Starting from the origins
When talking about a new topic or subject, it makes sense to start off with a clear definition of what we it actually is we are talking about. For the subject of "Strategy", one good starting point is the root of the word itself (also because it gives me the rare chance to show-off my classical education in Ancient Greek and Latin...).
Looking at the etymology of the word "strategy", it actually originates from two Ancient Greek words: "ho stratos" (the army) and "agein" (to lead). So, the word "strategy" is actually war terminology: It literally refers to the art of leading an army in a war or a battle - to victory, of course! Please note that embedded in the word "strategy" is not only the plan on how to win the war, but also the aspect of "leadership" - a concept we will get back to repeatedly when discussing the subject of strategy.
Taking this concept to the business world, strategy means having a plan on how we as leaders can steer our business to beat the competition and get ahead of the market, and then act on the plan by implementing these strategies and lead our business to outperform our competitors.
A formal definition of "Strategy"
Any academic discussion of a subject needs to kick off with a proper formal definition of the subject. If you look through literature, you will find a myriad of definitions, all with slight variations. Here a few:
- Alfred D. Chandler (1963):
"(...) the determination of the long-run goals and objectives of an enterprise and the adoption of courses of action and the allocation of resource necessary for carrying out these goals"
- Michael E. Porter (1996):
"Competitive strategy is about being different. It means deliberately choosing a different set of activities to delivery a unique mix of value"
- Henry Mintzberg (2007):
"(...) a pattern in a stream of decisions"
- Gerry Johnson et al. (2015):
"strategy is the long-term direction of an organization"
Personally, the one I like best and the one I refer to in my lectures is from Hitt, Ireland, Hoskisson (2019):
"An integrated and coordinated set of commitments and actions, designed to exploit core competencies, with the aim to gain a competitive advantage".
In a nutshell: Strategy is a well crafted plan that lays out how to win against competition.
Strategy vs. Tactics
Finally, one important distinction we need to make is the difference of Strategy as opposed to Tactics. Many times I have heard people say: "My strategy for next week's promotion is...". The way I like to look at it, strategy is something for the longer-term: a plan that covers at least the next full year period, but many companies looking at 3-5 year horizons. This longer-term strategic plan should be closely aligned with the even longer-term vision and mission of the company (more about this in a separate post).
Supporting the longer-term strategic plan are a number of smaller tactical initiatives (like next week's promotion campaign, for example), which become the "operationalization" of our strategy.
The key challenge for business leaders is to ensure that all these small tactical initiatives indeed are fully aligned with the long-term strategic plan. In my 15+ years experience working in various strategic functions (as a consultant as well as in corporate strategy functions across several businesses), whenever I have seen strategies fail, it was due to management taking too many short-term tactical actions that were not aligned with overall strategy, and that distracted the organization from its original direction.
If you take the analogy: If your long-term goal is to lose weight, it doesn't help if you eat too many sweets, chips and drink too many sugary drinks... :)
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Sources:
Chandler, A.D. (1963): "Strategy and Structure: Chapters in the History of American Enterprise"; MIT Press, 1963, p. 13.
Hitt, M.; Ireland, R.D.; Hoskisson, R. (2019): "Strategic Management: Concepts and Cases: Competitiveness and Globalization"; 13th edition, CENGAGE Learning Custom Publishing, 2019.
Johnson, G; Whittington, R.; Scholes, K.; Angwin, D.; Regner, P. (2015): "Fundamentals of Strategy"; 3rd edition, Pearson, 2015.
Mintzbert, H. (2007): "Tracking Strategies: Towards a General Theory"; Oxford University Press, 2007, p. 3.
Porter, M.E. (1996): "What is Strategy?"; Harvard Business Review, Nov-Dec 1996, p. 60.
