Strategy is a word of only eight letters. Yet those eight letters are the making or breaking of many a manager. Originating and forming a well-honed strategy, articulating it well enough to gain the necessary commitment, and then implementing, monitoring and adapting it tests a wide range of management skills and characteristics. Not least our judgement and interpersonal skills, as well as our fundamental strength of character.
Effective managers who can turn a vision into a successful reality, whether it was their vision or not, do so through having a robust and well-executed strategy. As I once put it to a rampant entrepreneur who was long on ideas and short on action, ‘Strategy is a vital connection between the dream and the money, but that connection is only possible if the strategy is realistic and the resources are in place to implement it.’
Few people can combine the talents of the visionary, the strategist and the implementer. Smart leaders know this as well as they know where their own talents lie. They know their managers well, and they build teams that collectively can complement them in order to turn their dreams into thriving organisations. This is as true in a business as it is in social enterprise or a government department.
The difficulty of getting strategy right and the absence of ‘one right way’ to decide on the best strategy might explain why levels of interest in ‘strategy’ and ‘strategy-making’ continue to be so high. Gurus on the topic – such as Michael Porter, Henry Mintzberg, Gary Hamel and C. K. Prahalad – have long grappled with the question of why some organisations are more successful than others. A steady stream of books and articles continues to be published as old models of strategy-making are critiqued and new ideas emerge.
There are many definitions of strategy, including the CMI’s own simple one: ‘The direction an organisation takes with the aim of achieving business success in the long term.’
This resonates with Alfred D. Chandler’s classic: ‘The determination of the basic long-term goals and objectives of an enterprise, and the adoption of courses of action and the allocation of resources necessary for carrying out these goals.’1
If you want to go back further, the term strategy is derived from the Greek strategia, meaning ‘generalship’. It was originally used in the context of warfare to describe the overall planning of a campaign, as opposed to the tactics. Indeed, before business publishing came to claim the word, writers on strategy tended to focus on lessons drawn from the achievements of legendary military leaders ranging from Sun Tzu, a Chinese general from the time of Confucius, and the Prussian general Carl von Clausewitz to the British naval hero Horatio Nelson.
The word strategy was reportedly first applied to business after the Second World War. However, it was the landmark publication in 1965 of Igor Ansoff’s book Corporate Strategy2 which led to the development of a systematic approach to strategy formulation and strategic decision-making. This evolved into the structured discipline of strategic planning which sought to set objectives and produce strategic plans to be followed by the organisation for the coming year and beyond.
The basic model rested on a formal process of:
Strategic planning, it was argued, could be effective in a stable environment, and it was seen as a rigorous, scientific and evidence-based approach.
This approach had its heyday during the 1960s and 1970s, but as the twentieth century progressed, the economic and business environment became increasingly characterised by change, uncertainty and volatility, and criticisms of strategic planning started to be voiced. From the manager’s perspective, strategic planning was time-consuming but often seemed to produce little in the way of results. The exercise often appeared to be more about streamlining and controlling what was already in place than about identifying new directions and opportunities.
With significant growth in the 1980s in both international trade and the importance of global brands, Michael Porter shifted the focus onto the competitive aspect: ‘Competitive strategy is about being different. It means deliberately choosing a different set of activities to deliver a unique mix of value.’3
Then in the next decade significant challenges were posed by writers such as Henry Mintzberg. In his 1994 book The Rise and Fall of Strategic Planning4 Mintzberg questioned the underlying assumption that there could be ‘one right answer’ to questions about strategy. He then went on to criticise strategic planning for its bureaucracy, inflexibility and tendency to stifle innovation.
As the technology and communications revolution in the 1990s and first decade of this century developed, culminating in the internet age, such processes were considered by many to be outdated; when circumstances were liable to alter so dramatically before a plan could be implemented, planning seemed redundant. Yet the chaos of the early internet age and the bursting of the dot.com bubble perhaps suggested that a ‘random walk’ approach to strategy may also not be great.
For some the ‘emergent strategy’ is a natural and pragmatic compromise, in which strategy essentially evolves from everyday activities and decisions, through a process of experimentation and learning or as a result of political dynamics within the organisation. As decisions are taken, a pattern that sets strategic direction for the future becomes clear. In my view this approach requires exceptional talent and leadership to be successful.
