Given the number of trees already killed trying to explain what strategy is, it almost seems pretentious to discuss the subject in a short essay; at the very least ambitious. But here we go…There are a few different contexts in which we can discuss strategy: generically, sports, corporate, and business unit.
The word strategy tends to be used to refer to any conscious and deliberately executed plan of action, to achieve an outcome. It could be to get funding for a startup, it could be to win a team contest, or it could simply be to organize the best surprise party ever. It is basically about the plan: why do I want an outcome, what does that outcome look like, and how do I realize that outcome. For it is written on the high walls, of revered places of business, that “A goal without a plan is just a wish” – Antoine de Saint-Exupéry
In sport, the stakes are raised a little. Not only does your talent count, but the talent of other people counts. You need a talent strategy. It might be to take a NBA basketball team from the bottom of the rankings, to two successive appearances in the NBA finals, with one win and one loss. You may then adjust the talent strategy, you might, for example, have noticed a problem in the finals loss, and decide to add a new player to the roster, let’s call him Kevin Durant, and then you win two more finals in a row, the second one in a sweep.
Talent is important on teams, though, it is equally argued that there are some systems that work well, without the accumulation of previously known stars. The New England Patriots are considered to have a good system that has created stars. GE, to use a business example, has often historically been cited as a company whose key competency was developing talent. It had a system. So hire stars or develop them, either way, you need a talent strategy to win at team sports. That talent strategy may be aimed at simply rebuilding a poor performer, or it might be aimed at what is going to be needed to beat your arch rival in the finals – kind of depends on where you are, and what are realistic expectations.
In sport, you also need game plans. How are you going to win each game? How are you going to match up your talent against the other teams talent, and that may change from game to game. So you might have an umbrella strategy of how to win the finals, but you still have to go and win enough games to get to the finals.
Strategy in a Business Context
In business, every function in the company needs a functional strategy, but they often link back to an umbrella company strategy, which is sometimes broken into two parts: corporate strategy and business unit strategy. It is also important to remember, that unlike sports, you not only have to beat the competition, you have to please a customer, with many a debate about how much focus should be on each. Ok, let’s not quibble, you have to beat the competition at pleasing the customer.
Corporate Strategy is concerned with what businesses a company should be in, whether it be a holding company model (many independently operating business units) or a more cohesive set of complementary businesses. Because of the focus on “what businesses should we be in”, corporate strategy often works closely with the CEO and executive leadership team on market/industry analysis, new opportunities, mergers/acquisitions/divestitures and strategic alliances.
Business Unit Strategy
Business strategy is concerned with how does a specific business reach its financial objectives: who is the customer, what does the customer value, what is the basis of competition, how do we win, how do we go to market, how do we monetize our offerings, etc. Perhaps we can simply say, the business model, as one proxy (though with industry dynamics added).
What does a strategy person do?
Well the short answer is a mountain of slides and spreadsheets. Ok, mostly slides and some spreadsheets – but quite a few slides have graphs from spreadsheets ;-). Now what are these slides and spreadsheets attempting to do?
Probably the most important thing a strategy person does is frame issues. If you are looking at the issue the wrong way, if you are not asking the right questions, then you are not going to get the right answers. This of course can be a political minefield, which the best strategists navigate with skill and emotional intelligence. The worst strategists avoid the mines (though this can be a good career move depending on the culture). The second worst strategists step on enough mines to be fired. The third worst strategists step on only the mines that have to be stepped on – injured, not fatally, but enough to start the conversations that need to be started.
Let’s assume you are asking the right questions, what next. Well usually, a whole bunch of analysis, which tends to be a certain personality type. It could be business case analysis, competitive analysis, industry structure analysis, value chain analysis, revenue realization analysis…whatever the circumstances call for. You are going to be looking to answer key questions: how do we make money, what are the scenarios for the future, what are the untapped vectors of innovation (business or technology).
So you’ve asked some questions, you’ve got some answers, what next? What next is the hard part, convincing others to take action. That requires influencer skills, which is very different than analysis skills, or even the negotiating skills you find in business development roles. Which is why the game within the game for a strategy organization is managing a team of people with potentially different skills, personalities, and passions. Now after people have taken action, the issue then becomes, how do I measure the results of the actions, and feed it back into the next iteration of the strategy.
The Art of Strategy
There are many nuances to any job, of course. For strategy, one already covered is framing issues. Others include:
- Debating real alternatives and making real choices
- Having numbers that make sense
- Having a story of the business that hangs together
- Aligning organizational structures to fit the strategy
- Setting stretch goals and sticking to them
- Having an ongoing, year long, strategy conversation
It starts with the simple premise of assumptions and plans. For every company, for every winning team, talent management is critical. Having clarity about what businesses a company should or should not be in, becomes especially critical as companies become larger. Having a plan for how each business wins not only the long game, but enough of the intermediate games to be around for the long game. Framing the issues, asking the right questions, analysis, influencing, driving action, and then checking the strategy for whether it is producing results. Understanding both what the company will and will not do, getting to that clarity by debating real alternatives and making real choices, with meaningful resource allocation. These are some of the aspects of strategy.