The purpose of this study is to design an applied and dynamic model for trading
managers. This model determines the most suitable type of thinking for strategic
thinkers under different inter-organizational and environmental conditions.
Most of the intellectuals who study and research into strategic thinking, pose
this type of thinking as a separate style of thinking against other types of
thinking like systemic thinking, intuitive thinking, analytical thinking and
so on. For example, Ohmae (1982) has posed strategic thinking
against systemic and intuitive thinking and has compared them.
According to Ohmae (1982), when a strategic thinker faces
problems, events or situations, which apparently form a concordant whole, he
divides them into their components. After identifying the components and their
importance, he re-mixes them using his intellectual ability in such a way that
they will have the highest advantage for him.
Real events don’t necessarily follow a linear model. So, the best method for dividing a situation into its components and its rearrangement in the intended way is not a step-by-step method and in methods like systems analysis, it is the brain of the human or non-linear demonstration of thinking that is efficient.
Therefore, the strategic thinking is highly in conflict with the normal view of mechanical systems and is based on non-linear thinking view. On the other hand, this view contrasts with the methods that attribute everything to the intuitive perception (achieving the result without real analysis).
In Fig. 1, Ohmae (1982) depicted different
characteristics of strategic thinking in comparison with other types of thinking.
Ansoff and Mcdonnell (1990), like Ohmae
(1982) consider strategic thinking as a separate type of thinking and pose
its characteristics in comparison with non-linear thinking:
||Both are futurist. A strategic thinker critically analyzes
the past and skillfully understands uncertain environmental trends, which
change the future towards the past. A creative thinker creates new thoughts
and structures from the historical trends
||A strategic manager values others’ mentalities and believes that
they can offer important services for the institute. But a creative manager
cannot bear the formalities for uniting the pluralism
||A strategic manager has the skill to distinguish the few variables which
are among the main factors of success
||Both types of managers have the view of a new future for the institute
in their minds. Both are gamesters. The game of a strategic manager is when
it is for the best benefits of the institute, while the game of a creative
manager may be just for the excitement of its novelty
||Both are tolerant of failure. Because they have accepted the danger with
open eyes and full understanding. But, both are alienated from the managers
who accept the danger with closed eyes or avoid it
Kilroy and Mckinley (1997) presented a hybrid thinking
framework. From their viewpoint, a strategist should be able to simultaneously
use different types of linear and non-linear thinking and use linear thinking
to make convergent the divergence resulting from non-linear thinking.
A HYBRID THINKING FRAMEWORK
The last 15 years or so have seen the emergence of a powerful management philosophy
known as Value-Based Management (VBM). The premise underlying this philosophy
is to maximize value for shareholders. Much of the work which has been done
in this field has focused on value measurement rather than value creation. The
model argues that we need to shift the focus from value measurement to value
creation and to do this, we need to accept that shareholders value creation
requires the combination of creative and analytical thinking skills. These skills
can be developed and if properly integrated into a hybrid thinking process,
can lead to better strategies, better financial performance and much more satisfied
employees (Kilroy and McKinley, 1997).
Hybrid thinking, in which the thinker iterates between linear and non-linear
approach to thinking currently, prevails in most organizations. Kilroy
and McKinley (1997) had presented a hybrid thinking framework as shown in
Fig. 2. This framework consists of three principal steps:
||Information and possibilities
||Alternative business strategy development
||Analysis and evaluation
Step 1: Information and possibilities: The process begins in one of
two ways. Either Data are gathered and from that information a series of possibilities
arises, or we already have a series of possibilities in mind and we go out and
get the data we need to inform and refine these possibilities. To deal with
the information side of this step, we need a combination of data-gathering and
data-processing skills. To manage the possibility side, We need both linear
and non-linear thinking skills.
Step 2: Alternative business strategy development: The next step is to begin to formulate alternative value propositions or competitive strategies. There are three fundamental ways to formulate alternatives, using the rational and logical thinking skills, our perceptual thinking skills and our intuitive thinking skills.
