WHAT IS STRATEGY?
Since Michael Porter’s famous piece Competitive Strategy, which appeared in his 1980 book What is Strategy [In the Business World]?, there’s been a lot of ink spilled trying to answer this question. Many academics have postulated their theories, including the famous duo Chan Kim and Renée Melbourne in Blue Ocean Strategy, as well as Clay Christensen and company in Reinventing Your Business Model. The only consensus? That there’s no consensus. Which is a reflection of today’s reality in an economy that’s forever in movement.
In business, strategy is the process by which an organization chooses the tactics needed to compete, win, and grow.
Does that mean strategy stems from a process more than an idea? Yes. Absolutely.
But before we discuss this further, let’s take a closer look at just what winning means.
In business, strategy serves one purpose: To have an advantage over a given market—whether it’s a new market or an existing one—in order to win a return. It doesn’t matter of you’re a foundation, non-profit, or private company; the goal of your organization or clients is to win. Winning can mean earning anything from sympathy capital to notoriety, ratings, recognition, or revenue. The organization is asking you to find the competitive advantage and grow. More often than not, this implies taking market share away from the competition by becoming more competitive.
That’s why what’s most important to a strategist is to better position your organization, or that of your client, with the goal of ensuring better returns. Without this ultimate goal, your role as a strategist is moot.
There are three key ways to apply strategy in order to win:
- Do something new (create)
- Make the best use of what your organization already does (optimize)
- Be an opportunist when it comes to emerging trends (innovate)
A strategist’s recommendations and tactics to be put in place at the organizational level inevitably revolve around these three things.
THE STRATEGIC PROCESS
Let’s get back to the idea that strategy is a process. There are four phases a strategist must engage in and carefully analyze before suggesting an idea or approach:
- The organization. An internal analysis must fully cover the organization’s current business model, business goals, stakeholders, perceived position on the market, and current strategic approach. Ask questions and note any and all theories that come up.
- The environment. As I mentioned in my previous article, an external analysis is vital to the strategic process. It must pinpoint industry and market strengths as well as establish the key trends that can influence the organization’s business model. Pay particular attention to tactics used by your industry’s main players, as this will help you better understand their strategies and avoid leading your organization or clients in a direction where it will be difficult to stand out.
- The truth. This is where true strategists are found. Start with the premise that you must take nothing for granted. During the first two steps above, you will be questioning organization leaders on their clients, value propositions, activities, and especially their vision of the future. Each of these remains a hypothesis until proven otherwise. Use techniques like Design Thinking to validate your hypotheses. Here’s a tip: This can’t be done within the four walls of your organization, but by speaking to your organization’s current and potential clients.
- A range of tactics. A strategy leads to a collection of tactics and agents of change. Following the first three steps, you will already have a good idea of the direction your strategic process will take and how it will help you win by creating, optimizing, and/or innovating. There are a range of tactics available to fulfill these strategies, from developing a product to entering a new market, improving a tool, and more. Make sure you know all the tactics you have at hand for every department in your organization, as well as all key players (stakeholders) who can help you. First and foremost, be realistic. Here’s another tip: Marketing isn’t always the answer!
To sum up, strategy is a process, not an idea. This process must be respected in order to minimize risk to your organization or client and, ultimately, ensure you maximize your returns.
Next up on the subject:
- The culture of frameworks: A work structure for the strategic process
- Strategy pitfalls
- Validation via Design Thinking
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