What is Strategy?

What is strategy? This is a question which comes up surprisingly often. Sometimes it is in isolation. Other times it is in comparison to something else. (See, for example, my recent post "Brand Strategy is NOT the same thing as Business Strategy").

If we are to engage in strategy with any measure of success, it is important that we are able to answer this question.

What is strategy?

A strategy is a plan to achieve a goal within a given context (tweet this).

Strategy (as an activity) is the development and execution of such plans.

Strategy is often boiled down to three simple questions:

• Where are we now?
• Where do we want to get to? (This is the goal.)
• What is the best way to get there?

What is business strategy?

In business strategy:

• the goal is usually defined in terms of growth, profit, sustainable value creation or something similar. It can also be expressed as a corporate mission or vision statement, or as a value proposition.
• the context is:
• the ever-changing environment in which the business operates. This includes the competitive, regulatory, technological, customer, supply chain, etc. environment,
  and
• the businesses internal capabilities, resources, strengths and weaknesses. 
• the plan is how you allocate resources (typically people and money).

In business, resources and executive attention are usually limited. So business strategies are often as much about defining what a business will do to achieve its goals as it is about defining what the business will NOT do in order to achieve sufficient focus. This is why Michael Porter declared that "The essence of strategy is choosing what not to do."

What is competitive strategy?

Competitive strategy adds to this by recognising that there may be other players/businesses on the field. These may have similar or competing goals. They need to be out-manoeuvred in order to achieve the business's goal.

What is marketing strategy?

Marketing strategy is a variant of business strategy. It starts from the position that the goal is to satisfy customers' needs.

That is technically a narrower definition than business strategy. But in practical terms, it is difficult to separate the satisfaction of customer needs from the sustainable achievement of just about any other business objective. For this reason, the lines between business, competitive and marketing strategy are often blurred.

However, the broader definition of business strategy recognises that there are courses of action that can be pursued to make a business more successful which have little or no direct impact on what the customer experiences (at least in the short term).

Business strategy encompasses and binds together not just marketing strategy, but also operational strategy, financial strategy, etc. However, in this video, Michael Porter cautions against have multiple sub-strategies in this manner. From this, it follows that an organisation should not have 'a marketing strategy' but rather that marketing should be a consideration within a business strategy.

For the reasons described above, business strategy invariably incorporates both competitive and marketing strategy.

Other types of strategy

There are, of course, lots of other types of strategy. Military strategy, for example, is a form of competitive strategy unrelated to either business or marketing strategy. So too are the strategies one might employ to win a game of chess or cricket. One might also have a weight loss or fitness strategy with no element of competitive, business or marketing strategy.

In all but the simplest contexts, successful strategies must recognize that the context is changing rather than static. Strategy must, therefore, be able to respond to, if not anticipate or even shape, such changes in the context.

Strategies, which are 'clever' are often considered more strategic than those that rely on brute force (size, amount of spend and effort, etc.). Complexity should not be mistaken for cleverness, and great strategies are often deceptively simple.

For example, consider the film 'A beautiful mind'. In it, John Nash famously advised his friends to always ask the second prettiest girl in a group out for a date. He argued that she was more likely to appreciate the attention and accept. A very simple strategy, indeed. Although I have always wondered if he shared this strategy with his friends so that they'd all pursue the second prettiest girls leaving him free to pursue the prettiest girls himself. That would be a neat feat of competitive strategy!

Strategies can be good, that is, likely to achieve the goal even as the environment changes around it, or poor, that is, unlikely to achieve the goal and/or too static in the face of the changing environment.

Good strategy is usually based on a thorough analysis of the context and capabilities. See, for example, my post on how to Analyse the Business and its environment.

Strategies can be subdivided into sub-strategies. For example:

• short, medium and long-term strategies,
• brand, IT, HR, financial, etc. strategies.

Ideally, such sub-strategies should all remain aligned as part of an overarching strategy. However, my experience is that such alignment is not always achieved. (See Michael Porter's comments in the video included under the Marketing Strategy heading above.)

What are tactics?

Tactics are related and yet different to strategies.

Tactics are rules of behaviour which apply regardless of context and strategy.

We can think of strategies as "given these unique circumstances and this goal, the best course of action is to ..." whilst tactics are "whenever this happens, we respond with that." In this way, strategy is contextual and unique, whilst tactics are generally repeatable.

For example, when walking through the woods, your should always be on the lookout for and avoid snakes. The things you do to look out for and avoid snakes are tactics. It doesn't matter why you're walking through the woods, you should just do them whenever you are. On the other hand, if the best method to get from here to the lake is to walk in a straight line in a Northerly direction. Walking in a straight line in a northerly direction and any steps you take to stay on that course are strategy. If that route take you through the woods, you're back to avoiding snakes - but those actions are still tactics.

Strategy provides a context for the long-term, big-picture thinking required in order to make trade-offs and sacrifices. Think, for example, of a chess player sacrificing a pawn in order to achieve some greater advantage.

A strategy is what makes all the tactics through which it is implemented add up to more than the sum of the individual parts.

