What is Strategy?
A strategy is a plan to achieve a goal within a given context.
Strategy (as an activity) is the development and execution of such plans.
Goal
A strategy needs some sort of goal - something about the world that you desire to be different. If everything was already exactly the way you wanted it, you wouldn't need a strategy.
Human nature being what it is, that is never the case. We always want something. And if and when we get it, we inevitably want something more.
The challenge is usually ranking the goals to determine which are primary and which are secondary - or which are the ends and which are the means to those ends.
So while strategy only needs one goal, it invariably confronts a system of interrelated goals of various levels of importance as well as cause-and-effect relationships.
In business strategy, the overarching goal is typically expressed as a mission, vision or purpose statement.
Context
Often when people talk about strategy, they mean business strategy. But business is only one context within which we can talk about strategy.
There is an almost infinite variety of other contexts in which strategy can take place.
For example, you can use strategy to prepare for and compete in a sporting event. See, for example: Five things running taught me about business strategy and Trust in the process.
And let's not forget that the origins of the word "strategy" itself have their roots in a military context. Perhaps this is because military battles were one of the first arenas in which large numbers of people had to work together to achieve a common goal.
Business as a context for strategy implies a number of contextual factors. For example, business strategy invariably implies customers, goods and services, production value exchange, ownership, etc.
Even within business strategy, there are several sub-contexts, often described as layers. And so we have, for example:
- Corporate strategy: which deals with business entities which wholly or partly own or control a number of businesses.
- Business strategy: which deals with individual businesses which produce and distribute goods and services to customers.
- Functional strategies: which deal with the different functional areas (operations, marketing, human resources, IT, finance, etc.) which make up a business or corporation.
These subcontexts or layers exist in a fractal pattern. As a result, each strategy is made up of sub-strategies which all have the same basic structure as the parent or super-strategy. For example, each of the functional strategies has the same basic structure as the business strategy it supports. You can read more about the fractal nature of strategy.
There are elements of strategic context which are unique to a particular organisation at a particular point in time. And every strategy should be unique to that unique context. That is why discovering, understanding and analysing the context is such an important element of strategic planning.
Constraints
The context in which strategy takes place is almost always constrained. We have limited resources, and obstacles and challenges to understand, prioritise and overcome.
Different authors have called this different things. Peter Compo talks about the Bottleneck. Richard Rumelt talks about the Crux.
But the challenge remains the same: to achieve the goal(s) within the context, the plan must overcome the constraints.
Plan
Finally, strategy involves doing something to achieve the goal within the context, and this requires a plan. Whilst most plans entail change, a plan to maintain stasis, like keeping a ship on course, also counts as a plan.
Whilst every strategy involves a plan, a plan on its own (without a goal and context) does not constitute a strategy.
The plan outlines who will do what and by when (and, by extension, what won't be done). It is used to allocate budget and resources. And because plans seldom go as anticipated, the plan must be actively managed and adjusted.
The notion of developing a plan as part of a strategy is called strategic planning.
Some red herrings
Strategy is an often misunderstood and abused term. So much so that it is worth considering some of the more common misconceptions.
Strategy versus tactics
Strategy is often described as what you want to do as opposed to tactics which is how you do it. Whilst this is linguistically convenient, it does not stand up to scrutiny.
How do you separate what from how other than by arguing that what describes the goal or outcome and how describes the plan? And as we've already established the goal is only a part of the strategy as is the plan!
Another distinction made is that each strategy is made up of tactics. However, as we've seen, the fractal nature of strategy is that each strategy is made up of sub-strategies which are structurally identical to the parent strategy. For a strategy to be made up of tactics, strategy and tactics would need to be essentially the same thing but seen from different perspectives.
A better distinction is to define tactics as individual configurations or actions from which a strategy may be composed. For example, an army may be trained to perform a wide range of tactical manoeuvres, the general creates a strategy by selecting which of those tactics should be applied to most effectively achieve the military goal within the given context. In a business context, there may be many available social media tactics from which a marketing strategist selects the combination that will most effectively achieve the organisation's goals. In summary, tactics are the sum total of all actions which an organisation could execute, whilst strategy is the subset of tactics which an organisation chooses as the best way to achieve its goal(s) within the context.
Strategy versus execution
The debate between strategy and execution is often expressed in pithy fallacies like "execution trumps strategy".
But, strategy versus execution is a false dichotomy - something presented as a choice when no such choice exists.
After all, what would you execute other than a strategy? What is a strategy other than something you intend to execute?
We can easily talk about developing a strategy, reviewing a strategy, aligning behind a strategy, and executing a strategy. Execution is something you do to or with a strategy. Execution and strategy are not two things that exist independently of each other.
Strategy versus culture
Strategy versus culture is another false dichotomy. It exists most commonly in the saying, falsely attributed to W. Edwards. Deming, that "Culture eats strategy for breakfast".
The culture that exists within an organisation is part of the context within which it plans to achieve its goals. But, it is not fixed. Many strategies include steps to change, develop or improve the organisations culture to better support its ability to achieve its goals.
There is no choice to be made between the two. Both exist and are important. Each acts on the other. If you insist on the misconception that "Culture eats strategy for breakfast" then you will have to accept that "without strategy, culture will starve."
Strategy as long-term planning
It is easy to see why strategy is often thought of as long-term planning (and by extension, why tactics are sometimes thought of as short-term planning).
When talking about strategy, the goals tend to be quite substantial (some even describe them as "big hairy audacious goals" or BHAGs). They don't have to be, of course, but small, simple and easily achieved goals tend to warrant less discussion. Substantial goals, on the other hand, tend to take substantial efforts over sustained time-periods to achieve them. The fact that the context tends to change during that period adds further complications which need to be addressed.
So, strategy does tend to be long-term, but it doesn't have to be. After all, if you could find a way to achieve your so-called long-term goals more quickly - even immediately - you surely would! Its equally true that not all long-term plans are strategic. If they lack appropriate goals and context, they won't be strategic no matter how long they take to execute.
Strategy is complicated
Strategies, which are 'clever' are often considered more strategic than those that rely on brute force (size, amount of spend and effort, etc.). Complexity should not be mistaken for cleverness, and great strategies are often deceptively simple.
Strategies can be good, that is, likely to achieve the goal even as the environment changes around it, or poor, that is, unlikely to achieve the goal and/or too static in the face of the changing environment.
Good strategy often requires a thorough analysis of the goals and context as well as the development and evaluation of many options (alternative plans). The process of developing and executing the strategy may entail significant hard work and yet the strategy developed may still be simple.
Strategy is goal-setting
Strategy does involve setting goals. But goal-setting alone is not enough.
Strategy also requires a plan outlining who will do what to overcome the constraints inherent in the context to achieve the goal(s).
And that plan must be both executable and executed.
Strategic Questions
Strategy is often boiled down to three simple questions:
- Where are we now? (Part of the context)
- Where do we want to get to? (The goal)
- What is the best way to get there? (The plan)
Of course, in practice, many other questions are likely to arise in answering these. For example:
- What obstacles are we likely to encounter along the way? (More of the context)
- How can we best use the advantages we have or find along the way? (More of the context)
- How is this changing and likely to change as we go?
Ultimately, however, strategy must ask and answer any and all questions needed to achieve the goal.