Our boutique practice focusses on working with clients to deliver better strategic outcomes through leadership and culture. I realise that that is what everybody is thinking and saying they do. But do we? Do we truly understand what ‘strategy’ is? How do we define a strategy for a business? Do we understand good strategy vs bad strategy?
Strategy is defined as a plan of action designed to achieve a long-term or overall aim. What started as a military term is now a loaded concept in the business sector. Modern business strategy began in the 1960s, where it has developed into the diverse field of study as we know it today.
“Strategy is the determination of the basic long-term goals of an enterprise, and the adoption of courses of action and the allocation of resources necessary for carrying out these goals” Alfred Chandler, 1962
“[Strategy is the] broad formula for how a business is going to compete, what its goals should be, and what policies will be needed to carry out those goals” Michael Porter, 1980
In 1998 Henry Mintzberg, prominent author on business and management, described five key definitions of strategy:
- Plan – a specific course of action intended to achieve a set of goals; similar to the strategic planning concept;
- Pattern – when strategy arises from a consistent pattern of behaviour over time, rather than planned or intended Where the realized pattern was different from the intent, he referred to the strategy as emergent;
- Position – a strategy determined primarily by factors outside the firm, this involves locating products or companies within the market, based upon consumer’s or stakeholder’s conceptual frameworks
- Ploy – a manoeuvre designed to outwit a competitor; and
- Perspective – strategy based on the natural extension of the ideological mindset of the organization
As we review these concepts, we note a few things that may help us understand the notion of strategy within a business environment.
- It involves a plan or intended course of action to achieve a better goal or outcome.
- It involves a target competitor or opponent.
- It involves understanding the environment outside of the business.
- It involves setting the specific action plans to achieve the goal.
- It involves deploying resources to deliver on the plan; implementation is key.
In our experience, we observe how often the information on the competitor or opponent is missing from the plan. We see businesses using or accessing technology to better understand their competitors.
Many of you reading this will know of my deep interest in all things Rugby Union. Business strategy is like a game of Rugby Union. The teams playing each other are the competitors. The crowds are the customers. The teams clearly must understand the other team’s game plan to ensure a win i.e. the greater market share. They need a plan or intended course of action to achieve that number 1 position. The coach is the MD/CEO and they have the responsibility to develop that plan or strategy. The captain is the Project Manager charged with leading and implementing the plan in the field. The teams need to clearly understand that plan to achieve the goals. When they are on the field, the resources have been deployed and now need to deliver. Between the coach, the captain and the team, it is a collaborative process; this should be the case in businesses as well.
The crowd (or customers) play an interesting role depending on whether you have a home game or an away game. If it is a home game (which we will call your core market), you are more likely to do well and succeed because that is where your supporter base is. Home game advantage is always an advantage. However, a team who has understood their opponent well can innovate and disrupt a home game and take market share. This win by an opponent will disappoint the local customers and it may encourage some to start following the team from out of town.
One further thought on the game plan is that there must always be room for adaptation. Best laid plans may go astray. The opposition may surprise, and this requires the other team to be flexible in the delivery of its response. We can share many examples of where this may be the case. The change by Virgin Australia a few years ago to become to a full-service airline would have challenged Qantas. They were traditionally offering different products but were now going to provide a similar service. Qantas needed to be agile and nimble to adjust their game plan.
Strategic plans are impacted by many factors. The starting point is where the company is, identifying where it wants to be, and then what plans need to put in place to achieve it. In good times, companies focus on growth and expansion. In times of stress, the strategy is often to cut costs; but this may not always be the right decision. For example, for years no one could beat the All Blacks. That was until internal changes started to occur – team members leaving, new young team members appointed etc. Now winning was no longer a given and they were beaten in a couple of games. With this came the need to work harder on their strategy to recover their team prowess. Three years ago, I wrote about the Melbourne Rebels and the way they were developing their strategy to succeed. They currently lead the Australian Conference and have not lost a game. They have understood what is required to outperform their competitors.
At Converse Strategy, we work with teams to facilitate the development of measurable implementation plans that allow a business to grow. For us strategy is defined as follows:
“A plan that is agile and nimble which sets a measured course of action to deliver better outcomes than competitors through deploying resources which in turn delivers great outcomes for all stakeholders of the business.”