The logical path: The first path is the logical path. When we pursue this path, we implicitly assume that our logical analysis of the data will suggest to us the way to go. This path rarely leads to any major breakthroughs, but it can and often does lead to value-creating enhancements to an existing value proposition or business strategy. It is generally deductive in nature.
The decision to raise price in a segment in which our return is below the cost of capital but in which the demand is well in excess of supply, is an example of this type of thinking.
The perceptual path: The second path is the perceptual path. This is where we really begin to add value with our insights. It is where we see the same data as someone else does, but we perceive an opportunity where they see nothing. It is generally inductive in nature.
An example of this approach might be to perceive the existence of a new market segment, or an opportunity to reposition an existing product within a different segment.
The intuitive path: The third path is the intuitive path. This is where we really Make the cash registering if we get it right. A thinker cannot use this path alone, as it can be used the logical and (to a lesser extent) the perceptual path. An intuitive insight always needs to be grounded with logical or rational analysis, but it often gives us a different starting-point for that analysis. An example of an intuitive insight is the feeling that a pipe product, which to date it has been offering to the water, sewage and drainage market, could be turned on to its end and sold as an architectural column in an entirely different market.
Step 3: Analysis and valuation: The first step is to conduct an analysis
aimed at determining the best (i.e., the most value-creating) path forward.
To do this, we need to think in terms of value creation for our customers and
shareholders, since there are really two markets in which we need to win:
||The market for our products and services
||The market for shareholders’ capital.
Winning in the market for our products and services usually means that we are
able to create more value for our customers than the competition, by offering
a superior value proposition.
Winning in the market for shareholders’ capital means creating more value for shareholders than the competition-usually by delivering that superior value proposition more efficiently than the competition.
A MULTIPLE THINKING FRAMEWORK
Based on the typology of contextualized thinking a new theoretical framework
is proposed by Cheng (2005) to facilitate understanding
and development of multiple thinking and creativity in organizational learning
and to enhance the effectiveness of the action of individuals and organizations.
This framework (Fig. 3) provides a new direction and new
strategies for conceptualizing research, development and practice, designed
to promote thinking, creativity and effectiveness in organizational action and
learning in a new era of globalization and great transformation (Cheng,
Levels of thinking: Currently, knowledge management is strongly emphasized
in daily operation and professional practice as the key for long-term effectiveness
and development of individuals and organizations. How should the involved data,
information and knowledge be managed and how should they be related to the actor’s
intelligence in organizational learning? How can organizational thinking and
learning be promoted to deeper levels as deep thinking or deep learning? All
these are significant questions in considering the application of the typology
of CMT (Cheng, 2005).
As indicated in the literature of knowledge management Lawton
and Tavakoli (2005) and Greiner (2007) data,
information, knowledge and intelligence are crucial elements in organizational
learning. The level of thinking in organizational learning can be illustrated
in terms of these elements as shown in Fig. 3.
Upward thinking in organizational action: In organizational learning,
data can be gained from the monitoring and assessment of action process and
outcomes or directly from the experiences and observations of the organizational
actors or independent observers (as shown on the right side of Fig.
||Levels of thinking in organizational learning (Cheng,
This data may be multiplied including the technological data, economic
data, social data, political data, cultural data and learning data when the
contextualized multiple thinking framework is applied in organizational learning.
From detailed classification and description of the data, the actor can draw
some factual meaning or understanding that becomes the information about the
action (Cheng, 2005).
Through linking and analyzing various information about the input, process
and outcome of organizational actions, the organizational actors can achieve
more reliable and consistent understanding that becomes organizational knowledge
about the action. Through conceptualization and synthesis, the actors can further
internalize the knowledge into mega-cognition in their mindset that becomes
the contextualized intelligence of actors and their organization. Given the
multiplicity of data in nature, the related information, knowledge and intelligence
are potentially multiple including technological, economic, social, political,
cultural and learning aspects (Cheng, 2005).
