Strategic thinking is all about change. It’s about ways to anticipate, shape and capitalize on the future by looking inside and outside of the business.

This is especially true given that many managers, until now, have found career success by excelling in tactical management—or by “doing things right.” But strategic management is less about “doing things right” and more about choosing the “right things to do.” 

In tactical management, objectives and metrics are clear, choices are limited and results can be controlled. But the strategic role of a coach and mentor is ultimately how manager performance will be judged. It’s also how management best contributes to company success. The art of strategic management is all about helping others become better managers, rather than doing all of the managing yourself. It’s about gaining satisfaction in your job through the accomplishments of the people you help develop.

Not to mention, strategic thinking spurs creativity and employee engagement.

Jeanne Liedtka, strategist and professor of business administration at the University of Virginia’s Darden School, puts it this way: “Strategic thinking breeds inventiveness and innovation. It engenders speed and flexibility. It invites employees at all levels into the strategic conversation and engages them as a result.”

Beyond that, thinking strategically is key to the development of a winning company strategy, which, when executed, can give a company differential advantage—something otherwise challenging to achieve, especially in volatile agricultural markets.

Differential Advantage

Another key component of business success lies in a company’s strategic capabilities. That means identifying, developing and leveraging two or three areas that give the company distinct advantage over competitors with core customers. A company that can use these capabilities to differentiate itself will be much better positioned to weather ever-changing market conditions.

Strategic capabilities combine talent, information, technology and routines. While many capabilities are necessary to compete in the marketplace, only a few can be strategic. They are the capabilities that are unique to a particular company, create value for customers and are sustainable for the long-haul.

Take Wal-Mart, for example. Wal-Mart has capabilities in logistics and distribution, but so do competitors. It’s the specific set of activities that Wal-Mart executes at a high level that sets the company apart from the industry and allows above-average returns more often than not.

A general example in our industry would be U.S. grain handlers. All need efficient asset design, sufficient unloading capacity, the right location, proper risk management, and strong farmer relationships to simply compete in the industry. But a single company can only develop a few of those into strategic capabilities.

There are four key questions to identify capabilities that can be developed into competitive edge:

  1. Is the capability an important source of the value proposition offered to customers?
  2. Is the capability relatively unique among close competitors?
  3. Is the execution of the capability head and shoulders above the competition if they rely on a similar capability?
  4. Is execution of the capability on-par with industry standards, or at least profitable, if close competitors rely on a similar capability?

The answer to the first question has to be “yes” for the capability to be strategic. The next three questions are all about determining how much strategic value the capability has.