It is quite common to see statements like:
“Our strategy is to become the preeminent firm in our community.”
“Our strategy is to disrupt our industry.”
“Our strategy is to disintermediate the industry’s supply chain.”
A sole business owner, might say “my strategy is to make a living doing the best I can.”
At best these are poorly framed objectives in part because they are definitionally devoid of rigour and no less important, they offer no sense of guidance for day-to-day decision-making. Statements like this are poorly defined goals that offer no operational guidance but only describe an ill-defined destination. They are not strategies, they only become strategic when they are extended to describe how the goal is intended to be accomplished. That is, a clearly defined goal is an element of a strategy, it is not the strategy.
Strategies described in terms of grandiose intentions lead to management by the seat of their pants. By that I mean as when they confront the inevitable challenges and opportunities that arise they tend to respond with knee-jerk choices that bear little or no bearing on the goals they have set and may actually work against them. Even more important, many of the challenges they face arise precisely because of the knee-jerk responses they have made to the same challenges, or systemically related ones, in the past.
You’re probably familiar with the acronym SMART goals which variously stands for Specific, Measurable, Actionable, Realizable, and Time bounded. I prefer to use a slight variation on that theme – SMARTEST to serve as a checklist acronym for framing a strategic goal. It stands for “Specific, Measurable, Ambitious, Realizable, Time bounded, Engaging, Strategically aligned, and Transformative.” The essential difference between these two acronyms is the latter forces us to think outside the “me-too” box and pursue an outcome worth pursuing because it is aspirational and transformative for all stakeholders – customers, team members, shareholders, communities, and even competitors.
In essence, a strategy describes how an organization intends to deploy resources to create, deliver and capture value for its chosen stakeholders in the pursuit of accomplishing an aspirational objective. Osterwalder & Pigneurcreated the first part of that to define a business model but I believe a business model is the embodiment of strategy, that is, it is the result of a strategic thinking process and have therefor chosen to extend their definition to include the purpose of value creation.1
Following Roger Martin, it is very important to understand that the purpose of strategy is to improve the odds of success in achieving an aspirational goal.2 It does that by providing a decision-making framework to guide the choices that people at all levels must make in the way resources are utilized to pursue the organization’s desired outcome.
Strategy explains what you choose to do and choose not to do in the pursuit of your organization’s aspirational purpose. It describes where you want to compete for customers, and how you want to create value they are willing and able to pay for so that you can accommodate the needs of your organization’s other stakeholders.
Martin notes another important thing to understand about strategy is that every part of an organization must have a its own strategy that is aligned with and supports the organization’s overall strategy. This is a key issue for successful implementation because unless there is a clear understanding of, and alignment with, the overall strategy the entire effort is likely to collapse i.e. the odds of success are not raised.
- Alexander Osterwalder and Yves Pigneur, Business Model Generation: A Handbook for A Handbook for Visionaries, Game Changers, and Challengers.
- Roger L. Martin is one of the world’s top 3 contemporary scholars and practitioners in the strategic thinking domain. His book, co-authored with A.G Laffley, Playing to Win: How Strategy Really Works, is a must read for anyone seriously interested in developing and implementing strategy.