What is Strategy?
Strategy can be a daunting term — an elusive concept shrouded in mystery, considered the mark of leaders, supported by the brightest, taught in executive programs, critiqued by the markets, the answer to every intractable problem… and sometimes a mirage, or the emperor’s new clothes! Let’s work out what the hell it is, and why we might care.
You want the short answer? Strategy is directing action to deliver goals under conditions of uncertainty. But as soon as you want to know ‘how’ to do that, you need more than a short answer.
A dense field, no doubt.
In discussing strategy, its history and various schools of thought, it’s good to glance at two texts: the 750 page magnum opus of Sir Lawrence Freedman — “Strategy: A History”, and Henry Mintzberg’s “10 Schools of Strategic Thought”. And by ‘glance’, I mean look at the tables of content. I’ve certainly pretended to read both myself. These two works alone make the case for strategy being a dense field; they demonstrate the depth of historical thinking on the topic, as well as the divergence of theory attached to this one little word. As an art of war, and an an instrument of commerce, the stakes have always been high and the perspectives many.
Although between Michael Porter and Henry Mintzberg you could probably account for the majority of MBA course strategy readings in the US tradition, frameworks and theories have been manufactured at an incredible rate for 4 decades (kudos to BCG for this great interactive chart). Add a little Machiavelli, a pinch of Sun Tzu, pepper with the insights of a consultant, a designer, a technologist, an entrepreneur, an interculturalist, maybe even mince an analogy to music, and we’re back where we started: an inexact, nuance-riddled, manifold term.
For a moment, think of other elusive fields such as can be found in the liberal arts: sociology, psychology, anthropology, political science, philosophy. In fields where discussion has occurred for centuries, there are some foreseeable approaches to sense-making. The first is to oversimplify to the point of losing meaning. The second is to argue points of difference endlessly. The third is to label the field nonsense. The fourth is to decompose the field into many cottage industries. The fifth is to write an article bearing one of the following titles: “The Death of X”, “Rethinking X”, “X in the 21st Century”, “X 2.0”, “The X Revolution”, “The Truth about X”. (mental note… write one of those puff pieces) But none of these responses help to capitalise on the good within the current expansive body of work, and bring shared understanding to a head.
They are essentially all dis-integrative approaches.
I think the best approach is to first believe that the field is amenable to understanding, and then seek to find a definition that, while perhaps not perfect, is enough with which to move forward. This is, by the way, a strategist’s technique when there is either too much or too little data — the “good enough” answer.
A Working Definition
With so much written on ‘the art of the general’, there’s not much value in a literature review. Instead, let’s start with an integrative working definition, which is my effort at synthesising an aeon’s writing:
“Strategy is the leadership art of making futures happen through the aligned effort of an organisation.”
Alright, now let’s deconstruct this definition to see what’s happening.
You’ll notice that it underscores the role of ‘leadership’, which here means making decisions on direction, and building the alignment and engagement of an organisation to move in that direction.
The term ‘art’ recognises that, despite its analytical leanings, strategy is not wholly scientific — especially when dealing with innumerable forces and the human aspects of change.
“Making futures happen” acknowledges that strategy is about creation, not just documentation. In order to be more than just a thought experiment, strategy has to walk alongside execution and pragmatically adapt, like a living and learning companion of the work. And it is trying to make the future, which means that strategy is not a field for fatalists! Freedman makes the point well that all strategy is essentially seeking to achieve control of the future, and — in the case of war or business — control that is superior to all challengers. That is the human impulse of strategy: superior comprehension of the future in order to achieve superior control of your outcomes.
The plural ‘futures’ entertains the possibility of more than one future, which is a feature of strategy that continues to rise in importance. A good strategic plan reduces an array of probabilistic transitions and the almost incomprehensible stochastic game theory of the real world into a small set of diametrically opposed scenarios. Each scenario has risks, opportunities and associated playbooks. By creating simple extremes, we can start to see the actions that have no regrets, and the opportunities or threats common to all scenarios. Gradually, the disquieting uncertainty of the future becomes a more manageable set of confidences and corner cases. Truth be told, it is difficult to show that strategy has ever been remarkably successful at predicting and then delivering a certain future. Instead, the most successful cases show a fluid and responsive evolution from a clear point of departure and a unifying vision. Whilst the future is uncertain, speaking in terms of potential futures creates a simple vocabulary and conceptual map for aligning on what an organisation should become. That’s a long way of saying that ‘making the future’ is a process of gradually converging on the best possible future, revealed only by the passage of time.
Lastly, this working definition talks about the “aligned effort of an organisation”, because we might as well limit our focus to the challenge of a strategy that involves more than one person! An organisation exists to extend the creativity of individuals, making strategy the object of their aligned effort. Strategy asks the same question every day: “knowing what we now know, how can we best use our time, and align our resources and unique capabilities, to make our idea for the future real?”… or more simply: “what matters today for our vision of the future?”
The terms that follow
As for all the cognate terms that are used in the field, we can do a bit of a clean-up by extrapolating all of them from this working definition.
