What is strategy?

What is strategy, really? Here we unpick the buzzword that strategy has become, define true business strategy and explore why it matters (and what to do about the strategy imposters).

The state of the strategy nation

Strategy has become the term that covers “anything I thought about for more than 30 seconds”.

Describe your approach / service / team / experience as “strategic” and you imply “not total crap”.

Brand or marketing fields seem particularly hooked on the word. Perhaps a way to overcome a corporate shoulder chip, I don’t know. ESG has sprung a whole new host of strategies that all talk about being connected to the overall business strategy but almost never are. There are people strategies, tech strategies, data strategies, transformation strategies, communication strategies and redundancy strategies.

99% of the time these are simply “thought through” plans.

It’s just words, why get worked up about it?

Call it a strategy. Call it a plan. Call it nothing but get it done anyway - does it really matter?

I’m going to argue: yes!

By calling everything a strategy, everyone a [insert discipline here] strategist, and every approach strategic, “real” strategy - by which I mean the overall business or corporate strategy - has been lost in the crowd.

Most businesses, unless very large and complex, thrive best with a single strategy. Everything else is the plan(s) that deliver that strategy. Multiple strategies lead to confusion, unhealthy tensions, missed opportunities, unnecessary risks, burnout and delays. Not having a “real” strategy leads to…yep…confusion, unhealthy tensions, missed opportunities, unnecessary risks, burnout and delays.

The definition of business strategy

I’ve not been able to find a strong definition that fits what I mean when I talk about business strategy so I’ve sharpened my pencil and written one down.

business strategy

noun

Your business's long-term future goals, your best current hypothesis for how to achieve them and a set of related decisions. Involves hypotheses and trade-offs - not just a plan, but a way to decide and act on what matters most.

It is a hypothesis, not a certainty. Goal-oriented rather than a continuation of the status quo. It involves making trade-offs. It tries hard not to be myopic. And it is about the business as a whole.

I’m not a lexicographer so this definition will be imperfect. But I think it’s good enough to bring some distinction back to “real” strategy and stop it disappearing into a throng of lookalikes.

Vision vs. mission vs. strategy

Another area that often trips people up is the difference between purpose / vision / mission / strategy / plans. I’m all for keeping things as simple as possible so I’m a fan of one ‘north star’ which can be articulated as either a purpose or vision or mission.  I think it’s more valuable to have a core concept here that can be tweaked for different audiences rather than three+ competing statements.

Your strategy, as defined above, gives you a process for getting closer to your north star and not tripping over obstacles or yourself too badly along the way.

What you do day-to-day to execute on and refine that process is your plan / roadmap / delivery schedule.

Now that we can identify business strategy, we can shine a light on why it’s great.

Why you need a business strategy

Strategy can be the glue that binds a frantically scaling business together.

It can be the glasses that allow you to see more clearly and make better decisions.

It can be the force that keeps an established business sufficient steps ahead of irrelevance.

It can be the framework that reassures existing and prospective investors, employees, and partners.

You probably have a purpose / mission / vision. You need a strategy in order to give you a good chance of achieving it. Otherwise it’s blind hope.

You and all the employees in your business are likely pretty busy every day. You need a strategy in order to confidently focus on the things that matter most and not on whatever feels most urgent. Otherwise you’re doing for doing’s sake and that’s draining.

You might have investors and a Board of Directors to oversee their interests. You need a strategy in order to help them add value and challenge at the right level and in the right way and feel reassured. Otherwise you risk blurring the lines between board and management and anyone who’s been in that position will know the unwelcome consequences!

The process of and output from strategic planning gives you something of real value for better (strategic!) decision making, improved adaptability and agility,

The way I see it, strategy is the most useful tool to define what gets you closer to achieving your vision in a given period and help you do less stuff so you can do more of what really matters.

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Strategy can’t solve everything on its own…but it gets close

I say above that “it can be the thing that does [x]” because I’ve seen so many bad strategies. I also say it because strategy doesn’t exist in a vacuum. It really starts to limp if it’s not linking arms with culture and it can be hobbled completely by poor execution.

But, I fundamentally don’t buy the anti-strategy rhetoric:

“you don’t need strategy, just sales”

“culture eats strategy for breakfast”

“execution is everything”

These are common misconceptions about strategy, exacerbated by the term being so overused. Before you’ve got product-market fit, you can probably get away without a strategy. You’re testing and pivoting so quickly in that time that it’s potentially too difficult to define what your business is and therefore think about where it’s going beyond next week.

After that, though, it’s not worth talking about culture or execution without strategy. Culture without strategy is just a club. Execution without strategy is just chaos. A chaotic club does not provide a good business model, however fun it might feel at the time!

