The 4 Levels Of Strategic Thinking in Business

Richard Shrapnel 'The 4 Levels Of Strategic Thinking in Business'.

Thinking strategically is an acquired skill and one that all leaders must master if their businesses are ever to be truly successful.


Active Knowledge Question:

How do you develop the strategic thinking capability of your leadership team?


One Degree Off Course Can Equal A Lifetime Of Failure

It’s usually assumed that a business leader can think strategically. Often, however, they are so consumed with managing their day-to-day responsibilities that they are not able to recognise where they have been and, more so, where they are heading.

There’s a common analogy about how being one degree off course can lead you to miss your destination significantly, this is, the one in 60 rule. In business, the same analogy holds true, but the error is magnified because of the effect of compounding.

In business, we compete around customer value. That is our ability to recognise customer need, not only for today, but tomorrow, and to deliver greater value than anyone else in addressing that need. This ability to compete requires insight, empathy, imagination, creativity, technical skills and the capability to deliver. These are not built overnight but require years of effort and compounding. The old saying of how becoming an ‘overnight success only took me 10 years’ comes to mind.

Success in business comes from building upon what has gone before, not wasting anything and compounding on everything. However, if leadership are not conscious of ‘where they are heading’– or in business terms, ‘what are they building’ – then years of effort can be wasted or take them in the totally wrong direction. So much so, that no amount of changing direction will allow them to catch up.

Businesses that ignore – or cannot see or understand – changes occurring in or to their chosen market are the classic examples. By the time they wake up and recognise the impact of change, it’s just too late for them.

In business, strategic thinking represents the ability of your leadership team to plot the correct course and ensure you are not tracking off course.


Mastering The 4 Levels Of Strategic Thinking

There is a progression of strategic thinking that every business leader and leadership team must master. It comprises four levels – of which, three are compulsory and the fourth is reserved for those who invest a lifetime in learning.

Strategic thinking does not follow a formula but instead are principles that can guide actions and decisions. It is a way of thinking and an attitude that leads to focusing and prioritising what is important. It moves from individuals thinking strategically, to teams, then to the entire business. But it all starts with leadership.

It is not a ‘set and forget’ exercise, an endeavour where you can undertake a day’s training and then move onto something else. The ability to thinking strategically must be practised, reinforced and improved continuously. It becomes part of who you are individually, and then as a business. Strategic thinking is the mental discipline required of business leaders.

Your business exists to compete, to meet the needs of its customers at an ever-emerging and improving value, in an ever-changing marketplace. To win in these conditions requires strategic thinking on a continuing, evolving and compounding basis.

The journey of strategic thinking commences with motive, and that motive must be to compete. Businesses are made to compete, and profit is simply one of the outcomes.


The Four Levels

The capability to build a competitive business rests in the progression through four stages of strategic thinking. A business leader must:

  1. Firstly, teach and lead their business to think and act strategically.
  2. Secondly, develop an understanding and appreciation of what real sustainable growth is and how to attain it.
  3. Thirdly, grow and craft an organisation that really understands what it takes to compete effectively and develop a passion to achieve it day-after-day.
  4. Only after these first three stages are achieved can a leader hope to lead their business towards formlessnesswhere their competitors can simply not catch up or even discern their next competitive move.

This progression supports the leader in:


1. Developing undefeatable strategies.

Business strategy should set direction, alignment and focus with the entire capability and energy of your business striving to win. It will be reflected in how you position the customer value you deliver at any point in time, but strategy is continuous and often emergent. You will develop a competitive posture, a way you compete to win, that draws your strengths to the surface each and every day, and allows you to always outcompete everyone in your chosen marketplace.

2. Achieving real sustainable growth.

Real growth compounds year-after-year and always builds upon what has gone before. No effort is wasted and everything – failures and successes – are invested in stepping the business closer to its customers and further away from its competitors. For there to be real growth, you need to possess a clear image of what it is you are building. Real growth is not simply represented by increased sales, it is represented by a growth in the capital value drivers that generate those sales.

3. Creating decisive competitiveness.

Competitiveness is the ability of your business to deliver on what it takes to win. Winning in business is all about delivering greater value than anyone else. It is about adaptability and agility but, more importantly, it’s about identifying where that greater value lies tomorrow.

Being decisive is not about catching up, being decisive is setting the rules of the game and moving on before competitors even know the game has changed. I describe these traits as being competitively fit.

4. Becoming tactically alive.

There exists a fourth stage in the growth and development of your business, which few will reach and even fewer will be able to sustain. It’s what some may express as ‘being in the zone’.

As you begin to focus on the continuous improvement of your competitive engine, you also begin to become aware and tactically alive. You become aware of the marketplace in which you are competing and you begin to position yourself so you can always overcome competition in the market and deliver greater value to your customers. Correct positioning is always evolving and dynamic. When correct, it is like a hundredweight on the offerings of your competitors – they simply cannot compete no matter what.


As a business leader, you must develop your own, your team’s, and your business’s ability to think and act strategically. It is what allows the effect of compounding to be established in your business. To move ahead of your competitors and not to be continuously playing catch up.


An entirely new level of performance.

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All the best in the success of your business,

Richard Shrapnel