Chris McCall of Touch Business Consulting, in his post What Is Strategy?, tries to answer that question by examining the words of business strategy gurus such as Bruce Henderson, Michael Porter and Peter Drucker. He then goes further and boils the practical approach to corporate strategy development and execution down to answering three fundamental questions:
- What business are we in? This is an examination of your firm’s strategic principles, its core competencies and its business model.
- What business should we be in? This question examines the structure of the industry or industries in which you compete, how your products and services stack up against the competition and what are your available growth strategies.
- How do we get there? In this question, you define how to translate the ‘possible’ into actionable plans, devise a clear path for growth, create an environment for execution and measure results.
Freek Vermeulen is an Associate Professor of Strategic and International Management at the London Business School. In So, You Think You Have A Strategy?, Vermeulen claims that, empirically speaking, nine out of ten strategy directors and CEOs do not really have a strategy for their organization.
“To be emphatically blunt: most companies and their top executives do not have a good rationale for doing the things they are doing and cannot explain coherently how their actions should lead to superior performance.”
Vermeulen lists five reasons why high level executives miss the most basic necessities of cogent and executable strategy:
- Not really making choices: Strategy is about making choices; choices in terms of what you do and what you do not do.
- Being stuck in the status quo: Everything in the strategy definition fits into what the company is already doing anyway.
- No relationship to value creation: You need a good explanation why your chosen strategy is going to create value for the company.
- Mistaking objectives with strategy: “We want to be number one or two in all the markets we operate in” is not a strategy.
- Keeping it a secret: A strategy only becomes a strategy if people in the organization know about it and alter their behavior as a result of it.