Strategy is about the methods used to attain goals. It’s the “how” of achieving goals—desired future conditions and circumstances towards which effort and resources are spent until their achievement.
If Strategy has any meaning at all, it is in relation to some aim or end in view.
Strategy is 1 of the 4 dimensions of an enterprise structure:
- Goals of the organization.
- Resources at our disposal.
- Strategies for achieving above-mentioned goals –i.e., the methods used to deploy the resources.
- Tactics—i.e., the ways in which the deployed resources are used.
Strategy and tactics – integral part of Strategy Development – bridge the gap between goals and the methods used to achieve those goals. These 4 dimensions of enterprise structure relate to one or both of the 2 domains; Policy and Management. Policies determine the goals of an enterprise, whereas attaining goals is typically a matter of Management. Tactics belong to the managers; strategy is the combined realm of the governors and managers; whereas resources are controlled jointly.
The employed resources through use of Strategies and Tactics give us “certain” conditions. Inspecting them in light of the “desired” conditions enables us to determine future employment of the resources and thus emerges a pattern of actions and decisions which makes Strategy an adaptive and evolving view of what is required, to achieve goals.
We take a look at various perspectives on and definitions of Strategy, as explained by 8 of the most impactful and renowned Strategists in modern times. Familiarity with the perspectives of these strategists enables us to develop a more holistic and thorough understanding of the topic, helping us improve our strategic thinking, decision making, and analytical skills. All of these experts agree on the fact that Strategy is a means to implement a policy or a view envisioned by those who matter. Let’s see how the following strategists define Strategy:
- Michael Porter
- Henry Mintzberg
- Treacy and Wiersema
- H. Liddell Hart
- George Steiner
- Kenneth Andrews
- Michel Robert
Let’s break down how a few of these renown strategists define “Strategy.”
Michael Porter, the father of modern Business Strategy, views Competitive Strategy as “intentionally opting a collection of activities that are dissimilar to the competitors in order to provide a unique mix of value”– i.e. Competitive Advantage. Porter states that Strategy is about:
- A competitive position.
- Differentiating yourself in the eyes of the customer.
- Adding value through a collection of activities different from competitors.
Mintzberg is credited with co-creating the Organigraph. He has written extensively on management and business Strategy. His contribution to Organizational Theory in the form of “The Organizational Configurations Framework” is a model that describes 6 valid organizational configurations or Organizational Design.
Mintzberg argues that the contrast of changing realities with intentions necessitates accommodation, generating Strategy. According to him Strategy is a combination of:
- The Perspective – Vision and Direction.
- The Position – Decisions to offer particular products or services in particular markets.
- The Plan – a means of getting from here to there.
- A Pattern in actions over time – for example, a company that regularly markets very expensive products is using a “high end” Strategy.
Treacy and Wiersema
Treacy and Wiersema’s Value Discipline Model talks about 3 different value disciplines: Customer Intimacy, Product Leadership, and Operational Excellence. Their research on market leading organizations reveals that they outdid their competitors through mastering 1 of these 3 disciplines.
Treacy and Wiersema assert that companies achieve leadership positions by narrowing, not broadening, their business focus on any one of the following:
- Operational Excellence – lead the industry in terms of price and convenience and is based on the Strategy of production and delivery of products or services. It implies world-class marketing, manufacturing, and distribution processes.
- Customer Intimacy – Long-term customer loyalty and customer profitability is based on the Strategy of tailoring and shaping products to the increasingly fine definitions of Customer-centric Design.
- Product Leadership – concentrates on quick commercialization of new ideas. It hinges on market-focused R&D as well as organizational nimbleness and agility.
Interested in learning more about the 8 definitions of Strategy? You can download an editable PowerPoint on 8 Perspectives on Strategy here on the Flevy documents marketplace.
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“Strategy without Tactics is the slowest route to victory. Tactics without Strategy is the noise before defeat.” – Sun Tzu
For effective Strategy Development and Strategic Planning, we must master both Strategy and Tactics. Our frameworks cover all phases of Strategy, from Strategy Design and Formulation to Strategy Deployment and Execution; as well as all levels of Strategy, from Corporate Strategy to Business Strategy to “Tactical” Strategy. Many of these methodologies are authored by global strategy consulting firms and have been successfully implemented at their Fortune 100 client organizations.
These frameworks include Porter’s Five Forces, BCG Growth-Share Matrix, Greiner’s Growth Model, Capabilities-driven Strategy (CDS), Business Model Innovation (BMI), Value Chain Analysis (VCA), Endgame Niche Strategies, Value Patterns, Integrated Strategy Model for Value Creation, Scenario Planning, to name a few.
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The most resilient and consistently successful companies have discovered that the devil is in the details of the organization. No company may ever totally master the enigma of execution. But for them organizing to execute has truly become a competitive edge.
Execution only becomes effective when the company’s DNA is holistically integrated. This means weaving intelligence, decision-making capabilities, and a collective focus on common goals widely and deeply into the fabric of the organization so that each person and unit is working smartly and together.
The best Organizational Designs are adaptive, self-correcting, and robust. But creating such an organization does not happen quickly. It can take several years to get the basic right.
In understanding Organizational DNA, one needs to have a full grasp of the 4 bases of Organizational DNA, as well as the 8 core elements of the Organizational DNA. While the 4 Bases are the building blocks, the 8 core elements are the blueprint for Organizational Design.
The 4 Building Blocks of Organizational DNA
Organizations must have a good operational understanding of the 4 Building Blocks of Organizational DNA to better perform effectively and efficiently. The 4 Building Blocks are Structure, Decision Rights, Motivator, and Information.
Structure is the organization of business units around customers, products, or geography. In principle, structural choices are made to support a strategy. However, in practice, often a company’s organizational structure and strategic intent do not match.
Decision Rights specify who has the authority to make which decisions. Often, these put the flex o the organization chart and define where responsibility lies.
Motivators are incentives, rewards, and systems that enable employees to perform their functions well. It shows how people respond rationally to what they see, understand, and rewarded.
Information is one critical base in the company’s DNA that underly the company’s ability to ensure clear decision rights and motivate people. Information is among the most underappreciated contributors to Operational Excellence and competitive advantage. Often, better information flows did more than keep costs down. It helps allocate scarce resources far more efficiently than before.
Discovering the 8 Elements of Organizational Design
It is best to understand the 8 Elements of Organizational Design as it is the blueprint for Organizational Design.
Let us take a look at the first 2 rungs. The first 2 rungs focus on Authority, governance of behavior, and how a company governs behavior.
Rung 1: Authority and governance of behavior
In terms of formality, in the formal part, how decisions are made are elements that a company can precisely articulate. This can be expressed through governance forums, decision rights, decision processes, and decision analytics.
In the informal part, how people instinctively act or take action is the informal part. This can refer to values and standards, expectations, and unwritten rules, and behaviors.
Rung 2: The way a company governs behavior.
The formal part is the Motivators on how people are compelled to perform. These can be represented by monetary rewards, career models, and talent processes.
The informal part is commitment. It is how people are inspired to contribute. It is represented by shared visions and objectives, individual goals and aspirations, and sources of pride.
The first 2 rungs are essential in ensuring that the Organizational Design has a balance of both authority and behavior.
The 3rd and 4th rungs focus on flows of knowledge and insight, as well as structure and networking. These 2 rungs are essentially important in ensuring that appropriate structure and network is in place to support flows of information and insights.
Interested in gaining more understanding of the 4 building blocks to Organizational DNA? You can learn more and download an editable PowerPoint about Organizational DNA: 4 Building Blocks here on the Flevy documents marketplace.
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