Pathways to Strategy

Strategy Is About Winning

Alfred Chandler, writing in 1962, outlined what many regard as the "classical" definition of strategy: "a strategy is the determination of the long-run goals and objectives of an enterprise, and the adoption of courses of action and the allocation of resources necessary for carrying out these goals".

However, many other cultures had developed earlier definitions related to military practice. The word strategy was coined to name a new military and political leadership position developed in the Greek city of Athens in the 6th century BC, as a combination of the words stratos, which meant "army" (or more correctly an army spread out over the ground), and agein, meaning "to lead". In another continent at about the same time, the military philosopher Sun Tzu defined strategy as ". . . the great work of the organization. In situations of life or death, it is the Tao of survival or extinction".

In the 1980s, writers sought to refine our views of what strategy was about. The Japanese-American scholar Kenichi Ohmae described strategy as ". . . the plan enabling a company to gain, as efficiently as possible, a sustainable edge over its competitors". While the world's most highly regarded management guru, Peter Drucker, suggested that a strategy was ". . . a firm's theory about how to gain competitive advantages" over its competition.

By the end of the 1980s, new types of strategy scholar, more schooled in human and organisational behaviour than warfare or industrial economics, were challenging the idea that strategy was about great ideas, long-term plans and rational theories. They believed that instead of focusing on what strategy is, it would be more realistic and useful to examine how strategy develops. And they believed that strategy happened as collections of small activities, some rational some not, that created trajectories followed by organisations. Henry Mintzberg thus claimed that strategy was ". . . a pattern of behavior that emerges over time", and then embarked on a series of debates with Igor Ansoff about whether strategy was about rational design from the top of an organisation (Ansoff) or patterns that emerged from the bottom (Mintzberg). In keeping with Mintzberg's view, proponents of the increasingly influential "resource-based view of the firm", such as Jay Barney, defined strategy as ". . . a pattern of resource allocation that enables firms to maintain or improve their performance".

By focusing on the processes that led to the development of a strategy, rather than the content of what a strategy is, writers like Mintzberg and Barney discovered that there were many schools of thought about where strategy came from. In a book called Strategy Safari, Mintzberg and his co-authors outlined 13 different strategy "schools". These ranged from the classical Design School (strategy is the result of senior managers using conscious rational analysis) to the Power School (where strategising is influenced by politics and focuses on bargaining, persuasion and confrontation) to the Entrepreneurial School (which represents a move away from precise designs or plans, toward looser notions such as "visions" and "perspectives").

But there is a danger that this definition proliferation can lead to greater confusion rather than greater clarity. Hence, in our experience it is useful to work with a unifying view of what strategy is about by focusing on the desired outcomes of a strategy, any strategy, rather than the process that led to a strategy's development, or a definition of what a strategy should contain. In this respect, we believe that Robert Grant's idea that "strategy is about winning" is particularly helpful.

Following this definition, a good strategy may take many different forms (a detailed plan, a list of bullet points, a set of cultural beliefs or a diagram) and be arrived at through different processes, but it always aims to outline how an organisation is going to "win". Winning can mean different things to different organisations (for a start-up it might be earning a particular revenue target in the first year, for a not-for-profit it might be helping people in their community lead better lives), but defining what winning means, and communicating the things we are going to do to get there, are the two essential components of a good strategy.

Strategy Pathfinder is organised so that all of it chapters or "pathways" point toward this aim.

Many Paths Toward One Aim

If the aim of a strategy is to outline how an organisation will seek to win, Strategy Pathfinder is organised around 11 pathways that contain related frameworks and ideas that can help thinking toward this aim. The final twelfth chapter is about new ideas that may influence strategic thinking in the future.

Our first chapter is about purpose. This is the first requirement of any strategy: what are you trying to achieve? What does winning look like? What is your Strategic Purpose and how can this be developed?

The next two chapters are on the strategic environment, the ecosystem within which an organisation's strategy seeks to fulfil its purpose. These chapters examine how to explore and determine the pressures and forces that act upon the industry or sector in which an organisation operates: the opportunities and threats presented by external environmental conditions. Chapter 2, Macro-Shocks, outlines the importance of scanning for and understanding small and major environmental shifts that may impact on an organisation's ability to win and indeed survive. Chapter 3, Industry Forces, looks more specifically at the pressures that act upon an industry to influence its profitability and so create opportunities or threats for competitors operating in that environment.

The next four chapters focus on ideas and frameworks relating to how to determine an organisation's Strategic Advantage. Specifically, how can an organisation exploit its position drawing upon key organisational strengths and reduce weaknesses in order to achieve its purpose. Chapter 4, Competitive Advantage, presents classic strategic positioning frameworks in order to determine how an organisation may be positioned relative to competitors and the strategic choices that may be available to them in order to achieve their purpose. Chapter 5, Resource-Based Advantage, examines the resources and capabilities available to organisations that they may draw upon to win in their markets. This chapter takes a more organic approach to understanding organisational capabilities. Chapter 6, Business Model Advantage, shows how organisations are able to win today with different types of business model. It also shows that a business model is the outcome of strategy and gives few clues about how an organisation will achieve its purpose in the future. And Chapter 7, Corporate Advantage, examines how the corporate parent, or HQ, may add value to different businesses or departments through careful choice of countries, industries and sectors for them to compete in, the constitution of its portfolio and the choices it makes about the deployment of resources across the group. Through coordination and control the corporate parent can help an organisation to win and achieve its overall purpose.

The four chapters that follow on from Strategic Advantage focus on how to achieve STRATEGIC GROWTH, how to develop and implement strategies that seek to explore opportunities and avoid threats by exploiting strengths and mitigating weaknesses. Chapter 8, New Ventures, investigates innovation and entrepreneurship, frameworks for assessing and managing start-ups, ways in which existing organisations can innovate internally through organic development and capture and create new capabilities externally through joint ventures and mergers and acquisitions. The ninth chapter, Crossing Borders, looks at why organisations may expand across national boundaries, the strategies they may use to enter these new territories and how they may organise themselves to achieve their strategic purpose. Leading Strategic Change, Chapter 10, recognises that organisations often need to adjust in the face of changing contexts. The chapter explains the types of change that an organisation may need to embark upon and how this may be managed successfully in order to move it from its present state toward one that will allow it to achieve its future strategic aims. Chapter 11, Evaluating Strategic Performance, examines how growth strategies can be assessed. It examines classic approaches to understanding risk and financial performance and recognises that there are other important environmental and social goals that organisations need to consider in order to win.

The three main sections of Strategy Pathfinder - Strategic Environment, Strategic Advantage, Strategic Growth - provide insights into the quality of an organisation's strategy. Our companion book, Strategy Builder, takes a more explicitly analytical approach and, with the associated app, StrategyBlocks, allows an organisation's strategy to be audited, and future strategic options determined....