Archives for January 2013

What is strategy?

The question “What is strategy?” has triggered many doctoral dissertations, countless hours of research and healthy debate among academic management thinkers. Perhaps this is why many of us also struggle with it.

Nonetheless, if you are seeking to steer a business to sustained success, you need a pragmatic view of what strategy is and how you can take a strategic approach to your marketplace.

Strategy is different from vision, mission, goals, plans, tactics and actions. It is a framework of carefully-considered business choices that we make, on where to compete and how to succeed. When people say “I have a strategy for this”, they really mean a worked-out plan based on a strategic framework.

The widely-accepted business school definition (from Johnson and Scholes’s Exploring Corporate Strategy) is “Strategy is the direction and scope of an organisation over the long-term: which achieves advantage for the organisation through its configuration of resources within a challenging environment, to meet the needs of markets and to fulfil stakeholder expectations”.

So “strategy” is a framework — the direction or scope of an organisation planned at the highest level. Take the Duke of Wellington at Waterloo, commanding 67,000 troops from an exposed position on the Mont St Jean ridge. His strategy had been set almost a year before when he made a detailed reconnaissance of the southern approaches to Brussels with his staff.

Wellington at Waterloo

The Duke of Wellington rallies his troops during the Battle of Waterloo. “The nearest run thing you ever saw in your life.”

Like any successful field commander-in-chief, the Duke had a keen eye for ground, particularly reverse slopes which protected his troops from direct artillery fire. His strategy was based on a defensive battle, hiding the true extent and location of his forces from Napoleon. Of course, he was leading a complex, multi-national army with three army groups under himself, the Prince of Orange and Field Marshal Blücher and the strategy included collaboration between the three groups.

The point I am making is that strategy was painstakingly developed over months, including meetings between the three army group commanders, while tactics — how he managed his dispositions during the battle — were what contributed to the victory on the day.

Your strategy will be determined by burning midnight oil and developed in the form of a business plan which might well have a section called strategy. Business schools have a host of tools for creating a strategic framework — Boston Matrix, Benchmarking, Competitor Analysis , Core Competencies, Five Forces Model, GE Industry Matrix and so on. Smaller enterprises simply need to grasp what their potential customers see as value and how to meet it, where to compete for that business and how they will do it.

Where does marketing planning fit in with the overall strategic planning of a business? By marketing I don’t mean merely promotion, or marketing communications, a common misconception. The definition from the American Marketing Association (AMA), the US equivalent to the CIM, reads: ‘Marketing is an organisational function and a set of processes for creating, communicating and delivering value to customers and for managing customer relationships in ways that benefit the organisation and its stakeholders.’

Strategic planning is concerned with marketing, of course. But it also involves decision-making about production and operations, finance, human resource management and other business issues.

Marketing has a key role to play in strategic planning, because it is the job of marketing management, or the solo entrepreneur, to understand and manage the links between the business and its environment. Sometimes this is quite a straightforward task. For example, in many small businesses there is only one geographical market and a limited number of products (perhaps only one product!).

Marketing is often seen as the voice of your customer within your organisation. This is becoming a key differentiator because, through social media technology and processes, customers can now actually collaborate in the conception, framing and development of product blueprints as Unilever’s customers did with the Dove brand. This is one aspect of what we mean by social business.

So to have a marketing strategy, a social media strategy, a content marketing strategy, a networking strategy, a sales strategy are all nonsense. Your main strategic framework  and business plan cascades down into plans for each of these areas.

Create a strategy and write it down. Use it as a section in your business plan to cascade into plans with tactics, actions and forecasts. Change it from time to time, as circumstances change. But please don’t wave the word around as a panacea for all business ills — “I have a strategy for that!”. You will confuse your bank manager, your advisors and stakeholders. And, worst of all, you will also confuse yourself.