Sun Tzu wrote: "All men can see these tactics whereby I conquer, but what none can see is the strategy out of which victory is evolved." Tactics are the individual actions which we can see an organisation take. Strategy is the unseen, behind-the-scenes logic which makes those tactics appropriate and effective.

Strategy itself is a relatively simple concept. The methods of achieving strategy may be complex and varied. But at the end of the day, the objective is very simple: a plan to achieve a goal within a given context.

Context

The context for a strategy is everything about the situation in which the strategy must operate.

In business strategy, this includes the internal state of the organisation (strengths, weaknesses, resources, capabilities, etc.) and the external environment (customers, distributors, suppliers, competitors, substitutes, owners, regulators, etc.)

The context for a strategy may impose a number of constraints (barriers, challenges, bottlenecks) as well as confer advantages.

A strategy must either operate within such constraints, or find a way to break out of them. And a strategy will be easier to the extent it exploits any advantages conferred by the context.

Post-script: Some other definitions of strategy

• The authors of Playing to Win, A.G. Lafley and Roger L. Martin, describe business strategy as “a set of choices about winning” or, more specifically, “an integrated set of choices that uniquely positions the firm in its industry so as to create sustainable advantage and superior value relative to the competition.” (Source)
• Peter Compo devotes an entire chapter to unpicking different definitions of strategy in his book "The Emergent Approach to Strategy". It is well worth a read.

Brand Strategy is NOT the same thing as Business Strategy

I don't often write rebuttals. However, after a recent debate on Linked with the author of a post entitled 'brand strategy is business strategy' I feel compelled to do so. I would have been happy with brand strategy is a component of business strategy, or even brand strategy is a form of business strategy, but the the author went too far by claiming that brand strategy (as well as marketing strategy) are synonyms for business strategy. And that is a step too far.

I accept that language evolves, but I think that every time you take two distinct words and make them synonyms for each other, you lose something. For example, the words 'hill' and 'mountain' describe two overlapping yet distinct concepts. Sure, we could rename The Rocky Mountains as The Rocky Hills, and described them as big hills to set them apart from smaller hills, but we'd have lost something in our ability to describe and understand the world.

So it is with management concepts. Strategy, marketing, brand, marketing strategy, brand strategy, etc, are all perfectly good terms describing related but distinct concepts. If we start treating them as synonyms for each other we will lose something of our ability to describe and understand the different facets of organisations.

So what are the differences between marketing strategy, brand strategy and business strategy?

Strategy involves trading off short term tactical considerations against longer term, bigger picture objectives. Business strategy involves making such trade-offs in any and all aspects of running a business.

Marketing involves matching what customers want (or can be persuaded to think they want) to what the firm does or can provide.

Brand is the mark a firm uses to symbolise and communicate the meaning it attaches to itself, it's products and it's services. (The word derives from old English 'to burn' and was first used by farmers who literally burnt their mark onto their livestock, but it is now used more generally than that.) In a modern context, brand provides a rich vehicle for building and communicating expectations of an organisation, product or service.

It is as possible to engage in tactical marketing as it is possible to engage in strategic marketing. The same is true of branding.

Similarly, there are many forms of strategy other than marketing strategy: think of HR strategy, IT strategy, even partnering strategy, operational strategy, procurement strategy, innovation strategy, etc, not to mention the overall alignment of business strategy.

These are related but distinct ideas - not synonyms.

If we allow marketing strategy to become a synonym for business strategy, then how would we justify not promoting HR strategy as a synonym for business strategy. That would make marketing strategy a synonym for HR strategy, not to mention IT strategy, etc. Before you know it everything would be a synonym for everything else. That way lies madness!

I frequently encounter people from various disciplines arguing that their discipline is the acme of business strategy, but branding people seem to do so more often and more strongly than most. In my experience this seems to stem from one of two causes: either

1. they are so wrapped up in the importance of branding that they simply fail to be able to conceive of the idea that anything else could be important,
   or
2. they actually are doing business strategy but for some reason are determined to call it something else.

To those people, I say: let's own our disciplines. Value branding and marketing for what they are. Value business strategy for what it is. Understand the similarities and differences between these disciplines, and how they can be combined where needed to achieved desired objectives. But let's not get lazy and try to pretend that they're all the same thing.

I thought I'd finish with an example: imagine a hypothetical European manufacturer of specialised industrial components. It has a strong innovation pipeline and its products are well protected by international patents. Its products are bought locally and globally by large manufacturers whose engineers value its products superiority quality and performance.  The problem is that it can't keep up with rapid growth in demand in the USA, and increasing shipping costs and trade restrictions are cutting into its profits. So it decides to start manufacturing in the USA for the first time. Where should it locate its factory(ies)? How and where will it find staff with the right kinds of skills? How will it train local staff and transfer expertise from Europe whilst maintaining tight control of its Intellectual property? How will it need to adapt to USA labour laws? How quickly should it bring capacity online? How will it distribute the product it manufacturers in the US? In answering all of these questions, the firm develops a perfectly valid business strategy with little, if any, reference to brand or marketing.

To describe such a business strategy as being the same thing as branding strategy is completely unhelpful.