*Note: Following is an excerpt from my newest book, STRATEGIC: The Skill to Set Direction, Create Advantage, and Achieve Executive Excellence
“Good strategies promote alignment among diverse groups within an organization, clarify objectives and priorities, and help focus efforts around them. In essence, they act like a map and compass. They provide direction.”
Clayton Christensen, former professor, Harvard Business School
The concept of strategy initially sprung from the need for people to defeat their enemies. The first treatises that discuss strategy are from the Chinese during the period of 400 – 200 B.C. Sun Tzu’s The Art of War, written in 400 B.C. has received critical acclaim as the best work on military strategy, including those that have followed it centuries later. However, unlike the theoretical treatises that followed, the Chinese works took the form of narratives, including poems and prose accounts. An example of this prose form of strategy can be seen in the poem by Lao Tzu, the father of Tao-ism:
Once grasp the great form without a form
and you will roam where you will
with no evil to fear,
calm, peaceful, at ease.
The hub of the wheel runs upon the axle.
In a jar, it is the hole that holds water.
So advantage is had
from whatever there is;
but usefulness rises
from whatever is not.
While at first glance it may be difficult to identify an element of strategy in the poem, a key principle found here is the importance of “not,” as strategy demands trade-offs—choosing your “not’s.” The business parallel is the need for disciplined focus that comes from making strategic trade-offs: What products will we not offer? What customers will we choose not to serve. As Meg Whitman, former CEO of eBay proclaimed, “Our strategy is as much the art of exclusion as it is the art of inclusion.”
The term “strategy” is derived indirectly from the Classic and Byzantine (330 A.D.) Greek “strategos,” which means “general.” The Greek equivalent for the modern word “strategy” would have been “strategike episteme” (general’s knowledge) or “strategon sophia” (general’s wisdom). The word strategy retained this narrow meaning until Count Guibert, a French military thinker, introduced the term “La Strategique” in 1799, in the sense that is understood today. Strategy as a term entered the English language in 1810.
Strategy Fitness refers to your ability to develop strategy, allocate resources, make decisions, and create competitive advantage. Strategy is a prerequisite for success whenever the path to a goal is obscure. Charting a clear path to a desired destination starts with a common understanding and language for strategy. Yet research with 400 talent management executives showed less than half believe their organizations have either a universal definition (44.3 percent) or a common language (46 percent) for strategy. And research spanning a 25-year period on the term “strategy” uncovered 91 different definitions!
Strategy Is Not…
In determining the essence of a thing, it’s helpful to begin with what that thing is not. Think the ABC’s.
Strategy is not Aspiration. How often have you seen a vision or goal masquerading as strategy? A vision is the future aspiration, what you’d like to be in 10 or 15 years. A goal is generally what you are trying to achieve. To become the market leader or the premier provider of your secret sauce, or the world’s most sustainable product are noble aspirations. Just don’t confuse them with strategy.
Strategy is not Best practices. If you benchmark the competition and then adopt the best practices, you have not developed strategy. You have converged with the competition, not distanced yourself from it. Strategy serves to differentiate your offerings and your company from the competition by providing superior value to customers.
Strategy is not Cautious. Find a strategy that’s not last year’s leftovers reheated and dolled up with some salt and pepper to make it palatable to the group going down the same path that they’ve been down a dozen times before. Find a strategy that isn’t afraid to upset some of the customer base because it actually contains real trade-offs that are designed to not appeal to everyone, especially the unprofitable, high-maintenance customers you should have fired years ago. Find a strategy that doesn’t bore the people expected to implement it because it contains nary a new insight. As Disney CEO Bob Iger said, “The riskiest thing we can do is just maintain the status quo.”7
The following are examples of strategies pulled from real companies:
“Become more profitable.”
“Grow our audience.”
“Be number one in the market.”
“Execute integration and capture synergies.”
“We’re trying to find the people that were customers and didn’t come back. That’s a major strategy.”
That last one still cracks me up. Make no mistake: bad strategy can literally kill a company. In a 25-year study of 750 bankruptcies, the researchers found that the number one cause of bankruptcy was bad strategy. Bad strategy often begins with imprecision in applying planning terms to our business. As Confucius, the Chinese Philosopher noted, “The beginning of wisdom is to call things by their right name.”
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