What is "Strategy" ?

by Süleyman Petek 29. June 2015 21:49
May be we should narrow down our question as "What is Business Strategy ?" What the hell is there ma

May be we should narrow down our question as "What is Business Strategy ?" What the hell is there many executives struggle with it ? 

"Business Strategy" is totally different from your recently learned famous  words such as "Our mission bla la", "Our vision is la la la", or "Our plans are redesigned by ..." etc. It is basically to make a decision to play on which horse, choosing the right jockey, how to train that jockey and brainstorm how to maximize the values earned.

If we look a little from the technical side, David Yoffie and Michael Cusumano mentioned 5 key rules of the 3 brilliant guys in their book : Strategy Rules 

Bill Gates, Andy Grove, and Steve Jobs's Keys to Success

  1. Look Forward, Reason Back
  2. Make Big Bets, Without Betting the Company
  3. Build Platforms and Ecosystems—Not Just Products
  4. Exploit Leverage and Power—Play Judo and Sumo
  5. Shape the Organization around Your Personal Anchor

Johnson and Scholes define strategy in their book Exploring Corporate Strategy :

"Strategy is the direction and scope of an organisation over the long-term: which achieves advantage for the organisation through its configuration of resources within a challenging environment, to meet the needs of markets and to fulfil stakeholder expectations".

Do the words in bold make a light in your mind ? Do you think most of the strategy definitions share the same keywords such as "long-term (maximize the value)", "market (which horse to play)", "environment (playground, jockey)", scope (here horses).

To clarify :

  •  Where is the company trying to reach in the long-term (direction, horse race targets ?)

  •  Which markets should a business compete in and what kind of activities are involved in such markets? (markets; scope, jockey decision ?)

  •  How can the business perform better than the competition in those markets ? (advantage, train the jockey ?)

  •  What resources (skills, assets, finance, relationships, technical competence, facilities) are required in order to be able to compete? (resources)?

  •  What external, environmental factors affect the businesses' ability to compete? (environment)?

  •  What are the values and expectations of those who have power in and around the business? (stakeholders)

So, if you want to build a business strategy  for your company from the ground up then you must answer these questions clearly:

  1. Why is the company in this business ?
  2. What is that company best at doing ?
  3. Which customers are in our target/scope ?
  4. Which products/services should we offer, should never offer ?
  5. Why we have chosen this strategic direction ?

To sum up, i would like to finish the article with Michael Porter's Generic Strategies: Competitive Advantage

Porter called the generic strategies 
"Cost Leadership"
"Differentiation" (creating uniquely desirable products and services) and 
"Focus" (offering a specialized service in a niche market). 

He then subdivided the Focus strategy into two parts: "Cost Focus" and "Differentiation Focus

You can start by making a SWOT (your strengths and weaknesses and the opportunities and threats you would face, if you adopted that strategy) analysis for each generic strategy and having done this, may be that your organization is unlikely to be able to make a success of some of these generic strategies.

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