I am excited about today’s lesson on strategy because I will reveal a new acronym that will help you understand the concept of strategy. But before I reveal the new acronym, we need to journey back to the ancient Greek empire where the word strategy originated to understand its meaning and the implications for modern-day businesses.
Strategy is derived from the Greek word strategos (plural strategoi). It is from two root words, stratos which means army and agos, which means leader. Putting the two words together, you have an army leader, general or commander.
In the ancient Greek empire, the strategoi were tasked with leading their armies to war. They may be involved with politics and administration, but they must be able to organize their armies for battle at the end of the day. Prominent examples include Pericles (c. 495–429 BC), the Greek politician and general during the Golden Age of Athens, Leonidas I of Sparta and Alexander the Great. These men demonstrated strategic thinking skills and achieved great victories in battle. In some instances, they defended their turf and repelled attacking armies; in other instances, they embarked on new campaigns and conquered new territories. In business speak, these two-prong approach is called defensive and growth strategy.
Now let’s go a little further and reveal the S.P.A. of Strategy, the heart of strategy.
Effective battle planning, the work of the strategoi or master strategists, hinges on answering three crucial questions:
· What is the situation? In this question, the key task is not to report the current situation but to know if the situation has changed or is about to change. The ability to anticipate changes before they happen or accurately diagnose the changes as they happen is the first master skill of a great strategist.
· What is our position? Once the strategoi have identified the changes, the next question deals with where they stand relative to the changes. Are the changes a threat or opportunity to their current position? What are their relative strengths and weaknesses compared to the enemy?
· How can we turn the situation to our advantage? The final question is about turning lemons into lemonade. Here the strategist must design the most feasible pathway to victory with minimal cost and resources. An advantage must turn the situation in your favour and improve your position relative to the competition.
It is at this point that decisions are made. The analysis would determine whether it is wise to fight or to send an emissary for peace conditions if they knew they could not win.
Situation, position, and advantage form the acronym of my Strategy S.P.A.!
It is from the military that the word strategy seeped into the business language, there are some slight differences between military strategy and business strategy. For example, in military strategy, the objective of war is usually to defeat and destroy the enemy. In business strategy, radical decisions to destroy a competitor rarely happen. The goal of business strategy is to win a portion of the market while coexisting with the competitor. In military warfare, ammunitions are used, which is not the case in business strategy. The ammunitions in business are the products and services.
Apart from these two differences, every other aspect of military strategy is the same as business strategy — the S.P.A. of military strategy is the same as business strategy. The battlefield is the marketplace where companies fight to either grow market share (growth strategy) or defend market share (defensive strategy). The same principles of understanding market conditions and forces, scenario planning, understanding the relative strengths and weakness of one’s position and competitors, and deciding the best offensive and defensive strategies apply to both fields. Therefore, a business strategist is like a general who must be able to read the market situation, understand their company’s and products’ relative strengths and weaknesses, and decide the best battle plan to win in the marketplace.
And every time a business fails, it fails because it was not rigorous in answering the three questions of the situation, position, and advantage. Take Blackberry, for example:
· Did they accurately identify the changes happening in the mobile phone market with the introduction of the iPhone?
· Were they truthful to themselves about their position and the relative strengths and weaknesses of the company compared to the iPhone and Android phone makers like Samsung?
· Did they ask themselves how they could have turned the introduction of the iPhone to their advantage?
And if you fail to ask yourself these three questions at least once every month, you might go the way of Blackberry or Blockbuster or Nokia.
Dr Maxwell Ubah is a strategy and business transformation coach. He helps organisations design and execute winning business strategies. He has a degree in leadership and strategy (Sloan Masters) from London Business School.