What is strategy?
Defining strategy is tough, which might we why it's so misunderstood.
A business turn of phrase that gets thrown around like box tickets to the next Springbok game, but unlike the simple rules of rugby - not too many business managers appear to really and truly understand what the term actually means, or what the true value and benefit of a good strategy is.
In reality a lot of random things that are not strategies are incorrectly referred to as strategy.
Some believe that the act of planning, also magically ticks the strategy box.
Short-term tactical manoeuvres - usually of the promotional kind - are wrongly thought of as strategy; hell I’ve even seen a desperate stock clearance attempt get called ‘a strategic move’.
Strategy is none of these things; and the danger is that when management honestly believes that they are acting strategically, when they actually aren’t - the future of the business is needlessly put in danger through ignorance.
This point leads us neatly into the first key attribute of strategy; that it is future-orientated.
Being a proclamation that finds relevance in the emerging future (a domain of uncertainty), strategy is largely built on a platform of conjecture (decision making based on limited factual information) rather than fact, which means that strategies cannot be right or wrong or proven to be true, they are rather an informed perspective.
This means that the ultimate quality of a strategy is very much dependent on the quality of the thinking that was used to create it. If strategy is intended to bring about specific outcomes, you would be right to assume that the higher the quality of the strategic thinking that goes into strategy work, the more likely a desired outcome will be achieved.
The second key attribute of strategy is that it is a big, coherent vision of a particular position that facilitates the long-term development of an organisation within an ever-changing environment.
To appreciate the value of this it’s important to first acknowledge that no business operates in isolation.
An organisation finds itself located within an industry of other competing businesses. At the same time it is also located within a larger national and international economic system, within a regulatory environment, a political and social landscape, a rapidly evolving technological landscape and a deteriorating environmental context.
All of these interconnected, dynamic systems are constantly changing; shifting the rules of engagement, the mindsets of consumers and the conditions under which a business operates and creates value.
For a business to be sustainably successful within the changing contexts that it finds itself in, it's important that it continues to be a ‘good-fit’ within these environments. It needs to anticipate change and be agile enough to adapt to it.
Strategy is a logical process of anticipating and managing this uncertainty, ensuring that over the long-term there is a good-fit between the organisation and the future environment in which it possibly operates and creates value.
The third key attribute of strategy is that it requires focus, trade-offs and is used as a framework to guide consistent decision-making throughout an organisation.
If an organisation simply chases every opportunity that comes along (or goes after the wrong opportunities), it will over a period of time dilute its competitive position and erode its value. The same can be said for attracting the wrong kind of customers, the wrong kind of growth.
Strategy keeps an organisation on the straight and narrow path towards the success that it has chosen.
The fourth key attribute of strategy is that it is about being different. If all brands were the same, then the only competitive advantage there would be superior operational efficiencies and price. A good strategy is about choosing uniqueness, an alternative to what already exists that either attracts existing customers or creates new ones by being the first to address their overlooked needs.
What strategy is, is a mental construct of how a business intends to uniquely position itself and the value that it creates, to win the future that it wants; based on the availability of limited resources and capacities in the present and how it understands change in the competitor- and contextual environment to unfold over time.
A strategy gives guidance to:
- Where an organisation is willing to play;
- How it chooses to win;
- What capabilities need to be in place;
- What management systems will allow it to achieve its goals / aspirations;
- What activities it will engage in / and what activities it will NOT engage in.
The true value of having a proper strategy, is:
- A strategy drives consistent, collective action towards an ideal.
- A strategy inspires individuals to develop.
- A strategy orientates an organisation’s collective mindset forward.
- A strategy gives clarity for easier decision making.
- A strategy is a benchmark against which performance can be measured.
A strategy is a powerful tool. Done well it ensures a clear blueprint as to how the future will be won.
Clarify your strategic intent
Over the years, Jonathan Cherry has helped numerous organisations clearly define their strategic intent and strategy map for accelerated business growth and resilience in uncertain times.
If you need a facilitator to take you through this process for your organisation, please get in touch here to chat with Jon.