A lot has been written about what strategy is and is not – about what makes a good strategy and indeed why successful strategies are so rare. However much of what has been written has had the effect of adding to rather than taking from the level of confusion surrounding the topic. Here we seek to distil the essence of strategy.
The measure of any strategy is its contribution to success. Indeed at the core of any strategy is clear definition of what success, or winning is. That definition is not just the target – it goes further to the purpose of the business and the intrinsic motivation of its team.
Strategy is about how you win today, but it is also about building the capability for winning tomorrow too. It is a perspective that spans (and integrates) 3 time horizons – short term, medium term and long term.
Profitable growth is the measure of success for most senior managers. That makes their strategy about accelerating growth.
Strategy can be measured in terms of speed, or lack of it. Although the objective is to accelerate growth, most strategies are slow rather than fast. That is they are slow to; develop, implement and adapt. Most important of all they are slow to succeed.
Strategy can be measured in progress along a journey from where the business is today to where it wants to be. So in terms of defining success, a great strategy has to answer 3 questions – this is the essence of strategy:
Strategy is the formula for success. That is those factors that have an impact on your organization, business unit, team or project’s success. It is what some call ‘the pathway to success.’
As Patrick Theam puts it strategy is about ‘ your winning moves’ (1). It is about what your organization consciously and deliberately does in order to win.
In terms of the formula for success managers are faced with two key decisions – what to sell and who to serve – alternatively called product-market strategy. This isn’t easy. Lafley calls it the choice of ‘where to compete’ and ‘how to win’ (2).
A key focus of strategy has long been on beating the competition – as creating a sustainable source of competitive advantage for the organisation (within its chosen markets). A great strategy can be measured in terms of competitive advantage.
Increasingly managers are advised to focus on creating superior value for customers, as the ultimate source of competitive advantage. That means value creation is at the core of strategy. So a great strategy can also be measured in terms of value creation. Innovation is a key pillar of any modern strategy and is essential to finding new ways to create value for customers. So, a strategy can be measured in terms of its innovation – the revelation of new ways to compete and to win.Strategy is a measure of the leader (3). If the strategy fails then the leader has failed. The ability of a leader to rally people behind a clear purpose and to keep the focus on the team’s definition of winning is vital to success. The terms leader and strategy are inseparable – one cannot have one without the other. Yet what is required is a leader (spelt with a small ‘l’ rather than a capital ‘L’) who can coach and empower others to succeed rather than the traditional leader who takes control and leads from way out in front – only to find that others have fallen behind.
But strategy is not just about the strategist – it is not about the senior manager(s) charged with setting a new direction. Strategy must be collaborative and requires a team effort (4).
A real measure of strategy rests on the ability of the leader to engage others in the debate around performance and potential. This engagement is key to the success of the strategy, but it requires a culture of openness, honesty and trust – people have to be able to say what they are thinking. Organizations that are able to have such conversations have a competitive advantage over those who cannot (5).
1. Rhythm: How to Achieve Breakthrough Execution and Accelerate Growth,
2. ‘Playing to Win‘, A.G. Lafley, HBR 2014.