I’ve been working my way through the book Your Strategy Needs a Strategy (amazon), and near the front, they offered an interesting exercise to find out which type of strategy makes sense for your business.
First off, I didn’t know there were different types of strategy!
The book breaks it down into five types, which I’ll get to below. Before I do, here’s the quick exercise: If you’re up for it, jot down your answer to the three questions below, and then see where it lands in the following diagram.
1.) Choose the one statement that you feel best describes our current strategizing practices.
- A. We set a clear goal and plans, which do not change frequently, and we execute to achieve them.
- B. We strive to realize an imagined end state, and we react flexibly to obstacles that we encounter along the way.
- C. We identify opportunities to reduce costs and preserve capital, guided by detailed plans, so that we can eventually identify a new path to growth.
- D. We constantly scan the environment for signals of change, which we use to guide a portfolio of experiments to remobilize our resources around successful ones.
- E. We actively engage other stakeholders and companies in our industry, create a shared long-term vision, and build platforms to enable collaboration.
2.) Choose one statement that best describes our perceived business environment.
- F. Our industry or company has been shaken by an internal or external shock or has become misaligned with a shifting business environment.
- G. Our industry is ripe for disruption by an imaginative new player.
- H. Our industry is marked by a high degree of dynamism and unpredictability, driven by shifting customer demand, technologies, or competitive structure.
- I. Our industry has a stable, predictable pattern of demand and competitive structure.
- J. Our industry can be shaped or reshaped by a coalition of players acting in coordination.
3.) Choose one statement that best describes the strategy we currently intend to pursue.
- K. We continuously renew our competitive edge, leveraging our agility and flexibility.
- L. We build sustainable competitive advantage through superior scale or capabilities.
- M. We succeed by seeing and realizing new possibilities, leveraging our imagination, speed, and persistence.
- N. We succeed by building and maintaining platforms to orchestrate the activities of other companies and stakeholders.
- O.We are focused on ensuring short-term viability as a prelude to reigniting growth by realigning our strategy.
Results: Are You Using the Right Approach to Strategy?
The chart highlights two main factors that greatly affect strategy:
- Predictability: How far and how accurately can you forecast demand, performance, competition, and market?
- Malleability: To what extent can you influence those factors?
This leaves us with four primary types of strategy, plus a fifth that is used in really rocky environments to simply survive. Here’s a very reductive breakdown of the five:
- Classical: Be big.
- Adaptive: Be fast.
- Visionary: Be first.
- Shaping: Be the orchestrator.
- Renewal: Be viable.
Classical: We can predict, so we can plan. This is the most familiar type of strategy, the type taught in business school. Long-term planning is key.
Adaptive: We can’t predict, so we can’t plan. You have to experiment quickly in order to optimize. Flexibility is key.
Visionary: We know what’s coming, and we can change it. You are willing to take the big bets to make good on the potential that you see. Boldness is key.
Shaping: We can’t predict it, but we can shape it. You have to be adaptive and flexible, plus think outside the box to explore to new opportunities. Breadth is key.
Renewal: Everything is on fire. This is fine. Surviving is key.
Where do you think you are?
(For a quick overview of these concepts, there’s a pretty thorough HBR article with the book’s author, plus this 11-minute TED Talk, which gets into the details around the 5-minute mark: