1 What Is Loss Aversion And How To Avoid This Bias 2 Are You Right-Brain Dominant? (7 Right Brain Characteristics) 3 How to Tap into Your Right Brain’s Potential 4 How to Think Critically: 5 Powerful Techniques 5 How To Think Effectively: 12 Powerful Techniques

Read Next

Advertising
Advertising

Published on August 2, 2021

What Is Loss Aversion And How To Avoid This Bias

What Is Loss Aversion And How To Avoid This Bias
Advertising

Have you been feeling particularly cautious lately? Do you find yourself avoiding making major or seemingly risky decisions until you feel life has returned to “normal”? This isn’t unusual, and you are not alone. In these uncertain times of the COVID-19 pandemic, people would rather stick with what they perceive as safe. They veer away from making any sudden changes that could rock the boat and resort to loss aversion instead.

After more than a year of having to take drastic measures to secure our safety as well as those of our loved ones, it’s not surprising to find that some people would choose to hunker down even when faced with issues that don’t pose any mortal danger to them.

The pandemic has challenged us to become more resilient—a good thing—and even pick up an additional useful skill or two.[1] However, the flip side presents us with a potentially unfortunate side effect—that it could have altered our risk-taking behavior.

Read on to learn what loss aversion is and how you can avoid this bias.

Taking Risks, Making a Change

Why is it important to have a healthy view of risk? Shouldn’t we approach life with caution to avoid making mistakes?

I would say that, indeed, making careful, decisive choices will yield great results, so long as you can identify the line between being reasonably cautious and being downright fearful. There are also certain patterns in decision-making that you must watch out for.

To illustrate further, I present you with this example: Let’s say you meet a kind stranger who offers you your choice of a great deal with absolutely no tricks. He gives you $45. Then, he asks you if you want to hold on to the money or give it back to him in exchange for a coin flip. If it’s heads, he’ll give you $100 right then and there. If it’s tails, you get nothing.

Advertising

So, which one do you choose? Instant cash in your pocket or a chance to flip the coin? Think hard before you read further.

When I present this coin scenario to different audiences, about 80% say they’ll take the $45 from the stranger. That’s the choice I made when I was also presented with this scenario many years ago. The same can be said for most people in studies of similar choices.[2] And why not? The $45 is a sure thing, after all.

Back then, I thought that I’d certainly feel foolish if I took the risk just for a shot at getting $100 only to lose out. My gut instinct told me to avoid losing. I suppose anyone would feel the same way initially.

Here’s the thing, though. If we run the numbers, the chance of getting heads is 50%, so in half of all cases, you’ll get the $100. In the rest of the cases, you won’t get anything. So, that’s equal to $50 on average, compared with just $45.

Now, imagine if you flipped the coin 10 times, then 100 times, 1,000 times, on to 10,000 times, and then 100,000 times. At 100,000 times, on average you would win $5 million if you picked the coin flip for $100 every time, compared with $4.5 million if you picked $45 each time. The difference is an amazing $500,000.

This means that picking $45 as your gift from the stranger leads to you losing out. The correct choice—the one that will mostly not lead to you losing—is to pick the coin flip. Pick the other choice and you’re pretty much guaranteed to lose over multiple coin flips.

However, you might reason out that I presented the scenario as a one-time deal and not as a repeating opportunity. Perhaps, you’d say that if you knew it was a repeating scenario, then you would have picked differently.

Advertising

The problem lies with this: studies have shown that our gut addresses each scenario we face as a one-off.[3] In reality, we are presented with a multitude of such choices every day. We are goaded by our intuition to deal with each one as an isolated situation. However, these choices are part of a broader repeating pattern where our gut pushes us towards losing money. We avoid risks—fearful of losing—and end up losing in the end.

Why Are People Afraid to Take Risks?

We are prone to shying away from risks due to a mental blindspot called loss aversion.[4] This is one of the many dangerous judgment errors that result from how our brains are wired—what scholars in cognitive neuroscience and behavioral economics call cognitive biases.[5]

Research has shown that people are more sensitive to possible losses than potential gains.[6]

Loss aversion goads us into having an unhealthy view of risk, causing us to have a knee-jerk and one-size-fits-all approach to risk-taking, which is to outright reject it. This rejection runs counter to the resilience and flexibility we gained during these uncertain times. It also poses a threat to how we can continue to adapt to the shifting nature of this pandemic, as well as how to smoothly transition to a post-COVID life.[7]

The Sweeping Influence of Loss Aversion

It’s easy enough to think that loss aversion only comes into play during major decisions or turning points. However, we are presented with a multitude of similar choices daily that—much like in the coin-flip scenario—represent a broader pattern that could cause us to lose out in life.

Remember that loss aversion isn’t just limited to decisions that have a corresponding monetary result. It also applies to situations and circumstances where avoiding a possibly negative outcome might blind you to potentially positive changes in your life.

Here are some aspects of life that can easily be derailed by loss aversion.

Advertising

1. Exiting Toxic Relationships

Have you ever stayed in a relationship (romantic or otherwise) that has clearly already run its course? Perhaps this relationship already causes you distress or keeps you from reaching your personal goals.

Yet, despite indications that you would have a healthier, happier life without this stressful relationship, you find it difficult to walk away because of the disruption it would cause in your life. You worry about the loss of your routine, and this holds you back.

2. Making Much-Needed Career Changes

People are particularly cautious about making career changes especially during this pandemic, opting to “wait it out” and just trudging on until life returns to “normal.”

We need to remember that we may never get back the version of normal that we had pre-pandemic. Just as the world changed and readjusted to COVID, so did each individual, and so did employers.

Jobs and employment are constantly shifting and evolving, more so now than before, so you have to weigh and consider if the loss of an old job is truly that daunting versus transitioning to a new career that could enrich your life mid- and post-pandemic.

3. Dealing With Your Current Pandemic Life and Looking Forward

Loss aversion can trickle down even to the smallest perceivable things in life. With our wariness of COVID-19 modifying our behavior when it comes to going out, physical distancing, and socializing, it’s perfectly understandable to someday come out of this pandemic more cautious, more health-conscious, and more aware of our security than we were before 2020.

However, as we start to consider what the world will be like after the pandemic, we should also plan our lives accordingly. This means that while our social and networking circles were forcibly shrunk in the last year, there is no need to let our lives deliberately stagnate for fear of leaving our comfort zone.

Advertising

It also means that, when the time is right, we must be willing to reintegrate our lives into a changed world and balance the risk with a potentially more meaningful life.

Conclusion

While it might seem daunting, looking ahead into the future calls for a reexamination of loss aversion. If left unchecked, it will keep you from living your best life as it goads you into focusing on what you could lose versus what you might gain.

With or without the pandemic, viewing risk with a steady perspective can indeed be helpful when weighing how to proceed with major life decisions. However, focusing too much on the risk may lead to abject fear, which can keep you from making balanced, decisive choices.

Identifying the repeated pattern of our choices and knowing how to tackle and transform each possible loss into a gain will go a long way in winning in life—with or without a pandemic.

More Biases That Unconsiously Affect Us Every Day

Featured photo credit: AJ Yorio via unsplash.com

Reference

Read Next