“Strategic planning” would be about planning to make a future happen. “Strategic Management” would be the coordination of resources to support a vision of the future, while learning and adjusting to change. “Strategic Leadership” would be the behaviours that any leader — not confined to those who hold positional power — must exhibit in support of a strategy, including the ability to grapple with ambiguity, navigate the unknown, anticipate, challenge, push for more, focus, trade off, and most importantly make clear decisions. “Strategic Thinking” would be about the cognitive disciplines and techniques to produce such a plan and to grapple with the questions involved in defining and delivering a future, as well as steering an organisation.
Lastly, to qualify for the most outlandishly misused term of all, “strategic”, an action would need to underwrite a bigger idea about how to control or deliver the future. It doesn’t mean ‘clever’ or ‘complex’ or ‘novel’ — strategic just means that you have one eye on the biggest game in town; to be instrumental in making your organisation’s future happen.
What’s not in this definition? Frameworks.
This working definition doesn’t talk about competitive advantage, differentiation, disruption, innovation or change. It doesn’t compare classical, adaptive and visionary modes. It doesn’t anchor on a core business objective like growth, or efficiency or customer satisfaction. It does not explore the value-creating business model underpinning an organisation. It does not talk about capability. You may have encountered one or more of these definitions of strategy in your life, and there is no doubt these are all important concepts in particular cases. But as organisations operate in vastly different environments with fundamentally different reasons for existing, these ideas are really just situational tools, not definitions.
Generally, these many brilliant ideas are captured in codified forms called “frameworks”. Don’t be tricked into believing that the latest framework is a new definition for strategy. Blind allegiance to frameworks produces zealots, cults, and with them outsiders, cynics, opposition, and generally a cultural condition that is not conducive to an organisation coming together. Frameworks and proprietary methods are low order concepts. They are blunt instruments, that should never distract us from an active conversation about the future we want to create. It’s handy to have many tools, and it’s also important to choose the right tool for the job.
A framework serves to structure thinking, not replace it.
Beyond mere frameworks, strategy is the seminal or focusing cultural idea upon which many other activities in an organisation are built. It must be the idea that binds.
Why do I need a strategy?
A big leadership crime is to attribute any uncertainty, shortcoming or issue to a lack of “strategy”. While that at first sounds virtuous, placing everything at the feet of an absent strategy is intellectually lazy — it is a neat way of deflecting from the challenge of working out what’s wrong or rising to a leadership challenge. More often, the speaker is actually saying “we lack clarity”, “we lack alignment”, “we lack data”, “we’re avoiding decisions”, “we’re avoiding big issues”, “we’re unclear what question we’re answering”, “we’re fearful”, “we’re confused”. Most of these shortcomings relate to the leadership responsibility inherent in strategy, not the absence of a document.
In addition to specific problems requiring strategic thought, strategy solves for a set of questions and issues common to many organisations:
- Where are we headed?
- How should we use our limited resources and capabilities?
- What change in action, resource or capability does our future require?
- Are we ready to manage uncertainties and respond to opportunity?
- Day to day, how do we focus on the things that matter?
- Can we demonstrate we’re doing what matters in the most efficient way?
- Are our people aligned and emotionally connected to our direction?
- Are we realising our purpose?
A strategy can answer these questions or test the adequacy of existing answers. It’s good to be clear on why you’re wanting a strategy so that your effort is proportionate to the perceived value, especially when a process is likely to seek the involvement and time of prized people and resources.
There are also lots of reasons you might need help with your strategy. If your strategy is created in an ivory tower, that ain’t great. If yours is a document that sits on the shelf, don’t bother. If the strategy is all form but no substance, no wonder nothing is happening. If your strategy doesn’t create cultural change, it’s probably just bureaucratic nonsense. If it could just as easily be the strategy of your competitor or a peer, does that make a word of sense? If you’re saying one thing but the ‘real work’ is completely contrary, it is just an opinion. If work on strategy ends when the Board provides its approval, then the motivation is skewed. If you can’t turn your strategy around fast, and turn it around again, then you’ll never really be prepared for today or tomorrow. For these reasons, it is not just a matter of common sense.
There is undoubtedly a cohort of readers who considers all of the above to be semantic fluff. Firstly I will offer a counter to that view, and secondly I’ll get down to brass tacks for those who remain unconvinced!
Leaders of large organisations would no doubt have recognised the long shadow they cast for good and bad. Every curiosity, question, decision, preference and prejudice they put forward is magnified as it cascades through an organisation. A small signal can echo through the corridors of an organisation and produce substantial and sometimes unintended consequences. Filtering out noise and being crystal clear on meaning is a major cultural responsibility for those leaders, and this is especially true when defining, catalysing, and provoking strategic actions. Leaders need to be aware that every word spoken produces activity, and activity depletes resources. The wrong word, or ambiguity, generates contrary and competing activity in various pockets of an organisation. If strategy is murky or even absent, everything beyond this is point teeters on the edge of chaos. I would venture that the semantics matter a great deal to anyone who has grappled with the question of how to set an agenda or drive counter-cultural change.
