What is strategy?
As a strategist, you get asked this a lot. When I left business school over two-decades ago the answer seemed clear – a response I’m sure that was peppered with the latest buzz words and overly complicated thinking. And now? The same question is answered with the benefit of two-decades of experience in creating and implementing strategy for clients running real businesses, large and small, in different industries and continents. It’s a lot clearer now!
Strategy is a “specific, coherent and coordinated response to the obstacles to forward progress with activities focused on where they will have the greatest effect.” The “response” is supported by an evidenced-based argument informed by the critical factors in the company’s unique situation, and management’s future performance aspirations. Inevitably, the response or strategy involves making choices or trade-offs about what the company will and won’t do – often the difficult part.
Strategy is Emergent
Although I’m told strategy is planned and deliberate by the great and good every time I read the latest “how to” strategy book, I think strategy is emergent. By this I mean it’s steered by a vision of what the company could be with purposeful direction via strategic goals and the focus and allocation of resources via objectives, of course, but, importantly, the strategy often evolves as circumstances become clearer over time and in response to timely implementation feedback (i.e. what’s working and what’s not). No matter how comprehensive the strategic plan developed three-years ago, it’s no substitute for thought, now. A technological breakthrough by the company that dramatically reduces operating costs that afford a competitive advantage or a new disruptive business-model financed by a formidable parent or changes in buyer behaviour, and so on, could all be unforeseen – presenting new opportunities and threats that were never factored into the original strategy. The world keeps changing and so to must the strategy.
A simple way of thinking about strategy is to consider Ends-Ways-Means. I know it’s a bit rudimental but you’ll be surprised how useful it is. Let me explain…
ENDS – the desired outcome you want to achieve from the strategy. What winning looks like, the strategic goals, the vision, etc. This isn’t the strategy but instead how you choose to measure its success.
WAYS – this is the strategy. The way in which you are going to achieve the ENDS (above). Where your company is going to play and how it will compete, now and in the future.
MEANS – this is the strategy – essentially the resources and how you will organise yourself to implement the strategy – efficiently and effectively. Think about people, systems, processes, etc.
So, what does bad strategy look like? Ultimately, failure. I know that doesn’t help much so some of the common mistakes I come across include the following:
- Fluff or linguistic garnish and buzz words instead of evidence-based analysis of the company’s situation. Analysis is the prerequisite to understanding and decision-making
- Failing to tackle the key issues to forward progress
- Setting the wrong objectives or conflicting objectives that fail to support the strategy or confusing objectives for strategy
- Not thinking through the competitive response. Often the success or failure of a strategy is determined, in part, by how the competitor reads your strategic moves and what they do next
- Not thinking through implementation – a strategy is not a good one if it remains a paper exercise with no hope of being executed
Where to start? First, understand the internal and external environment and how this is changing. Then think about what your company could be in the future? Then start to think about ENDS-WAYS-MEANS…