How Do You Define Strategy?

I've seen a lot of different responses to this question. Some people see strategy as just "Vision/Mission/Goals" or "Vision/Mission/Values". Others see strategy as the plan for creating customer and shareholder value and sustainable competitive advantage. One response I've seen referenced a few times is that of a military leader that goes something like this…"Strategy is everything you do to prepare for the upcoming encounter or challenge, every plan, decision, and preparation, right up to the minute the first gun fires. From there on, it's tactics." As an ex-military member I'm in agreement for the most part. I just wonder what would the need be for generals/admirals after the first gun fires?

Here is a response I gave to this same question on LinkedIn.

"First off, I do not believe Vision/Mission/Values or Goals to be strategy. Rather I see them as the companies "Strategic Identity". What they want to be, why they exist, and what values they believe are critical to success. With that said, I define "Strategy" as HOW you translate intangible assets into tangible results in order to sustain or improve your competitive position in the marketplace.

Companies need to understand the market need and identifying ways to create sustainable competitive advantage for long-term success. This includes, which industries to compete in, which products/services to offer and how to leverage resources (internal & external alliances) for executing on that strategy. It should include ways to protect/defend your position from the competition. The strategy should result from research and analysis to determine how to beat the competition for customer loyalty. Analysis should include an external analysis, a la Porter's Five Forces: Bargaining Power of Suppliers (Oil Companies), Bargaining Power of Buyers (Walmart has tremendous power over its suppliers), Barriers to Entry (high start-up costs), Threat of Substitutes (Internet & Kimble over Newspapers), and Rivalry (Level of competition). Some like using SWOT analysis. The only issue I have with this is it implies performing an internal analysis (SW) before external analysis (OT). I subscribe to the school of thought that you must know your external environment before evaluating your strengths and weaknesses.

The strategy of the organization should drive the activities it engages in. This is where I see many companies struggle. They do not define activities that align their resources to support execution of the strategy. In other words, they do not know which value creating process leverage intangible assets to create customer/shareholder value. Even when they do, many companies fail to align cross-functionally to execute strategy. That is to say, many functions of the business compete for resources to achieve their goals, which usually results in silo'd execution similar to drilling a tunnel from two ends and missing each other in the middle. Probably went off on a tangent or two, but that should describe what Strategy is."

Of course developing a strategy and managing it are two different things entirely. We'll hit on this in an upcoming blog entry.

-RH