Lesson 1: What is Strategy?

Strategy as a word has a lot of misconceptions due to it being a relatively young discipline. Most people think of strategy as synonymous with management. Since it is difficult to find a single and clear definition of strategy, companies often struggle with not only how to define a strategy but also how to create one that is useful. Let’s try and understand what strategy really is.

The easiest definition for strategy is making the right choices that would lead to success in the marketplace. In other words, strategy is about deciding to do some things and not doing other things. These choices in turn help in placing the firm within its industry at a position of advantage and superiority over its competitors. However, most companies fail to have a clear, well-defined, winning strategy. They approach strategy in a very ineffective manner. Some of those ways are:

Strategy as a vision: Most companies like to think of their vision and mission as a substitute for strategy. While it is good to have a vision, their vision does not provide them with a guide to productive actions, or for that matter, any way to reach their desired future.
Strategy as a plan: While having a detailed plan is a beneficial tool at hand. It does not necessarily ensure that the outcome will lead to sustainable competitive advantage.
Strategy as short-term only: Companies argue that with an ever-changing marketplace it is not viable to formulate a strategy that could hold off all the uncertain challenges. They, therefore, prefer to deal with new challenges and threats as and when they come. The drawback with this approach is that companies tend to put themselves in a reactive mode where they become vulnerable to their more-strategic rivals.
Strategy as optimization of the status-quo: Most companies prefer to optimize their current activities in the business. This helps them create efficiency and draw value. However, while doing so they could be accidentally exhausting their assets and resources while at the same time encouraging the wrong activities.
Strategy as following best practices: In an industry, certain activities may have proved to be useful and profitable in the past. Most organizations then tend to identify these activities as their guideline and use them against the competition. However, by repeating the same activities over and over they are simply establishing their mediocrity.

These ineffective approaches are born from an ignorance of what strategy truly is and a failure to make hard choices. It is natural to be