What does strategy look like, and will you know it when you see it? This question may seem a bit odd given that every business leader is responsible for ensuring the right strategies are in place in their business. But I’m not convinced that we do recognise a good strategy when we see it and often go in search of a strategy when the obvious is right in front of us.
Active Knowledge Question:
How would you describe ‘a good strategy’ to a colleague?
Please Define It
Strategic management theory in a business context in western society is only about 60 years of age. The mid-1960s is when we saw the emergence of business strategy in our business schools. And since then, there are many definitions of what business strategy is, and what it looks like, as various scholars seek to differentiate their work as unique.
I personally like the business strategy writings of Henry Mintzberg, who felt much of the work in strategy was focused on control and direction. And I think, in that observation, he’s nailed it on what the real problem is when it comes to recognising strategy, but we will come back to that shortly.
Mintzberg saw strategy as ‘a pattern in a stream of actions’. He further expanded on this definition by stating strategy may be a:
- Plan: most people would consider strategy is a plan of some sort.
- Ploy: strategy may merely be a manoeuvre intended to outwit a competitor.
- Pattern: a strategy can be seen as a pattern in a stream of actions.
- Position: a means of locating a company in the environment in which it competes, its niche.
- Perspective: a means of not only positioning a company but thereby defining the perspective it takes on its environment.
But when you look through all the various definitions of strategy, a dominant thread does emerge, and that is competitiveness, and creating, maintaining and enhancing such competitiveness.
So for me, strategy in business is how you intend to compete. Compete to achieve the purpose for which your business exists. And that purpose is not profit; profit is merely one of the outcomes of competing well.
Why Can’t I Recognise It?
The definition of strategy as ‘being to compete’ is not that complex, so why would anyone have a problem in recognising strategy? And it’s not a question of one person’s strategy being another person’s tactics. Rather it rests in what competitiveness looks like and how it is achieved.
Some business leaders would see strategy as being very specific growth actions and targets – we will enter this market, sell these products, acquire this business, etc.
Strategy is seen as being very deliberate and setting out the actions to be taken to drive revenue and profit, which is what they see competitiveness as being all about. And such an approach to strategy is valid and is the most common form of expression of strategy that you will see in businesses. It’s a command and control approach to strategy, whereby the strategy sets out the exact actions that are to be taken.
But as is recognised by many, it’s not hard to come up with a list of strategic goals. What is really hard is making them happen. Creating a list of goals or actions and passing them down the line to be delivered is what I would describe as a ‘command and control’ approach – we’ve decided what needs to be done and now your role is to make that happen. This approach often does not lead to successful outcomes.
Structure Before Strategy
There is a common expression in the business strategy world that you first develop your strategy and then create or adjust the structure of your organisation to deliver it. Structure can incorporate all aspects of how the organisation operates. This approach of strategy before structure is an element of the command and control in formulating strategy. And as such, I would say it is lacking.
Structure really reflects the ability of an organisation to compete and to be able to get things done.
A better approach to the interdependency between strategy and structure is to always develop your strategy from the foundation of your structure (capability) and always be seeking to strengthen that structure (competitiveness).
Within your business, there is a competitive engine that underpins its performance and its competitiveness. In fact, this competitive engine sets the floor and ceiling to the competitiveness of your business – it determines how competitively fit it is.
If you want to improve the capability of your business, its ability to get things done and to compete effectively, then focus on strengthening its competitive engine.
Mintzberg, in his work on strategy, believed that there were deliberate, emergent and unrealised strategies. Deliberate strategies are those that are pre-determined, passed down the line and delivered as expected – this approach rarely works well. Then there are emergent strategies which come to light as deliberate strategies are being pursued and in recognition, the course is changed. And the emergent strategy is delivered – this is not uncommon but requires the freedom to pursue and deliver. And then the unrealised strategies are where the deliberate strategy is pursued, but a totally different outcome is realised – not that common and often rejected and lost.
Command and control approaches typically don’t permit nor encourage any variation from the formulated strategy, and therefore the ability of the business to take advantage of emergent and unrealised strategies is simply not available.
Always Build Capability
So what does a good strategy look like? Strategy is always about direction, alignment and focus, but also the capability to deliver and compete.
If you see a strategy that is focused on building the capability of a business to deliver and compete, then do not discount it nor look for more command and control actions – this product, this market etc.
Before I can enter a new market, deliver a new product, acquire another business and all the other expansive strategies that commonly populate strategic plans, I must have the capability to do it and the strength of the competitive engine to drive such capability.
In fact, if I was only to focus on the competitive engine of a business and its capability, then the drive to enter new markets, deliver new products, etc. would be self-emergent. The business would through its competitive nature, discover, identify, enter and win in all those possible opportunities.
Often at a board and senior leadership level, command and control thinking is dominant, and strategy is defined in a way that disempowers an entire business and dampens if not squashes competitiveness. The competitive potential of the business is never permitted to materialise.
When you are crafting strategy, always seek to build capability and competitiveness and then open the doorways (new markets, new products, etc.) for the business to proceed through, but always allow it to discover what is the best path for the business to pursue in achieving its purpose as a business.
An entirely new level of performance.
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All the best in the success of your business,