Strategic Thinking in Management Development:
A case study of a scenario-based simulation for strategic leadership programmes
M Meadows
Open University
F O’Brien
University of Warwick
LA Franco
University of Warwick
Abstract
The development of strategic thinking and innovation are an important topic in management research and education. Driven by recent changes in business models, many organisations are investing in executive management programs to help their managers ‘think strategically’ and produce innovative ideas that can transform their current products and services.This paper provides an account of the development and testing of a scenario-based group decision making simulation aimed at fostering and testing strategic thinking among participants enrolled in a strategic leadership programme for a large organisation operating in the UKtransport industry. This developmental paper describes the different stages in developing and implementingthe simulation, and reflects on the experience to draw lessons for future work.
- Strategic thinking in management development
The development of strategic thinking and creativity skills is an important topic in management research and education. For instance, Bonn (2001) argues that a lack of strategic thinking is a major shortcoming in organisations, and that this needs to be remedied by the development of strategic thinking skills at both the individual and organisation level; moreover, strategic thinking at these two levels is inter-related, and must be integrated to build a core competency that is the basis of enduring competitive advantage for the organisation.
There is increasing evidence of significant investment being made by organisations in the development of skills such as strategic and creative thinking in their senior management. Yet the assessment of training needs at an executive level is problematic, because ‘an executive is not a function manager but rather a visionary, who must think in more abstract terms (and) move from tactical to strategic thinking’ (McClelland 1993). Kasharni (1995) highlights the need for marketing staff to have an appreciation of strategic thinking, due to the increasing pace of competition in global markets and rising demand for high standards of product and service quality as well as greater sensitivity to customers. Specific sectors have been analysed in order to understand the unique context that they provide for strategic thinking by senior staff; for example, Useem et al (2005) consider the reasons for sub-optimal decision-making by leaders in a fire-fighting situation, while Goldman (2006)considers the development of strategic thinking in health professionals.
It appears that our understanding of how best to develop these skills in managers is, in itself,still developing. In his book “Managers not MBAs: a hard look at the soft practice of managing and management development”, Mintzberg (2004) argues that MBA faculty have too readily reduced strategic management to a kitbag of analytical techniques that are often inadequate and irrelevant to strategic thinking itself. Easterby-Smith and Davies (1983) point to the difficulty of getting managers to contribute effectively to strategic planning, and argue that managers need to be exposed to strategic issues at an early stage in their careers, and supported by senior staff that create a climate for strategic development. Goldman (2006) identifies ten experiences that contribute to the development of expertise in strategic thinking over the ‘lifetime’ of a manager; these experiences range from family upbringing and education, through being mentored and challenged by key colleagues, to spearheading a major growth initiative and dealing with threats to organisational survival. Graham et al (1992) consider the potential role for model-based case studies in the development of strategic thinking skills in managers, and argue that by combining models with traditional case studies, management educators can provide an effective learning environment that will both improve strategic thinking skills and provide for better integration of modelling with policy and strategy formation.
Building on these ideas of the value of models in supporting strategic thinking skills, this paper provides a case study of a scenario-based simulation exercise facilitated by the authors in a large UK-based organisation in the transport sector. The paper is structured as follows. First, the theoretical rationale underpinning the simulation is discussed, followed by a description of the simulation’s developmental stages. Next, an account of its use by and feedback from students and clients is presented, and this experience is then evaluated by the developers/facilitators. The paper ends with some implications for the future development of this type of simulations that seek to build strategic leadership skills at a senior management level in organisations.
- The context and rationale for the simulation
The client organisation is one of the largest companies operating within the UK transport sector. Discussion with the client organisation began around eight months before the exercise was due to ‘go live’ for the first time. The authors met with representatives of the client organisation, to understand what the training and development needs of their staff were perceived to be. The exercise described here was to be part of a strategic leadership development programme for senior managers in a large organisation in the transport sector. The client wanted the exercise to “build strategic thinking” in programme participants; in particular, they wanted senior management to exhibit a greater awareness and understanding of the needs of stakeholders in their external environment, and an ability to think across the traditional “functional silos” that can prove to be a barrier to effective strategy development and implementation in large organisations.
