Strategy and execution are the 2 critical elements that drive a business. However, leaders often struggle even with defining—let alone devising and executing—an effective strategy. Many of those who are responsible to deal with it fall short of describing how they typically employ it. This failure takes its roots from the fact that there is no clear path associated with strategy.
Strategy is about making sound decisions about unforeseen problems. It’s about selecting the right options—about matters that are often quite ambiguous today but have great significance in the future—based on thorough contemplation, detailed analysis, and creative ideas. Broadly speaking, strategy encompasses these 3 main elements:
- A vision and direction
- A certain position or pattern
- A deliberated Strategic Plan to achieve strategic goals and vision
Great strategists execute their plans, analyze the results, evaluate their actions, and perform course correction based on the outcomes. They are not afraid of even revamping their approach entirely. Senior leaders should clarify their understanding of the concept of strategy and draw attention to the importance of differentiating between the 3 distinct types of strategies before formulating their own course of action:
- General Strategy
- Corporate Strategy
- Competitive Strategy
Let’s delve deeper into the 3 types of strategy.
General Strategy indicates how a specific objective will be achieved, with well-thought-out plans. The focus of this type of Strategy is on ends (objectives and results) and means (the resources we have to achieve the objectives). Strategy and tactics combined bridge the gap between ends and means; where Strategy deals with deploying the resources at our disposal while tactics govern their utilization. A pattern of decisions and actions marks progress from the starting point to achievement of objectives in General Strategy.
Senior executives need to deliberate on the following questions before devising their General Strategy:
- What do we do?
- Why are we here?
- What kind of business are we?
- What kind of business do we want to become?
- What is our purpose? What are the results we seek?
- What is our existing Strategy, is it explicit or tacit?
- What Strategy and plans may bring about the results we want?
- What resources we have at our disposal?
- Are there any constraints in terms of resources that limit our actions?
Corporate Strategy describes what a company does, the purpose of its existence, and what it aims to become. Corporate Strategy focuses on choices and commitments concerning the markets, business, and the organization. Corporate Strategy classifies the markets and the businesses in which a company will operate. This type of strategy is typically decided in the context of defining the company’s mission and vision.
A detailed assessment of the existing strategy, market, competition and environment is critical for devising the Corporate Strategy. Strategists indicate that there are critical elements that should be factored in while formulating Corporate Strategy. These elements include product or service offerings, resources, marketing and sales approaches, manufacturing capabilities / capacity, customers, distribution channels, technology, type of market and its requirements, and revenue and profit goals.
While formulating Corporate Strategy, senior executives should consider and seek answers to the following questions:
- What is our existing Corporate Strategy?
- Is our Corporate Strategy explicit or tacit?
- What are the critical assumptions that make our existing strategy viable?
- What is going on in the market—in terms of social, political, technical and financial environment?
- What do we seek to accomplish in terms of our growth, size, and profitability targets?
- What markets we are eyeing to compete in?
- What businesses we intend to operate in?
- What locations and geographies will we compete in?
Competitive or Business Strategy specifies for an enterprise the core reason on which it contests its rivals. It depends on an organization’s competences, advantages, and disadvantages compared to the market and the rivals.
Interested in learning more about the General, Corporate, and Competitive Strategies? You can download an editable PowerPoint on The 3 Distinctions of Strategy here on the Flevy documents marketplace.