You cannot define what porn is, but you definitely recognize it when you see it. While there are lots of definitions of strategy, but you rarely see them in practice. What is strategy then?
When I was 10, watching TV with my parents and two people started kissing each other, my father always said: ‘Close your eyes!’ It was meant to be funny and a prohibition at the same time. The former did not work, because you could feel the latter, while the latter did not work, because you could feel the former. As a result, everybody stayed where they were, keeping our eyes open and we felt that something was going on that should not have. Well, I do not know what porn is, but it must be something else.
When it comes to strategy it is kind of the same situation as it was with my father and the kiss on TV - if it looks like a tiny bit of that, we call it so. If we are thinking of not just today but tomorrow as well, we tend to call it strategy. Spoiler alert, it is not yet.
For many years, I prepared next year’s strategy, however, these were yearly operational plans. What to do with which segment, where to push more sales, where you need to intervene with customer churn, where to sell add on services. It sounds like a great plan, it is necessary too, but it ain’t strategy.
If so, what is porn, I mean, strategy? And why should we need to define it, anyway?
Primarily because if I don’t know what I am doing, then let’s not expect the outcome of the action I think I am doing. In other words: for a given task, I need the right tool. When I want to beat the nail, I need a hammer. You can try and even manage somehow with the handle of a screw driver, but it is not the way to do it. It might seem that the nail has got in the wall, but maybe partially or crookedly. Pretence instead of real solution.
Nevertheless, whoever has a well defined strategy, they are more successful. James Collins and Jerry Porras found in their research that successful companies encourage and preserve a core ideology that nurtures the company. In their best selling book 'Built To Last' (1994) they state that short term financial goals are not enough to build a lasting culture and company.
Strategy is the process of creating a set of well-aligned activities with the aim of occupying a valuable position in a competitive landscape.
Straty adapts the original meaning of military usage to today’s business context so that the definition is true for both worlds.
Strategy is a plan to create value.
The intention of HBR is to simplify the expression that is believed to be complex, and doing so, it gets tangible and manageable.
Chief strategist of a multinational company:
Strategy is the constant pattern of acting.
The expert of practice creates the definition that has got distorted due to the big company context with which the notion loses its original intention and goal. However, it is true that only those elements of the strategy are realized that we do or how we decide recurrently. Nevertheless it is the definition of culture that always eats strategy for breakfast. Instead of systematically executing the strategy, some kind of modified version of it is generated by the organizational forces.
Strategy is a general plan to achieve one or more long-term or overall goals under conditions of uncertainty. Resources available to achieve those goals are usually limited. Strategy generally involves setting goals and priorities, determining actions to achieve the goals, and mobilizing resources to execute actions.
Wikipedia collects the essential elements of strategy:
Finally, Henry Mintzberg defined strategy in 5 different ways:
Strategy as plan – a directed course of action to achieve an intended set of goals; similar to the strategic planning concept;
Strategy as pattern – a consistent pattern of past behavior, with a strategy realized over time rather than planned or intended. Where the realized pattern was different from the intent, he referred to the strategy as emergent;
Strategy as position – locating brands, products, or companies within the market, based on the conceptual framework of consumers or other stakeholders; a strategy determined primarily by factors outside the firm;
Strategy as ploy – a specific maneuver intended to outwit a competitor; and
Strategy as perspective – executing strategy based on a "theory of the business" or natural extension of the mindset or ideological perspective of the organization.
This variety of definitions shows how many ways a strategic approach can be on one hand, and illustrates the missing consensus of the term on the other.
So, as of now and of the similarity of the examples, the definition of strategy goes like this:
What I want to achieve and how I will achieve that. In a nutshell, to achieve what and how.
By the way, this is a crucial difference between the corporate vision-mission and its strategy: the former is about the why, while the latter is about the what and how.
If sales do not perform as expected in the high value customer base, I can increase the sales commission (how) to reach a better position (what) within the segment. Then how come it ain’t a strategy yet?
Tactics and strategy are different. Tactics are in direct relation to actual actions and are well describable, while strategy is more of a set of abstract principles that helps decide in situations where there are direct relations in effect but they were not defined explicitly or even expected before.
Going on with the example, I want to work on the high value customers, because I want to improve my profitability. To do so, I could develop a product version that suits better the current needs of the segment. Or I could open a new sales channel that reaches the target group better. Or I could create a referral program making the product exclusive. There are many possible ways, even the combination of all of these.
All right, so far so good, pulling in the high value customers starts working. Furthermore, everything that has developed perceptually in the sales process gets reevaluated during product usage and during occasional problem handlings. If these experiences and processes are not in line with the high value customers’ expectation, cognitive dissonance shows up. Knowledge will be spread, which affects future sales.
In fact, I tend to create high value positioning, so I need to generate that throughout the entire customer journey: from gathering information, through purchase, usage and problem solving, till churn, leave. This approach is a guiding principle in every decision of every phase, that’s how it becomes a constant pattern, and by the end of the day, strategy.
Because when I am saying yes to something, I also say no to something else. Higher standards mean higher prices which itself alienates those who cannot afford the given price level.
Where we are in the definition is that with strategy, we want to achieve something for which we apply principles that help us make decisions along the way.
Bain & Company structured the values that can serve as a foundation:
https://hbr.org/2016/09/the-elements-of-value
Successful companies use one, two or maximum three out of these values. If you try to enforce even more, there will be conflict of values in some of the cases. Nevertheless if we do not abide by the basic values, we will devalue our own strategy and will derail. Consistency is key.
Target oriented activity based on consistent choice of value to achieve a desired state.
If strategy can be like this, why would you take less?
Big companies are usually in the mature phase of their lifecycle. Reaching this point suggests that they have been successful in some way throughout the years, which implicitly demonstrates a working strategy. Nevertheless the management always feels the urge to reinvent themselves, especially when there is a new leader in town. These changes are often called strategy, however, many of those are tactical shifts, which can be absolutely critical and have no lower value. Still, the strategy at its core might not be touched at all. And should not be, if sustainable performance is assured.
So, make sure you know your strategy. Sometimes the explicit strategy got lost along the way as it was defined properly quite some time ago. If so, you must think on an abstract level to avoid too operative initiatives to be considered as strategy.
When the company is just born, it is essential to elaborate a strategy the right way, answering the questions and aspects above. Actually, this can be the easiest way to do strategy, because it starts as a blank sheet, there is nothing to confuse us, nothing to already drive our thoughts. Later, we might modify the starting point, think it over from time to time as we get by along the way and the actual knowledge about the business gets clearer and known more.
(Disclaimer: porn distorts reality, degrades women so it is not meant to be promoted. As every analogy, this one has its weaknesses, the purpose of using it is only to have a definition for something which does not have yet.)
