What is Strategy?
What is strategy? Students, managers and leaders alike can often struggle with this question. Of course, it’s a very important question to struggle with! This is evidenced by the mass of literature about strategy. In this article we explore the meaning of strategy by looking at 3 areas, our 3 P’s:
- The purpose of Strategy – Has leadership been lost in our strategy formulation?
- The perspectives of strategy – two dominant schools of strategic thinking: looking in or looking out?
- The process of strategy – prescriptive or emergent?
You can find more about developing a strategy and business plan in our series on Business Goal Setting: Using the “F-Plan”. The F-plan series provides a structured process to help improve business planning and goal setting.
The Purpose of Strategy needs Leadership
Strategy has almost developed into a discipline in itself, with well established models and theories. Whilst this development has resulted in a wide range of useful tools to help the process of developing a strategy, it could be argued that this has also led to the separation of strategy from the discipline of leadership.
The two fields of strategy and leadership are often taught separately in our Business Schools, when in practice they should go hand-in-hand. One view of strategy is that it is just a glorified plan, albeit a vital one, needed to help take an organisation forward. However, this is only part of the picture.
What is strategy? Well, it is certainly more than just a plan. The purpose of a strategic plan is to produce directions for change. These should be about positive, desired, ideal futures, not current problems, negative reactions or mitigation of past failures. A strategy needs vision and purpose, a “why” to bring life to the “what” of a strategic plan. There is a danger that over-emphasis on models, tools and resources can create an analytical focus on strategy, which may overshadow the crucial role of leadership, or worse, ignore it altoghether. Leadership is needed to bring vision, purpose and life to any strategic plan.
A powerful vision is important because it is one way of linking the realities of the present to the desirability of the future. The role of strategic planning is to map out a path to achieve that vision. As Henry Mitzberg said:
“If you have no vision, but only formal plans, then every unpredicted change in the environment makes you feel your sky is falling in.”
How do you explore and gain clarity on the directions you should take? To be clearer about the nature of strategy it helps to look at differing perspectives.
Perspectives of Strategy – Looking Inward and Looking Outward
There are two dominant schools of thought in strategic management. These differ initially by their respective starting points. The first starts by looking outside the organization. For example, at what might be needed to compete in a particular market. Strategic management then brings together resources to meet those needs.
The second perspective starts by looking inward, at the strengths of the organisation (its core competences), and then looks outward at what the organization could effectively do to capitalize on them.
The two schools of thought are commonly referred to as market position and core competence perspectives:
- Market Position – identifies opportunities in an industry, then channels resources to take advantage and make it difficult for competitors to replicate their activities;
- Core Competence – assesses what distinctive competences an organisation wants to build on, then considers what opportunities would exploit those core competences best.
Market position is often associated with Michaels Porter’s approach, that of organizations positioning themselves in positions which are hard to replicate. This then gives them a significant advantage over their competitors. Core competence is closely associated with Hamel and Prahalad’s notion of activities and processes, which give an organization its competitive advantage.
A better way to try to answer the question “what is strategy?” might be to incorporate both of the above perspectives. In this way an organization can work to its strengths and take advantage of any assets and competences it possesses. Provided of course, that these assets are considered attractive to the market, and they are positioned so as to achieve best advantage. We discuss these two perspectives in more detail in our Business Planning series, especially our article: Goal Setting Strategies.
The Process of Strategy
What is Strategy? Is it an art or a science? Or should we perhaps think of it as craft? Some would say it is a rational scientific process of analysis, an intuitive, creative judgement call, or an application of skills. Just as we have discussed two distinct perspectives on strategy, now we’ll consider strategy as a process, with two distinct approaches:
- Prescriptive Strategy – a structured, rational strategic planning process;
- Emergent Strategy – typified by uncertainty, strategy develops with experimentation to achieve an optimal process.
To quote Henry Mintzberg again, he has argued for a more flexible approach to the development of strategy. One which is more akin to the notion of crafting:
“To manage strategy is to craft thought and action, control and learning, stability and change”. It is a recognition that strategy can form as well as be formed.
The head, heart and hand approach to strategy.
What is a Happy Manager? A core them underpinning this site is the importance of integrating head, heart and hand, in order to manage more effectively.
What is strategy? The head, heart and hand approach can also be used when answering this question, a way of combining some of the ideas we have discussed. The head suggests a rational approach to strategy, using a structured process, analyzing models and information to develop a strategy. The heart suggests using some of the attributes of leadership. An intuitive approach, holding to what you believe is right, building a sense of purpose into a strategic plan. Hand, suggests the idea of crafting and implementing a strategic plan, then being responsive to developments and context.
What is Strategy? To better understand strategy, think about:
- Purpose – why is a strategy being developed? Use leadership to bring life to a strategy;
- Perspectives – view strategy from different lenses to consider it from different perspectives;
- Process – think of strategy as a process, perhaps combining a prescriptive approach with an emergent view.
Other insights into the question “what is strategy?” Take a look at our series on business goal setting and planning:
Business Goal Setting : Using the “F-Plan”. The series consists of a structured process designed to help you improve your business planning and goal setting:
- Future: Company Goal Setting: Two Kinds of Future.
- Filter: Goal Setting in the Workplace: Filter to Make the Right Choices.
- Frame: Frame Your Goal Setting Plans.
- Focus: Goal Setting Strategies are Underpinned by Focus.
- Fast: Goal Setting Exercise – Are You fast Enough?
- Faith: Goal Setting Facts Need Faith.