The Essence of Strategy

Much has been written about strategy, and no doubt more will be written in the future. However, the many thousands of articles, academic papers and books that have been written on the subject have done little to increase the chances of organisations finding the key to sustained success, particularly in today’s increasingly volatile, uncertain, complex and ambiguous (VUCA) world. While there are some notable exceptions, for example Good Strategy/Bad Strategy by Richard Rumelt, most authors tend to be too formulaic, take too narrow a perspective or offer a ‘killer’ strategic framework for all situations.

While developing and executing a successful strategy is without question difficult, it’s not complicated if you understand the essence of what strategy is really about. At its core are the choices we make that are aimed at putting our organisations on a trajectory to a different future. A future that is better than the one it’s currently heading for.

Developing strategy is not about making aspirational wishes about the organisation you lead or describing a vision that you hope others will find compelling; it’s about deciding which trajectory to take. A trajectory that takes your organisation away from the (default) future it’s currently heading for to one that is better. It begins by understanding the influence of exogenous forces that are changing the context within which your organisation operates, the new opportunities that the changing context creates and the opportunities that are closing down. Only by understanding the changing context will you be in a position to make an informed choice on the trajectory to take – your strategic intent. But that’s only half the story as choices also need to be made on the changes that need to be made in order to actually change the trajectory. And this requires an understanding of both the endogenous forces that have the potential of anchoring your organisation to its current trajectory and the new organisational capabilities needed to ‘pull’ it on to its target trajectory.

Furthermore, the essence of good strategy is also understanding what’s strategic and what isn’t. The distinction is in the nature of the choices that are made. Choices that are difficult, if not impossible, to reverse or undo once executed, are strategic. The rest are planning choices, which can be changed – albeit at a cost. Strategic choices not only relate to strategic intent, ie the trajectory you want to take, but also how the change in trajectory will be achieved. For example, if your strategic intent was to provide your customers with compelling digital experiences, but the wrong choice was made on the enabling digital platform the strategic intent would never be realised. The choice of the enabling digital platform is therefore strategic.

A strategy is of no value if it cannot be effectively executed. Yet all too often strategy development and strategy execution are treated as two distinct exercises where the strategy is developed by one team (or outside consultants) and then given to another team to execute. A similar situation existed decades ago when product designers would design a product – for example car, aeroplane or domestic appliance – and then ‘throw’ it over to manufacturing to make. This often resulted in a product that was difficult and costly to manufacture, and of poor quality. This was eventually resolved through an approach that became known as simultaneous or concurrent engineering where product and manufacturing engineers worked on the product simultaneously, thereby ensuring that the product was designed in a way that it could be easily manufactured and serviced. As a result, the time from concept to market reduced, quality improved and costs dropped. It should be the same when developing strategy: thought should be given to how the strategy will be executed from the outset.

If the essence of strategy is the choices we make about the trajectory that we want our organisations to take then they need to be informed choices, and they will only be informed choices if they are based upon understanding. Without understanding they are no more than guesses. And guessing isn’t strategy, it’s gambling!

Final thought

Strategy is not restricted to corporations, it’s equally applicable in our personal lives. The context within which we live is constantly changing, new opportunities present themselves and things that we thought were secure cease to be the case. We constantly make choices in the hope they will put us on a trajectory to a better life. Some of these choices are strategic, others not.

I welcome your thoughts.

David Trafford
Co-author of Beyond Default and Managing Director of Formicio, a strategy and change management consultancy