But you may be in a position of practical responsibility. You may need to set wheels in motion with something concrete. You may need some terms of reference. Well no matter what your context or framework, strategy tends to have some commonly regarded features.
A popular analogy for describing the elements of strategy is a ‘road trip’. You set your destination (vision), assess travel conditions (analysis), determine a path (plan), define your riding speed, stops and breaks (goals, milestones, KPIs), adjust when you encounter something unexpected (risk management), and so on. There are three notes I’d raise in relation to this analogy.
- Good strategy starts with a deep reflection on purpose and a point of departure. The road trip analogy doesn’t do enough service to the importance of understanding who you are, what your essential purpose is, what assets you have to leverage, what values will guide you, what stage of maturity your organisation has reached, what question you’re answering.
- The futures with which strategy engages are more uncertain. Good strategy focuses on the long term — it is not merely a collection of known goals. It must adjust to emergent trends and issues, and grapple with alternative futures. The future dominates decision making and there is a bias towards dealing with risk, uncertainty and discontinuity. Good strategy is messy… a living dialogue
- Strategy is about people. The need for strategy is predicated on the need to connect people coherently in their action. Does everyone understand? Do you have the right capabilities? What will be the deciding factor when there is disagreement or when priorities compete? Is there belief? What do customers want? These are all complex intercultural matters that are concerned with the connections between parts of an organisation, and the coherence of disparate actions.
The road trip feels to me more like a planning exercise than a strategic exercise. Strategy would be the process that decides to have a road trip in the first place!
As for the brass tacks? Our own strategy software has three broad phases — 1. Define, 2. Design, and 3. Execute…. as well as several feedback loops:
- Define: Set your purpose, vision and values; complete a SWOT; obtain stakeholder inputs; analyse internal trends and your point of departure; understand your health and maturity; explore scenarios; devise a strategic logic, and set a focusing idea (burning ambition) to launch design.
- Design: Determine your bold moves; establish the key heads of action (pillars) and the objectives that will provide you confidence you’re realising your vision and purpose; create a vital set of goals under this framing, and understand associated risks and investments; sequence and prioritise limited resources over time.
- Execute: In a nutshell, do it… but more importantly, ensure that what you discover along the way informs 1 and 2. Execution is about clear communication and an active process of decisions so that all activity can ultimately be traced to your purpose, values and vision for the future.
If strategy is the leadership art of making futures happen, the elements become quite self-evident. It is, however, equally important to realise that only these things should be done — or rather, that you should do what is necessary and no more. Michael Porter famously offered that “the essence of strategy is choosing what not to do.” You will know your strategic process is successful when you’re bravely stopping things that don’t align, and removing the nonsense that is more concerned with appearance than value. Which leads to one last golden rule:
Ruthlessly stop any activity outside of that which creates value in the context of your future. Here is the ruthless strategist’s manifesto:
Work out a direction and communicate it clearly. Strategy is inexact, but your strategic logic should not be — make your reasoning and assumptions known so that they can be tested with experience. Pick some vital priorities, and weed out the non-essential. Set clear guard rails for your direction but allow creativity within them. Be bold, because decisive actions preserve strategic integrity. Monitor performance, opportunities and risks, then learn and adjust through one well-understood process. Failure is healthy as long as it is not protracted and impervious to change, so create safe conditions for engaging honestly with failure. Don’t talk too much, don’t govern too much, and don’t pretend there is more science to your answer than there is. Don’t try to control from the top down, because that is a fool’s errand. Love data, but recognise the diminishing returns of analysis — ask only what you need to support a decision. Reduce activity at all cost, so that only the essential remains. Have a single operational cadence. Meetings are for deciding and committing. Create the shortest possible path from a decision to an action within your organisation, and communicate decisions as clearly as your name. Communicate regularly, which includes listening to and acting upon feedback from any source. Celebrate success. Look outwards to the world, competition and trends that create opportunities for, or threats to, your future. Keep your brand promise. Live your values. Constantly return to your purpose. Never lose sight of engagement, as strategy starts and ends with people.
So what is strategy?…
There’s clearly more to the answer than a working definition, and exploring each part of strategy will extend answers further. But it is certainly an evolving and exciting domain worthy of discussion. And because good strategic execution relies on clarity, it certainly makes sense to line up on your understanding.
Strategy is a process of change and leadership that mobilises limited resources to create things beyond our practical belief. It is the crystalising of ideas into action and of questions into choices. Strategy derives from a universe of possibility a vital and essential set of priorities. Of the infinite questions one might ask, it finds the best. It detects bias, logical fallacy, paradoxes, conflicts, and duplication. It corrects our reasoning and sharpens our mind, improves our conversations and guides our resolutions. It creates context. It is structured, but its procedure should never stifle a curious mind. It is a discipline of thought that is founded on creativity, and its quality is a direct function of stakeholder engagement and diversity. Strategy makes the future more comprehensible, predictable and amenable to control… it makes futures happen.
Who wouldn’t want a piece of that?!