The authors were invited to meet with the client organisation due to their interests in using methods and models to support strategic conversations within management teams. It was believed that expertise in scenario planning (see for example Schoemaker, 1995) could be used to provide a ‘simulation’ of possible future environments, where participants would be challenged by a range of external and internal events, and required to propose effective and robust strategies that were intended to secure the future of the organisation. In addition, it was felt that a scenario-based simulation exercise should be positioned at the end of the leadership programme, as it would allow participants to synthesise and consolidate their learning from a range of earlier activities.
The developthe simulation, the author drew upon the behavioural complexity view of leadership, which argues that effectiveleadership often requires the performance of multiple (and sometimes competing) roles simultaneously (Denison et al. 1995; Quinn et al 2006).This view attempts to define a portfolio ofroles and behaviors in which a leader engages in response to the complex demands of his/her environment. Such portfolio consists of eight different roles organized around four quadrants which differ in terms of a control-flexibility emphasis and an internal-external focus, as shown in Figure 1. According to this framework, leaders in Quadrant I are creative, clever, resource-oriented and politically astute (they create and do things first); Quadrant II leaders are decisive, directive, task-oriented and work-focused (they compete and do things fast); Quadrant II leaders are procedurally expert, factually oriented, dependable and reliable (they control and do things right); finally, leaders in Quadrant IV are process-oriented, diplomatic, tactful, caring and empathetic (they collaborate and do things together).
Figure1 ABOUT HERE
The competing values framework described above provided a basic organising structure for developing the simulation. Clearly, the client organization wanted emphasis on Quadrant I, which broadly resembles the characteristics of a ‘strategic leader’. However, the authors’ intention was to develop a simulation which could test leadership roles and associated behaviours in all quadrants. The stages in the development of the simulation are described next.
- Developing and running the scenario-based simulation exercise
What follows is a description of the main stages adopted in the development of the scenario based simulation exercise: setting the scene; capturing internal knowledge and external uncertainties; developing materials; piloting; launching; learning. These are summarised in Table 1 below.
Insert Table 1 about here.
3.1.Setting the scene
A series of early meetings with senior executives who were sponsors and/or supporters of the leadership programme were therefore planned. These meetings focused on gaining an explicit understanding of the key issues facing the client organisation. For example, attendees were asked to brainstorm important factors in the external environment (political, social, economic, technological, etc.) that were likely to pose serious challengers to their senior management in the future. A time horizon of around four years hence was chosen, to link the exercise into key funding decisions for the client organisation.
3.2.Capturing internal knowledge and external uncertainties
Using their knowledge of scenario planning methodologies, the authors used the data generated in the previous stage, along with their own knowledge of scenario planning methods (summarised in O’Brien, 2004) to write a ‘first draft’ of a set of scenarios, or alternative futures that the organisation might have to face in around four years time. These were tested on the senior executives sponsoring the exercise, and enhanced in response to their feedback. Next, as the exercise would require participants to propose strategies for the client organisation, the authors invited the senior executives to brainstorm their own responses to the scenarios. These responses were recorded in a “knowledge bank” of possible strategies for the organisation, along with the views of the senior executives on the relative merits of the ideas generated. This “knowledge bank” was intended to support effective feedback to participants once the exercise was ‘live’.
In parallel to these activities, the authors were developing more detailed ideas around how the exercise should be implemented, and negotiating suggestions for the structure and support of the exercise with their clients. For example, it was suggested that the exercise would be run by a panel consisting of senior staff from the client organisation, the authors themselves, and other academic colleagues involved in wider aspects of the leadership development programme.
It was also proposed that the exercise should be run in two stages, to allow time and space for refection and effective learning. In the first stage, the participants would be presented with a scenario of a possible future for the client organisation’s environment, and would be asked to develop a strategic response which they would present to a select panel of senior executives drawn form the organisation and receive feedback on the content of their work. In addition, the simulation developers/facilitators would provide feedback regarding the decision making process that they had followed. In the second stage, participants would be presented with a further scenario (a development of the first) and again required to develop a strategic response which would be presented to the panel, before a final session of feedback and critical reflection. The second stage would allow any learning points emerging from the first stage to be debated and tested out.