Perhaps your culture isn’t what it needs to be? I’d expect to see goals and hypotheses within your business strategy around what you’re going to do about it.

Maybe you need to get better at execution? Ditto…improving strategy execution becomes a business-wide strategic priority.

Strategy, when applied right, is enduringly relevant for both big businesses and smaller ones. And I would argue is more critical than ever in today’s fast-changing world.

Strategy remains relevant in a world moving too fast

The other rhetoric I’ve encountered is “strategy’s obsolete, things change too quickly these days”.

While the old approach to strategic planning may well be obsolete, it shouldn’t undermine the concept of strategy itself. Right now, there may be a few more bad strategies floating around that are poorly suited for the demands of today. But this offers an even greater opportunity for companies making a decent attempt at strategic planning.

I’m not going to go into approaches here, suffice it to say that the old way is a bit too linear and backward-looking for the uncertain and fast-changing world of today.

Yet that very uncertainty and pace of change that critics cite as a reason not to bother with strategy is precisely why it’s more important than ever. Burying one’s head in the sand and hoping the world turns in a helpful direction leaves you somewhat exposed. And only making plans based on how far ahead you can be certain of anything - well, you would hardly be able to plan what to have for lunch next week!

There’s a way to develop an adaptive strategy - to build in strategic agility that is designed to deliver long-term value in a world of change and uncertainty.

Businesses that double down on long-termism despite society’s worsening myopia will equip themselves far better to respond to uncertainty, adapt, and come out on top.

What to do about competing strategies or plans posing as strategies

If your business has multiple things it calls ‘strategy’, be stricter on how you define strategy vs. plans. Chances are, all the additional things you call strategies are actually multi-year plans that contribute to one or more of the higher-order goals of your overall business strategy.

If they’re not, you need to question whether something really requires a separate strategy. Is it not sufficiently represented in the business strategy? In larger organisations, different departments have a tendancy towards creating their own strategy. This is unhelpful as it reinforces siloes - instead, they should be thinking about how their area contributes towards the business strategy.

Very rarely, you will get a case where there’s genuine need for a strategy-within-a-strategy. Perhaps an area of the business needing to undergo massive transformation. Perhaps a new acquisition that you’re integrating. In that case, you need a clear hierarchy that has business strategy at the top.

And for the trap we all fall into - overusing the term “strategic” - the best way to climb out is via the following test:

Can you replace the word “strategic” with “smart” and lose little meaning?

If so, it’s worth thinking about what you’re really trying to convey.

Thoughtful and well considered? —> deliberate, considered, thought-through, intentional

Focused on outcomes? —> goal-oriented, outcome-driven, purpose-led, impactful

Informed by context? —> insight-led, informed, context-aware, rooted in research

Connected to the bigger picture? —> holistic, joined-up, coherent, aligned, integrated

Facing into trade-offs? —> decisive, prioritised, focused, decision-oriented

How to get started with strategy

I think of strategy development as a mixture of thinking time, problem solving, and common sense. Some people are naturally much better at it than others but everyone can do it.

If your business is earlier stage and you have no money to spend, I suggest that you use our (Perigon’s) free guidance and ask your chosen AI bot to help you work through it, supporting you with structure, challenge and expanding your thinking. Do encourage the AI not to be sycophantic though - strategy builds best with real debate.

If your business is a bit later stage and you get how important an area this is to invest in, you might want to get in touch. We have - and are continually adding to - an array of services designed to help you understand what matters most for your business, strengthen your strategic muscles, shape an ‘intelligence-age’ strategy, and structure a path to successful delivery and communication. Everything we do fully embeds the concept of sustainability - your company’s impact and reliance on people and the planet. And we have a mixture of self-serve to deeper partnership options to suit different company sizes, stages, internal capabilities and budgets.

Most importantly, even carving out the time to step back and think about how you’d approach a strategy development or refresh process is valuable as it will give you a different perspective. Then having the discipline to keep carving out that time to spend thinking longer-term will go a long way.

Go ponder - and don’t let anyone tell you that’s not a valuable way to spend your time!

TL;DR:

The word strategy is painfully overused. It now just conveys something vaguely thoughtful and not total crap. But this masks the deep value of real business strategy: the identification of meaningful long-term goals and your best hypotheses for how to achieve them in a way that maximises long-term value and impact.

Strategy isn’t a silver bullet but it is your most powerful tool for a successful and enduring business, especially in today’s world of uncertainty and change. Most businesses need only one strategy at any one time and should remove any interference by being clear about what’s a plan vs. a strategy.