The above mental process from data to information, to knowledge and to intelligence
can be perceived as thinking or learning process in organizational action. Thinking
often refers to the internal mental process but learning is a general term including
both internal mental processes and explicit behavioral processes of the organization
and its members. Since the thinking process is upward from data to intelligence,
it may be called as upward thinking in organizational action. There is a hierarchy
of thinking in the organizational learning, including four levels (Cheng,
||Thinking from action to data
||Thinking from data to information
||Thinking from information to knowledge
||Thinking from knowledge to intelligence
In general, levels (1) and (2) are often considered as superficial thinking
or the first order thinking that involves only observable data and information
and levels (3) and (4) as deep thinking or the second order thinking that involves
implicit knowledge and intelligence. Correspondingly, learning in action has
four levels with levels (1) and (2) as superficial learning and levels (3) and
(4) as deep learning. Only deep learning can cause internal changes in organizational
mindset (in terms of knowledge and intelligence) but superficial learning can
just result in operational changes with feedback in terms of data and information.
Downward thinking in organizational action: The above thinking process
can be downward from intelligence to knowledge, to information, to data and
to action as shown on the left side of Fig. 1. With the organizational
intelligence (or CMI), the organizational actors think how to theorize the aim
of an action in a context and provide a rationale to conceptualize such an action.
Furthermore, the organizational actors think how to apply some related knowledge
to predict and explain the possible relationships between key elements (e.g.,
input, process and outcome) of the organizational action (Cheng,
The predicted relationships will become the major information to be tested
and validated in the reality. In order to test the information, the organizational
actors think how to plan and design the action and collect the expected data.
Finally, they validate the provided rationale, related knowledge, predicted
relationships (information to be tested) and expected data in reality through
implementation of the organizational action in the context. As a whole, the
above process can be considered as downward thinking in organizational action
During the above thinking processes, contextualized multiple intelligence,
multiple knowledge, multiple information and multiple data may be involved and
used. If the provided rationale, related knowledge, predicted relationships
and expected data are found to be consistent and valid in the action process,
then the existing CMI and related knowledge are confirmed and reinforced. But
if they are found to be inconsistent and invalid in the reality of action, the
organizational actors need to think and check if any gaps exist in the design
of action or any misconceptions exist in the original mindset of the organization
and its members (Cheng, 2005).
Based on the actual results (data and information) of organizational action,
the actors think how to redress the gaps in the design of action (i.e., the
first order thinking) or modify the existing intelligence and knowledge in the
mindset (i.e., second order thinking). Then, the actors may start the upward
thinking again in organizational action and learning as discussed above. In
sum, the upward thinking and downward thinking as a whole form a cycle of thinking
process for the organizational learning (Cheng, 2005).
MODEL FOR SELECTING THE MOST SUITABLE TYPE OF THINKING FOR MANAGERS
In this model (Fig. 4), first the decision-making environment
is specified in different scopes of the organization. We should answer the following
three questions in order to determine the environmental elements of each scope:
(A) Is the element out of the scope? (B) Does it influence the operations of
the scope? (C) Do we have control on them? If the answer to all questions is
YES, that element is a part of the environment of the scope under our management.
After defining the environment, we will study it from the dimension of available
||Model suggested for selecting the most suitable type of thinking for
As it is clear in the model, there are three modes. The most suitable
type of thinking for confidence and risk modes is systemic thinking.
Systemic thinking is the ability of a director to look at the organization
as a whole consisting of components having interaction on each other.
When this type of thinking is established, the manager should be able to visualize
in his mind the interactions between the components of the organization and
also the interactions between the components of the organization and environmental
elements. Considering the above definition, first: these interactions can be
visualized only in nearly certain situations and in environments which have
risk mode to some extent. Second: all people are not able to establish this
thinking and visualize these interactions in their minds.
According to Aronson (1998), systemic thinking includes
a broader view instead of dividing the system into small and smaller parts,
which considers a large number of interactions.
Graetz (2002) reached this conclusion in his studies
that the persons who have greater mathematical and spatial intelligence (visualization)
can easily establish this type of thinking in the organization, so we should
select a manager for this scope who has specialized knowledge in this field
and is familiar with the environment and has also great mathematical and spatial
We can use multiple IQ tests designed by Gardner and Haward
(1989) in order to assess these intelligences in the model suggested in
Fig. 4 (Nasser and Abouchedid, 2006).
It should be mentioned intelligence was considered generally in the past and
the intelligent person was defined as a person who has the ability to interpret
a high volume of data within a certain period. But, Gardner
and Hatch (1989) disagrees with this idea and bases his model on intelligences.
His theory has highly influenced the thinking of managers.
Strategic thinker should use a non-linear thinking (lateral or intuitive thinking)
in a scope where there is non-confidence in the environment. For this purpose,
Companies should select a person who has the ability to use the right hemisphere
of his brain.
The discussion about the difference between the hemispheres of the brain was
proposed by Charles Darwin for the first time. From his viewpoint, left-brain
persons are skillful analyzers and have tendency to look at the facts and details
logically. They gave also tendency to plan and organize their tasks before starting
them. Instead, right-brain persons generally process the data and their decisions
are based on feeling, judgment and intuition. They have also tendency to compare
things while performing their tasks (King, 1994).
The tools designed by Davis (1994) were used in this
model in order to assess the control of brain hemispheres in managers. This
questionnaire is a tool with high validity and reliability.
We can use lateral thinking in order to create creativity in such an environment.
This thinking was proposed by Debono (1979) for the first
time. He describes the usual method of thinking as digging a hole and as the
information increases; the person makes that hole deeper and cannot see other
places for digging. However, lateral thinking directs the attention of the person
towards new points and the new information and experiences are not just added
to the previous thinking, but change the previous thinking and create new patterns
and structures (Debono, 1979).
As these wells are lateral, Debono (1979) uses lateral
instead of creative to describe this type of thinking and he has also focused
this point in his lectures.
The other skill of right-brain persons is using intuitions in making decisions.
Under highly uncertain environmental conditions, the subjects under investigation
have no counterpart in the past and also while a large number of variables are
interdependent and put pressures on the manager to make true decisions, the
manager cannot use analysis to make decisions and has to use his intuitive judgment
for selecting the best alternative. Little investigation has been carried out
about the origin of intuition. Henden (2004) said that
the access to wisdom (the ability of understanding the relation between different
types of knowledge) and gaining experience is the ground for revelation and
inner-originated gleam in management. He has also concluded in his studies that
intuition has origin in metaphysics (Fig. 5). From his viewpoint,
concentration and gaining energy from the environment can facilitate the process
of intuition. Different methods are used for concentration and gaining energy
from the environment in different cultures. For example, Buddhism suggests special
yoga exercises and Islam suggests timely praying for this purpose.
Finally, in this model companies will do hemispheres control test on managers who have had several years of activities in scope C (uncertain environments) and will select a manager who has the ability to take advantage of both hemispheres of his brain as a member of high management team. In this team, companies will encourage him to use hybrid thinking. This person can simultaneously use linear and non-linear thinking and make converged the divergence of the thinking using a plan. In other words, they make their ideas stemmed from intuitive and creative thinking business-wise and compatible.
A dynamic and applied model is presented for trading managers in this model,
which determines the most suitable type of thinking for them under different
inter-organizational and environmental conditions in this research. Considering
the studies, a universal style of thinking, with highest efficiency under all
conditions, cannot be determined for a strategist. As the conclusion of this
research, it is suggested that it is better to use the thinking of a strategist
instead of strategic thinking in strategic management literature, because a
strategist can use different types of linear or non-linear thinking or a combination
of them taking into account the conditions. The model suggested in this paper
will help trading managers to select their type of thinking.
The authors would like to thank the reviewers for the constructive comments and illustrative suggestions.