What is strategy? Perhaps no other topic in business is as confusing as the concept of strategy. With so many strategy schools, professors, and consultants, why is strategy still so confusing?
The good news is that it doesn’t have to! Amid the confusion, you can find the true north of strategy to direct your life and organisation. And this is what I intend to do. My goal is to bring you one strategy idea every week to help you understand what strategy is and how to apply the concept to your business and personal life.
Understanding Strategy Using the Metaphor of a Journey
Today’s lesson is a foundational lesson on strategy. And for the lesson, we will use the metaphor of a journey. Imagine going on a trip. The first thing you must do is decide WHERE you are going, which is your ultimate destination. Your destination will be your vision, goals, or strategic intent in business parlance. For someone, the goal might be to make an extra $1,000 a month to supplement their income; for another it might be to make $10,000 and yet another $100,000. Irrespective of the target you have, strategy is impossible without clarifying your goals.
But after you have decided upon the goal or destination, the next big question is HOW: how will you get there? And this is the domain of strategy. Strategy is all about how you will accomplish your goals or vision. In deciding the HOW, you must determine two important factors: the route and the resources. Let’s briefly consider each one.
To reach your destination, you must ask yourself what options are available. Using our journey metaphor, the following are possible options: plane, boat, train, private car and public transport. The key strategic question is, which is the best route to reach my destination? Strategy is about evaluating options and deciding the best option to reach your destinations or accomplish your goals.
Applying this concept to your personal or organizational life, you need to ask yourself the following questions:
· Where am I headed?
· What are the available options?
· Given my current position, which is the best option for me or my organization
An effective strategy enables you to reach your destination faster. Therefore, without clarifying your destination, strategy design is impossible. Furthermore, strategy is about choosing the best option among competing alternatives.
But the strategy process is not over yet! To decide upon the best strategy, you also need to ask yourself, do I have the resources for the strategy I want to embark upon, or do I have the resources to execute the strategy I have chosen? Why? Because what you consider the best option can be hindered by the availability or lack of resources. So using our journey metaphor again, if your best option is going by plane and you cannot afford the airline ticket (resources), then it will be foolhardy to think choosing that option is being strategic. Actually, it is being foolish or delusional. And there are many delusional individuals and companies.
Deciding the “best” route without thinking through the resources required is not strategy but wishful thinking. If you do not have what it takes to execute what you believe is your strategy, you do not have a strategy!
What therefore is strategy? It is about choosing the best option, given the availability of resources at your disposal. And if the best option is to go by plane and you do not have the resources, strategy is about accumulating the resources necessary to pursue that option.
As a simple equation,
Strategy = Route + Resources
The route part deals with strategic thinking, while the resources part deals with the organizational capabilities to execute the strategy. Today, the schools of strategy are divided broadly into two. Some specialize in designing the best route without considering the organization’s ability or resources to execute the strategy. In contrast, others focus on the resources aspect. For them, strategy is nothing; execution is everything.
Deciding a route without considering the necessary resources is not strategy. Effective strategies choose the best route for the individual or organization based on their current resources and capabilities or help the organization identify the resources they need to accumulate or capabilities to build depending on the future route they intend to take to get to their destination.
This concept also introduces the two dimensions of strategy: the external facing part (route) and the internal facing part (resources). Both must work together in the design of a winning strategy.
I hope this foundational lesson helps. We will explore the concept of strategy deeper next time. To stay up to date with my latest posts on strategy, please subscribe to my blog.
Dr Maxwell Ubah is a strategy and business transformation coach. He helps organizations design and execute winning business strategies. He has a degree in leadership and strategy (Sloan Masters) from London Business School.