There is a lot of confusion about what a “strategy” is… and is not. “Strategy” is making choices about where to go, where to play and how to win, of setting goals and actions, about how to create and capture value over time. In the current climate, where there is uncertainty due to COVID-19, getting clarity on your business strategy is more important than ever before, yet more challenging than ever before.
Many leaders struggle with strategy. They know it’s important to have strategies in order to take advantage of opportunities and out manoeuvre the competition. But when it comes down to crafting a business strategy, they either get bogged down or struggle to ground it in reality.
Strategy is context specific. A strategy is only as good as the underlying understanding of the context to which the strategy is being applied. This is where a lot of business strategy development practices tend to go wrong.
Key steps in understanding context is,
- Clarity on the purpose of developing a strategy. Starting with clarity on the purpose of why the strategy is being developed informs what you focus in on in the subsequent steps.
- Observe the landscape and the prevailing climate. Next step is to gain an understanding of the environment upon which the organisation is operating within. The strategy developed is intended to navigate this landscape successfully. The landscape is affected by various climatic conditions that change it. Along with understanding the landscape, the prevailing climatic conditions need to be understood.
- Orient your organization and where you are. Once the landscape and climatic conditions are understood, focus attention on the organization, where it is within the landscape and how well it is positioned to undertake potential strategic options.
This provides the context for strategy and when done correctly forms a solid foundation for the strategy.
- Decide on the strategy. The next step is to work out the options available and choose one to navigate the landscape that can get the organisation to the desired destination.
- Act on the strategy. Final step is to take action to implement the strategy.
The context does not remain static. It is dynamic and constantly changing. Therefore, the strategy developed today may no longer be applicable tomorrow. Good strategy requires cycling through this process to continuously adjust the strategy to remain relevant.
This is nicely explained in the strategy cycle illustrated by Simon Wardley (Figure 1).
Figure 1: Simon Wardley on Strategy
A common misconception is that strategy is something that is done at the top level of an organization. Strategy is hierarchical. Business strategies can be classified into three levels:
- The Corporate Level
- The Business Unit Level
- The Functional Level
Strategy is developed at each of these levels, informed by the context set by the higher level. The process followed in developing the strategy is the same regardless of the level.