What is Strategy?

Have you ever talked strategy and thought 'actually, what is strategy?'

I have the privilege of interacting with a lot of companies as they articulate strategy inside Leaderkit.
It's pretty clear, that 'strategy' is harder and less well understood than many other business concepts.

Let's try and build a concise, powerful definition of strategy then.

Wikipedia describes strategy as 'a plan of action designed to achieve a specific goal'.

The Allied strategy to defeat Germany in WWII was to disrupt her war machine through airborne bombing, engage on multiple fronts and invade.

In a business context, strategy is simply the 'how to' of achieving worthwhile goals for your stakeholders.

Michael Porter's work is helpful in articulating this 'how to'. He distills strategy down to just two root forms: cost leadership and differentiation. Differentiation is the offer of a unique product valued by a set of customers.

So let's start defining strategy but we'll fit it into a broader framework so we can include the natural object of strategy: the goal we want to achieve for our stakeholders.

1. What long-term goal shall we set for our stakeholders? (vision)
2. What product or service is of particular value to a group of customers?
(value proposition and target customer)

Note that I've described the goal as 'long-term' – achieving worthwhile business outcomes takes time.
This leads to another question:

3. How can we deliver that proposition in a superior way to the competition over time?
(competitive advantage)

Jim Collins (author of Good to Great) adds value here with his hedgehog concept:

• What are you deeply passionate about?
• What can you be best in the world at?
• What drives your economic engine?

So too, does Simon Sinek's excellent TED talk, 'how great leaders inspire action' ( > 7 million views)

Perhaps then, a robust strategy also requires an understanding and a fostering of identity.
Let's add some identity questions to our emerging strategy model:

4. What do we love doing (purpose)
5. How do we want to work? What ways of working are intrinsic to who we are? (values)

Let's try it on Apple:

Surprisingly simple and elegant, isn't it.

We use a slightly expanded version of this model in Leaderkit – it divides nicely into three components; identity (4-6), target customer (3) and strategy (1,2).

To recap:

Strategy is simply a component of knowing who you are, what you want to achieve and how you're going to get there.

Specifically, strategy is determining a product or service of value to a set of customers, that can be delivered sustainably over time. All other considerations are simply a subset of this core strategy.

I'd love to hear your views including your take on Apple's strategic foundation.

Brett Herkt, blog@leaderkit.com