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.