A valuable and natural starting point is to ensure each member of a strategic leadership team has a common, precise and unified perspective on what strategy is, and what it isn’t.
In recent years strategy has become both something of a buzz word. Commonly when, people want to sound make something sound more important, they just make sure to decorate the otherwise mundane business concept with the word “strategy”.
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Strategic vision.
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Strategic initiative.
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Strategic supplier(s).
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Strategic objectives
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Strategic intents
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Strategic investment
Imprecise and overuse of the word strategy has resulted in ambiguity or confusion on exactly what strategy is.
Being clear about what a strategy is will help ensure your team are better aligned in creating, sustaining and implementing a strategy for business success.
The word “strategy” originally comes from the Greek word “Strategos”, meaning, “the art of the general.”. In other words, the origin of strategy comes from the art of war, and, specifically, the role of a general in a war. Intuitively, you recognize the role of the general in war is to orchestrate the resources involved in the war, to leverage the strengths of those resources to exploit weaknesses in the opposing forces.
That is, the goal in war is to win, and to win with minimum losses. But goals are NOT strategy. Goals are what we want to happen. Strategy is how those goals get accomplished. Military strategy represents a set of choices and a sequenced and timed set of events or action to enable the general to win the war.
Investment strategy
Consider an investment strategy. The goal of an investment strategy is to maximize return on investment, for an defined level of risk. Again, the goal is NOT the strategy.
The investment strategy will be represented by the policies to manage risk and the choices of what types of investment will and won't be made to fulfill that investment goal.
Business strategy
1. A business strategy is a set of choices supported by an orchestrated set of activities that positions your business on a playing field of your choice in a way that it succeeds or wins i.e. on that playing field - your business has some kind of advantage is servicing customer needs better than others.
2. The choices set is updated to keep the business relevant as more is learned about customer needs, or changes occur in the industry and external environments, that affect the needs, priorities, lives and purchasing decisions of your target customers.
3. Finally, strategy aligns and focuses the resources internal to the business, to respond to the evolving needs of the external environment.
So, how do you know what your strategy is? Or, if you do not have a well-defined strategy, how do you formulate one?
The most conceptual acid test to ask any business leader to determine the presence of absence of a business strategy is
Who are your customers and why do they prefer to buy from your business rather than alternatives?
A coherent and compelling answer to this question will likely represent previous consideration of a standard suite of strategic choices.
StrategyCAD Unified strategic choices model
A well-defined strategy provides complete and clear answers to the following choices or questions. Importantly, each choice is supportive of each other choice. For example, the Where to Play and How to succeed choices are supportive of each other and consistent with and supportive of the aspirational choices.
- What is your winning / success aspiration?
- What difference does the business want to make in the lives of the customers it will serve?
- What difference / benefit does the business want to provide back to its' stakeholders in return for that customer value.
- Where you does your business compete?
- In other words, what competitive arenas or markets will your business be active in?
- You will define markets as industries, product markets within those industries, geographic markets and relative price. Bentley and KIA are both car companies, but based on relative price they are in different markets, addressing some of the same but also different customer needs.
- How do you win / succeed?
- What unique value do you bring to win in those markets. In other words, why do your customers choose your products and services when they could have chosen the products and services of any competitor out there?
- Your unique value could be cost competitiveness or differentiation which includes image/brand, convenience, customization, styling, reliability, other performance or quality attributes, etc.
- Resources and capabilities
What resources and capabilities do you utilize to deliver that value?
- Do you have exceptional human capital, superior technology, unrivaled network connections, or a unique reputation?
- Resources generally refer to the things we have in your toolbox. These things can be tangible such as a specialized manufacturing equipment, or other resources such as an oil field, precious metal mine or they can be intangible, such as a reputation, specific know-how or trade secrets.
- Capabilities generally refer to the things that you can do, or your abilities to use the things in your toolbox. So a business may have a good market reputation as a resource. A capability might be, ability to use that reputation to bring new products to market and gain market awareness quickly and cost effectively.
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Manage and sustain
- How will the strategy be managed, refined and maintained?
- How do you sustain your ability to provide your unique value?
Four strategic choices model
Defined and described in their book Strategic Management: Concepts and Cases
Lafely and Martin: Five choice model
Defined and described in their book Playing to Win: How Strategy really works