3.3.Developing materials
In this stage, the authors were engaged in an intensive period of work on the scenario narratives themselves (i.e. writing detailed descriptions of the future environments that were to be presented to participants), as well as putting together ‘packs’ of supporting materials for the participants and the panel members. The packs included explanations of the objectives of the exercise and instructions on the tasks to be undertaken, as well as detailed timings for each stage of the exercise. For panel members, the authors developed representations of the “knowledge bank” in the form of colour-coded maps, to support the panel when evaluating the work presented by the participants. In order to give feedback on process, the authors intended to observe the participants while they were working in groups on the scenario-based tasks; lists of criteria were developed that could be used when observing the groups and giving feedback, and the authors designed a pro-forma based approach to ensure consistency of observation and feedback.
3.4.Piloting the exercise
Prior to the first ‘live’ run of the exercise, a pilot was planned to test the materials developed. The pilot was run with a small group of managers from the client organisation who were not participants on the leadership development programme, but understood the objectives of the exercise and were willing to give constructive feedback on the experience. In the light of this event, the participant and panel materials were developed further, and the criteria for observation were also refined.
3.5.Launching the exercise (early experiences)
The first two ‘live runs’ of the exercise led to significant further developments in both the participant and panel materials. The authors met with panel members and other academic colleagues involved in the leadership development programme to discuss feedback from participants along with our own observations on how the exercise was working. This resulted in some enhancements to the structure of the exercise, including some clarification of roles, particularly with respect to panel members, and hence the required characteristics and behaviour of future panel members.
3.6.Learning from on-going experiences
At the time of writing, the leadership programme continues to be a ‘live’ programme with regular intakes of senior managers from the client organisation. The scenario-based simulation exercise is run at regular intervals, and the authors continue to adapt and enhance the structure of the process as well as the content of the scenarios and other materials in the light of feedback and on-going observation of the evolution of the simulation.
- Initial evaluation of the experience
A number of issues emerged from the authors’ experiences of running the simulation to date. These are summarised in Table 2 below and are discussed next.
Insert Table 2 about here
4.1.Structure of the exercise
As previously explained, the exercise was organised into two stages. The first stage was designed in such a way that the participant groups were likely to ‘fail’ at the task set, or rather to develop responses that would lead to substantial developmental feedback from the panel. Learning gained from the first stage typically resulted in improved process and content during the second stage. It was interesting that participants identified what was taking place, and generally appreciated the ‘need to fail’ during the first stage, in order that learning would take place in more than a superficial manner.
Some participants were reluctant to embark on the second stage, seeing it as a repetition of the first. The authors decided to alter the exercise after the early runs, to make a clear distinction between the two stages (while still allowing learning from the first stage to influence performance in the second). The change made was to ask the participants to develop strategies for the future of the organisation (2009/2010) during the first stage, but to develop strategies for the present day (2006/7) in the second stage. This allowed the participants to build on the organisation’s current work around its new vision statement in their final presentations, which added an extra valuable dimension to the participants’ learning.
4.2.Facilitation and decision support
During the exercise described here, the groups received no facilitation by an external party; they made their own decisions as to whether they should nominate a facilitator (or chair or timekeeper) from within their own ranks. The authors observed that, as a consequence, a clear process was often lacking during the first stage of the exercise. The groups were sometime good at generating ideas (such as brainstorming ideas for strategic initiatives), but were often less successful at reducing their brainstormed lists, or evaluating their ideas in a systematic fashion. As a result of feedback and reflection at the end of the first stage, some improvement was often observed during the second stage, with the groups becoming more aware of, and more likely to adopt, basic tools that appeared to help them through the process, such as the use of a ‘round-robin’ approach to brainstorming to ensure that all participants have an equal opportunity to put forward their ideas, or a simple voting mechanism to help the group to reduce and select from its list of strategic ideas.
4.3.Panel membership
It was important that the panel provided feedback that met the expectations of the participants, in that it covered both the process and content of their group work. As panel membership varied from exercise to exercise due to diary constraints of senior staff in the client organisation, it was difficult for the authors to ensure that this happened in a consistent manner. For example, some panel members wanted to focus on a particular set of leadership skills that the participants had demonstrated during the exercise (e.g. communicating effectively during their presentations), and some went as far as to express ‘no interest’ in the content of the strategic responses to the scenarios. This issue was addressed in later ‘runs’ of the exercise by the presence of a senior colleague who acted as chair of the panel, and ensured that the feedback sessions followed the format intended.