Always start by defining terms. It sounds sensible and straightforward – especially with a subject like strategy which has been studied from every angle.
But it is not.
In 1987 Henry Mintzberg offered five definitions of strategy for consideration: plan, ploy, pattern, position and perspective. Strategy is perhaps most commonly envisaged as a plan — consciously intended action developed in advance. A related concept is strategy as a ploy – a specific manoeuvre designed to outfox opponents. Strategy as pattern –the focus of much of Mintzberg’s research – is a consistency of behavior intended or otherwise. Strategy can be a position, an organization locating itself in an environment as Mintzberg describes it. This definition of strategy is consistent with the preceding definitions; an organization can position itself via plan, as plan, or as a pattern of behavior. Finally, suggests Mintzberg, there is strategy as a perspective. In this instance is effectively the ingrained perspective the organization has, it is collective and shared outlook on the world.
In The Financial Times Guide to Strategy, Richard Koch provides two senses for strategy:
“1. A good strategy is the commercial logic of a business, that defines why a firm can have a competitive advantage and a place in the sun. To be complete, a strategy must include a definition of the domain – the lines of business, types of customer and geographical reach — in which the firm competes. It must also include a definition of the firm’s distinctive competencies and the competitive advantage that gives the firm a special hold on the chosen business domain.
Strategy also means what a company does, how it actually positions itself commercially and conducts the competitive battle. You can always attempt to describe a competitor’s strategy, whether or not you think it sound. In this sense a strategy is what a firm does, not what it says or does, or what its strategy documents propound.”
This provides some reassuring clarity, but also establishes that the scope of strategy is incredibly broad – from the logic of a business to what it actually does. And, as we shall see, the scope of strategy is ever broadening.
Costas Markides, the charismatic London Business School professor, provides this overview: “There is general agreement that every company needs a strategy – either explicit or implicit. Yet, there is surprisingly little agreement as to what strategy really is. Within both business and academic circles, it is not easy to identify two people who share the same definition of ‘strategy’. Differences in opinion on the content and process of developing strategy are passionately argued. Yet these debates cease to matter when we realize two important points. First, strategy needs to be approached from a variety of perspectives. Second, rather than adopt a single perspective at the expense of all others, good strategies have to achieve a fine balance between seemingly divergent views.
“When it comes to strategy, I have found that there are three problem areas of controversy. I believe that sound strategic thinking achieves a fine balance between the arguments surrounding: (1) what constitutes the content and process of strategy, (2) strategy as analysis or creativity and (3) strategy dynamics. Analyzing each area in turn will help in achieving that fine balance.
“Strategy is both of these things: strategy must decide what game we want to play and then determine how to play that game well. As practised today, strategy is preoccupied with fixing the problems in the existing business rather than thinking about future businesses. The essence of a good strategy is to create new markets, new products and new industries. This leads to the position that strategy should be about competing for the industries of the future rather than competing for market share in the industries of today. It is hard to argue with the need to focus the organization’s attention on discovering new markets. But this should not come at the expense of today’s businesses.
“Therefore, the key question for any company is not whether it should try to create the industries of the future but how to take care of its existing business while at the same time attempting to create the industries of the future. Every company should also prepare for an unknown future — either by trying to create this new future itself or by creating the conditions that would allow it to exploit the future when it unfolds.”
As these takes on strategy suggest, strategy really is a moveable feast, an awkward hybrid of delivery in the present and mapping out a persuasive future and route to get there. The challenge for all those charged with leading organizations is to reach their own definition of what strategy is and what it should do. Without this as a starting point, strategy is as useful as whistling in the organizational wind.
Richard Koch, The Financial Times Guide to Strategy, FT Prentice Hall, 2011
This was originally published in What we mean when we talk about strategy by Stuart Crainer and Des Dearlove (Infinite Ideas, 2016).