What are the dynamics between strategic and creative thinking?

I have been working on a framework in which businesses can achieve more sustainable success through strategic and creative thinking. In the last ten months, I researched and wrote topics about business strategy and creative thinking. By now, if you have read my previous blogs, you might also understand how the two work and interact with each other. But, it is always easier said than done. So, how does strategic and creative thinking work in practice? This article will not solve all your queries, but let’s say it can be a start point for both of us.

First, we have to clear out the preconception that creative thinking is about art, design or visual stuff, etc. If we set a limitation of how creative thinking can work for organisations, it would not play its magic. Because creativity is about zero-boundary, it takes you as far as you want to go. Creative thinking can play in all the aspects of a business, especially in problem-solving.

Next, we have to abandon the assumption that strategy is complicated. No, it’s supposed to be simple, clear and straightforward. The goal of corporate strategy is value creation. And companies create value in different ways based on their shared values, industries, competencies, etc.

You have both creative and strategic thinking in your hands. Strategic thinking helps us to find out what creates value for organisations. On the other hand, creative thinking is a master of finding solutions to create value for organisations. In other words, strategic thinking and creative thinking are both sides of a coin. You have to embed both to achieve a sustainable business.

After we set up the right mindset, let’s dive into how it works in practice. We apply a value-based strategic tool: The Value Stick, from the strategic thinking side. The value stick visual represents a value-based pricing strategy’s different components. At the top of the stick is the value captured by the end consumer, called the customer’s delight. In the middle of the stick is the value captured by the firm, called the firm’s margin. At the bottom of the stick is the value captured by the firm’s suppliers, called the supplier surplus.

The value stick comprises four components: willingness to pay, price, cost, and willingness to sell. Where on the stick each of these points falls determines how a sale’s value is split between a firm, its customers, and its suppliers. To create value, organisations need to increase WTP (willingness to pay) and decrease WTS (willingness to sell). Companies have different distribution structures in the value stick according to their competence and differentiation within the market.

Source: Harvard Business School Online

After the strategy sets up the framework, creative thinking kicks in to find solutions for either increasing WTP or decreasing WTS. It’s critical that the outcome of creative thinking has to align with the corporate strategy. Otherwise, your hammer is hitting the wrong nail, which will not create value for your organisation. Let’s have design thinking as an example of creative thinking. Design thinking is a popular tool to increase customer satisfaction, but it can also decrease WTS for employees and suppliers. Most importantly, design thinking is highly data-driven. And design thinking is powerful in identifying gaps and spotting opportunities during data analysis. For example, near-customers are those whose WTP (willingness to pay) is fairly close to the level required to make a purchase. And it is hard for companies to identify their near-customers and know their needs without understanding the customer journey and breaking down the barrier of stereotypes.

Design Thinking Process丨Source: Medium

When e-commerce entered the Chinese market at the beginning of the 2000s, Taobao did not have the network effects that its rival eBay had as an online trading platform. Then Jack Ma and his team identified that the near-customers of online trading were not feeling secure about the transaction. So, instead of expanding the presence of Taobao in the Chinese e-commerce market, Jack Ma launched Alipay as an escrow for providing safer online trading transactions. Taobao focused on a segment of near-customers who were not (yet) in the market. By 2007, eBay’s market share had fallen from 85% to 7%, while Taobao stood at 84%.

As strategists, solely cultivating strategic thinking is not enough. We have to foster our ability to think creatively as well. How can we know what to do but don't know how to do it?

If you have to ask, which one is more important? In my framework, creative thinking's role is to serve strategic thinking to create value. Without strategic thinking, creativity is a mess.


Book to read: "Better Simpler Strategy" ------ Felix Oberholzer-Gee

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