What is Strategy? And How Is It Obtained? (Part II)

Part I reviewed the definitions of strategy offered by Alfred D. Chandler Jr., Kenneth R. Andrews, Michael E. Porter, Thomas J. Peters and Robert H. Waterman Jr., Richard N. Foster, Andrew S. Grove, and Henry Mintzberg, who are generally thought to be (among) the preeminent strategists of the last 50 years. It also indicated why each, on its own, was not sufficient. This post will look at some other definitions of strategy and try and arrive at a definition that can be applied to a business, and its supply chain. Then Part III will discuss how an organization might go about getting there.

Most of the basic definitions seem to mirror the Wikipedia definition of a plan of action designed to achieve a particular goal, such as the definitions found on InvestorWords and the BNet Business Dictionary. But those aren’t deep enough to be useful.

Richard Whittington wrote a book called What is Strategy — and does it matter. In it, instead of offering just one kind of view on strategy, the book built on four generic approaches to strategy:

  • classical: it’s rational planning,
  • evolutionary: it’s the discipline of the market,
  • processualists: it’s the accommodation of the fallible processes of organizations and markets, and
  • systemic: it’s linking with the powers and cultures of the local systems in which the business participates.

In other words, Whittington attempts to convey that strategy is four-point diamond, and that the right strategy is probably somewhere in the intersection, just like the most brilliant diamond is critically angled.

Then there’s Gordon Walker who wrote a book on Modern Competitive Strategy which started off by asking what is strategy and noted that an effective strategy must provide the following benefits:

  • economic gain: it matches the market position of the firm to resources and capabilities,
  • resource allocation: it insures consistent and self-reinforcing programs can be built and maintained, and
  • management and organization: it insures the organizational structure is tied to economic rationales.

In other words, Walker attempts to convey that a strategy is that which enables the firm to succeed in its market(s) in a repeatable and maintainable manner.

And then there’s Robert Wittman and Matthias P. Reuter who wrote a book on Strategic Planning: How to Deliver Maximum Value through Effective Business who also started off by asking what is strategy, which started off by quoting Sun Tzu and noting that Sun Tzu’s three aspects of victory still express the essential elements of strategy today, which are:

  • profit potential: which highlights courses of action that will lead to future success,
  • value-based orientation: which revolves around an encouraging vision that provides the path for long-term development, and
  • competitive advantage and customer advantage: which is essential for the long-term success and survival of the business.

In other words, Wittman and Reuter attempt to convey that a strategy is that which will generate business success.

Tie it all together and see that many of the essential elements of a strategy revolve around:

  • actions and goals,
  • allocation of resources and policies,
  • patterns (identification, incorporation, and manipulation),
  • competitive advantages,
  • emerging markets and technologies,
  • offence and defence,
  • rationality and analysis,
  • internal and external factors, including market forces,
  • sustainable vision, and
  • people and cultures.

This allows one to define a business strategy as:

a comprehensive rational plan of action to achieve one or more goals designed to give the organization one or more competitive advantages consistent with the long term sustainable vision of the organization that addresses historical and emerging market patterns, emerging markets and technologies, resource allocations, offensive and defensive actions, organizational and customer cultures, and the people who will make the plan work.

And while this definition may not be perfect*, unlike most other definitions, it does provide a solid foundation that can be used to determine whether or not a proposed strategy is reasonable and actionable. It provides a basic acid test — if it doesn’t meet these basic requirements, the strategy is not ready for prime time.

However, this only indicates what a strategy is, and says nothing about its derivation. Part III will discuss existing proposals for the definition a business strategy, and, ultimately, a supply chain strategy and indicate where they fall short.

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* but then again, is any definition of strategy perfect? The author hasn’t found one!