Erik Elgersma explores the definition and attributions of that elephantine concept: strategy
We see the word so often. We may even use it thoughtlessly. I know I do.
‘Strategic analysis’ is easily defined: the collection and interpretation of data regarding the business environment of a firm, and reporting the conclusions to underpin a firm’s decision-making. When, however, we reflect upon the single, oft-used, word ‘strategy’, I realize that it is rarely properly defined.
What is ‘strategy’? What does it mean in general, and what does it mean in a business context?
Strategy: an analysis as we know it entered business in the 1960s
Michael Porter’s 1996 Harvard Business Review article1, What is Strategy?, is the beginning of any search for the definition of ‘strategy’. It is, however, over two decades old.
A newer book, published in 2013, has an imposing size (it runs to more than 600 pages) but an inviting title: Strategy, a history. The author, Sir Lawrence Freedman, has a background in military strategy but he also covers business strategy in this magnum opus.
Not surprisingly Freedman shows that strategic thinking in business finds its roots in the military.
Alfred D Chandler Jr was a 1960s pioneer in management science. He introduced strategy in business through adapting concepts of military strategic thinking, which he familiarized himself with during his tenure as teacher at the US Naval War College (Rhode Island).
After Chandler, many others have defined strategy and its attributes. There is so much out there, that to me the only way to develop a view on strategy was simply to gather up a list of every definition I could find, and forge my own view from there.
Strategy: Definitions and attributes throughout history
Conducting a meta-analysis of the list seemed the best way to capture the diversity of definitions and attributes of strategy.
These, I think, are my most important conclusions:
1) A strategy can be as obscure as an elephant
All too often a strategy is whatever the source wants it to be. The phenomenon of strategy has many attributes, with the attributes apparently being less elusive than strategy itself.
This is not a new or an original conclusion: management thinker Henry Mintzberg described business strategy as an elephant.
Consider the following: Put a quiet elephant and three blindfolded people in a room. Ask the people, individually, what they discover. One will find the trunk, another the tail and the third, a leg. Each of them is 100% correct when they describe the elephant as a tail, a trunk or a leg. Yet no one has the complete picture. According to Mintzberg this also applies to strategy and management.
Attributes are what you discover but the whole picture may remain obscure.
2) It may well be more relevant to define attributes rather than the term
Considering the obscurity of strategy at large, then, I hesitate to add my own definition of ‘strategy’. Rather, I prefer to focus on describing some common attributes of strategy. As I see it, an understanding of the attributes of strategy matters more to the practitioner’s application of strategy than the best definition ever will. Reviewing the findings of all those that have been brave enough to touch the elephant and whose original observations have been listed in the table, I thus come forward with the following set of attributes of strategy:
Now, when I create or review a business strategy, I use this homemade set of attributes as a checklist – if only to see whether we have seen enough of the elephant before confidently moving on to execution of the strategy.
‘Strategy’ is an umbrella term for a set of activities that connects a firm’s internal world of capabilities and resources to the opportunities and threats in the firm’s external world, in doing so permanently preparing and guiding the firm for action.
3) For a strategic analyst, humility is a good start
Repeat: there is a catch with getting carried away with designing, or defining strategy simply as ‘action’. Strategies only really deliver value when turned into action. No matter how sophisticated a strategy we develop, as strategists we better remain a bit humble – all too often a firm’s execution capabilities matter more than its strategy. Paul Polman, chief executive of Unilever PLC, phrased this elegantly:
“I cannot speak for other industries, but for us, execution is strategy. […] In fact, the strategies that we have as companies might differ a little bit, but that’s five or ten percent of the work. And then the other 90 percent is execution. I’ve seldom met a consumer […] who buys our wonderful Knorr products or Lipton or Omo or Skippy because they like our strategy.”
Even when, in a fast-moving consumer goods (FMCG) industry such as the one in which Unilever operates, the strategies of various competitors converge to become a single industry best-practice, I still believe Polman is slightly underplaying things. Truly distinctive companies always have unique and often innovative strategies. Moreover, even in a more mature industry segment like FMCG where competition is cutthroat, the last “five or ten percent of the work” might still make the difference between sustaining success and near-future obsolescence.
When the above checklist contributes to postponing that obsolescence a bit, a lot has been gained.
– Erik Elgersma PhD is director of strategic analysis at FrieslandCampina, one of the world’s largest dairy companies, with 18 years of experience as a senior practitioner in corporate strategy, business development and innovation management. He is author of The Strategic Analysis Cycle: Toolbook and The Strategic Analysis Cycle: Handbook