And that is probably why most organisations still use some kind of structured process for developing strategy. It is still important to be aware of the external business environment, to have an understanding of markets, competitors and customers, and to know what your organisation is currently capable of. But this now comes with a greater emphasis on strategic thinking with the aim of generating, evaluating and selecting the most promising strategic options, and a keen awareness of the need to build in enough flexibility to allow for adjustments and realignments as these become necessary.
Looking at the latest thinking, and incorporating into it an element of sustainability, Vaughan Evans, in his 2013 book Key Strategy Tools, puts it as follows: ‘Strategy is how a company achieves its goals by deploying its scarce resources to gain a sustainable competitive advantage.’5
Efforts are understandably made to distinguish strategy from the related concepts of vision, mission or objectives. Put simply:
Whatever your precise definition of strategy it will usually come down to making choices amid a degree of uncertainty and using information which is of variable quality. We live in a dynamic and fast-moving business environment. That’s one of the things that make business today so exciting and create so much opportunity. Yet, as anyone in a management position the day after the Lehman’s crisis in 2008 can tell you, it can also be pretty scary. So no matter how much market intelligence we have or how sophisticated our forecasting tools may be, strategic decisions are generally taken in a context of uncertainty.
Recognition of an increased frequency and amplitude of major changes and external factors has led to a move away from more rigid planning cycles and plans. The old five-year strategic plan ritual is giving way to plans which ‘bake in’ adaptability and are more ‘step and contingency’ based. It is therefore vital to monitor organisational performance, keep right on top of the market, track what competitors are up to, look out for emerging social or technological trends, and generally be on the alert for any changes which require a strategic response, be it a slight shift of focus or a more radical change of direction.
Strong strategic processes also involve testing the vision to ensure that there is a way of achieving it and that it will deliver enough success for the investment, time and risk entailed and be better than competing alternatives. The best processes avoid developing strategy in a vacuum and take account of competitor reactions and likely changes in environment.
Frequently the winning strategy will take longer to bear fruit than originally anticipated. Star managers have the conviction and courage to continue to pursue their strategies and bring all those necessary along with them. They will also have the ability to recognise when the strategy is no longer appropriate, face reality, and possibly – given enough courage – risk loss of face by making a required shift in time.
Responsibility for organisational strategy-making lies primarily with senior management and the board of directors. But managers at the middle and lower levels of an organisation, and indeed all employees, are concerned with implementing and acting on the strategy which has been set, and may also be involved in shaping and participating in the process of strategy development. This book aims to help managers, in particular middle managers, to gain an understanding of strategic issues and introduces some tools which will assist them in assessing strategic options.
There are many books on strategy, ranging from extensive textbooks to personal reflections, for those who have the time and the interest to read them, and there are also many different models of and approaches to strategy. It is not a subject that can be comprehensively addressed by means of short checklists. But what checklists can offer is a valuable introduction to the complexities of a subject in a straightforward and accessible format. The aim of this book is to provide insights and a range of tools and techniques that will help managers to engage with the development of strategy in their organisations and participate in the planning and execution of strategy in their own area of responsibility.
Latterly, more attention has been paid to how strategy is implemented or executed, as highlighted by Ram Charam and Larry Bossidy in their book Execution: the Discipline of Getting Things Done.6 No matter how good a strategy, it is useless unless it is implemented, and its aims will never be achieved unless it is acted on and put into practice by engaging people right across the organisation. This approach is reflected in this collection of checklists.
The first section of this book focuses on the organisational context in which strategy is formulated and executed; the second examines the area of strategic analysis and introduces a number of commonly used tools and techniques; and the third section moves on to the meat of formulating and implementing strategy. A further brief section looks at evaluating progress in achieving strategic aims and objectives. This is followed by a final section exploring a range of strategic options that an organisation may choose.
Patrick Dunne
Member, General Council, The University of Warwick
1. Alfred D. Chandler, Strategy and Structure: Chapters in the History of American Enterprise, MIT Press, 1963, p. 13.
2. Igor H. Ansoff, Corporate Strategy: An Analytic Approach to Business Policy for Growth and Expansion, McGraw-Hill, 1965.
3. Michael Porter, ‘What is strategy?’, Harvard Business Review, November/December 1966, p. 60.
4. Henry Mintzberg, The Rise and Fall of Strategic Planning, Prentice Hall International, 1994.
5. Vaughan Evans, Key Strategy Tools: The 80+ Tools for Every Manager to Build a Winning Strategy, Pearson Education, 2013.
6. Ram Charan and Larry Bossidy, Execution: The Discipline of Getting Things Done, Random House, 2002.