Why Strategy?

Strategy is thoughtful, purposive action

A business needs a strategy because it is trying to prosper in a competitive environment. It is common to hear people talk about the ‘strategy’ of functions like HR or IT. A large corporation will probably have dozens of strategies being pursued within it, many of which it knows nothing about. This is complicated by the fact that there are different levels of strategy: it means something different at the corporate level from the business unit level.

This is where the problems begin. In strategy, more is not necessarily better.

The various elements of a business all have a part to play, but there is only one strategy. Its elements need policies, goals and objectives which support the strategy. If they have strategies of their own, expect trouble. They will seek to optimise themselves rather than the whole and the result will be silos and conflict. A strategy should be a way of overcoming silos, not cementing them.

The environment of strategy is fast moving and uncertain. It is fundamentally unpredictable. Strategy seeks to shape and adapt to events, not predict them. Good strategists know the limits of their knowledge and are humble in the face of their ignorance.

A strategy is a means of giving coherence and direction to an organisation. A good one can turn activity into purposive action. Because executing a strategy involves co-ordinating different efforts, it usually gives rise to plans. But because its environment is unpredictable, a strategy itself cannot be a plan. It is the evolution of a central idea under continually changing circumstances. It provides coherence by forming a framework for decision-making.

No strategy is foolproof. No strategy is invulnerable. Every strategy has a counter-strategy. If the environment changes, the very things which made a strategy successful can make it fail.

A business without a strategy but good at operations may do well for a while. But sooner or later it will fall victim to a competitor or a change in the environment.

On the other hand, a good strategy does not guarantee success. All it can do is to shift the odds in your favour.

Success only results from the combination of strategic rigour and operational excellence. Combining the two is the hardest thing of all. Operational excellence cannot be an end in itself, but it can be the basis of strategic advantage. Strategic purpose guides and dominates operations; but in the face of operational success the demands of strategy fall silent and it adapts itself to the new situation.