What Is Strategy?

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There are few more confusing concepts in management than “strategy”. What is strategy? My quick, working definition: “Strategy is the rationalization – articulation, elaboration and extension – of what works”. It is the alignment of effective means with desired ends.

Let’s unpack that definition a little:

  1. It implies that strategy is best thought of as a process rather than a “thing”.
  2. It implies that strategy-making does not occur in the void. There is always an organizational context, where some pre-existing activities are going on that seem to ‘work’ i.e. help the organization survive. These activities have also been called competencies or capabilities.
  3. Strategy is a rationalization – it is a retrospective process that makes logical sense of behaviors, connecting them together, often supplying a logic that was not seen at the time that the strategy was developed. Thus strategy happens in space and time – context matters.
  4. In summary, strategy has to be thought about ecologically rather than in a context-free logical way. I prefer to think of strategy as an adjective, as in ‘strategic management’, as a phase in the life of an organization.

So far, so good. A key feature of my book The New Ecology of Leadership: Mastering Business in a Chaotic World is the importance of asking good questions if one wants to get good answers. “What is strategy?” tends to imply that it is a “thing”, an object of some kind. The very question limits the answers we can get. Thus when Harvard strategy professor Michael Porter asked “What is Strategy?” (HBR November-December 1996), he concluded it that it was “the creation of a unique and valuable position, involving a different set of activities” (from one’s rivals). It required the firm to make trade-offs – decide what not to do and that the firm created “fit” among its activities. According to Porter, fit drives competitive advantage and sustainability.

That definition too is fine as far as it goes, but that’s not very far. Porter’s concept of strategy is a position in a market space, but there is no hint of development over time. Strategy as position points to desirable outcomes without telling us how they are achieved. It tends to apply to established firms and assumes an organizational hierarchy, with those at the top formulating the strategy and those below requiring guidance on how to “deepen” a position rather than “broaden or compromise it.”

Part of the problem is the question. So to the question “What is strategy?” one might add:

  • When is strategy? When is it needed? When does it emerge?
  • Who is strategy? Who formulates it? Who does it?
  • Why is strategy? Why do firms need strategy? What purpose does it serve?
  • Where is strategy? Where is strategy developed?
  • How is strategy? How is strategy developed? How is it ‘implemented’?

In my view the answers to all these questions begins with “it depends…” That is context – where the firm is in space and time – really matters. If it’s a young entrepreneurial firm trying to develop a new product or service, then the strategy is likely to be emergent. If it is in mid-life and still growing strategy will be clearly articulated and well understood. As organizations mature, strategy tends to degenerate into dogma, as the link between means and ends, the ‘how’ and the ‘why’ becomes frayed and broken. At its worst, strategy can become a verbal cloak for the exercise of raw power, rationalizing actions that are taken for reasons that have nothing to do with improving the fortunes of the organization’s stakeholders.

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