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What Is Strategy?

2011 August 21
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by Greg Satell
William_of_Ockham

Hey you!  You’re a bright one.  You’ve got a real spark, I think you’re ready for some real high-level thinking.  You are now a strategist!

That’s right!  No more toiling away in the Dickensian world of Word and Excel, you are now strictly in PowerPoint.  You have transcended the Samsara of everyday business life and achieved the Nirvana of full strategic consciousness.  Great.  Now what do you do?

All too often, “strategy” is a value judgement rather than a practice.  Nobody is a screw-up anymore, merely “not strategic.”  One becomes “strategic” by getting promoted, not necessarily through acquiring new skills.  So what should a strategist do?  Well, there’s an answer to that. As Wittgenstein would say, it’s time to let the fly out of the bottle.

The Core Strategic Principle

“Strategy” is a word that gets thrown around a lot, to such an extent that many people don’t even think it’s worth the effort.  Lou Gerstner, after spending a career as a strategic consultant remarked “The last thing IBM needs right now is a vision,” when he joined the company as CEO.

Many very capable executives echo the sentiment.  They don’t want a lot of fluffy talk and armies of consultants running around with stacks of charts.  They want results!  They don’t have time to pussyfoot around.  They need to drive sales and increase margins. However, that, in essence, is a strategy, possibly a viable one, albeit pursued without rigor.

A strategy doesn’t have to be long, drawn out thing.  Put simply, a strategy is a coherent and substantiated logic for making one set of choices rather than another.  If it meets that standard, then it’s done its job.  Anything more is just wasting time.

The Core Strategic Dilemma

So the strategic principle is clear:  know why you’re doing what you’re doing.  However, a dilemma remains: How do you know that you’re not just making it all up?

Put some people in a room and before long a consensus will form around general principles.  There will be some arguing, a bit of back and forth, more than a few false starts, but sure enough a dominant theme will crystallize and that theme will drive further action.

The problem, of course, is that what happens inside that room won’t always reflect the fact pattern outside it.  Nevertheless, once a belief takes root, it is incredibly hard to shake and before long money is invested, momentum builds up, the train starts rolling down the tracks and continues to gain speed until it finally derails.

How To Keep Yourself Honest

Nobody wants to build a strategy based on conjecture rather than fact, but the simple truth is that we live in a very confusing world.  It moves fast, bombarding us with information that often seems contradictory.  Clarity is elusive, certainty a pipe dream.

Nevertheless, we can minimize the mess by following a few simple rules:

Drive with Data:  Data analysis is an art as much as a science.  There are problems with measurement, competing methodologies and our most recent information, while not always the most valid, tends to be the most persuasive.  However, data does have a way of enforcing discipline and minimizing the ways in which we could be wrong.

Normalize Whenever You Can: One way to clean up the data mess is to benchmark against a standard.  If sales went up, compare the increase to the industry or the category. Brand specific statistics like marketing expenditure, web traffic or social media following should be set against market share and so on.

Assume the Opposite: Whenever you find yourself sure of your strategy, assume the opposite and see if you can find facts to support it.  Unfortunately, you will usually find that isn’t very hard to do.  That doesn’t mean you need to start over, but it will give you a good idea where trouble is likely to come from.

Good Strategy is Parsimonious

In the middle ages, the great logician William of Occam became famous for his principle of parsimony.  He implored us to “not multiply entities beyond necessity.”  More recently, mathematicians have taken it as a general precept that the best solution explains the maximum amount of variables with the minimal number of statements.

Strategists, all too often, fall into the trap of adding one more box or triangle to the diagram, one more slide to the deck, a few more superfluous premises to an already complex syllogism.  The result is frequently a garbled mess or, at the very least, a loss of strategic clarity.

Good strategy is parsimonious.  It states the problem succinctly and uses only the information needed to solve it.  In a very real sense, addition is subtraction.  When in doubt, leave it out.

Strategic Humility

Probably the most important element of strategy formation is a realistic perspective on what strategy can accomplish.  We often elevate strategy to the realm of the mystic; a secret sauce or magic bag of jellybeans that can sweep away the inconveniences of everyday business life.  Strategy should service execution, not the other way around.

Having had the opportunity to run a multiplicity of businesses in a variety of market settings, I have come to the firm conclusion that at any given point there are several viable strategies that an organization can pursue.  There is no one true path to success.

What’s really important, crucial in fact, is that the strategy is parsimonious enough to be clear, well articulated and bought into by key stakeholders.  A good strategy puts objectives first and motivates the organization to find innovative ways to achieve them.

Strategy is a blueprint.  It’s the craftsmen that create the sublime.

Greg

17 Responses leave one →
  1. August 21, 2011

    Hi Greg,

    “Strategy is a blueprint. It’s the craftsmen that create the sublime.”

    The above is the punchline and motto of the post. I agree. I also agree with your propensity to favor parsimony. That I guess is a better approximation to describing or trying to orient/act in the reality. More complexity does not necessarily and usually mean better or closer to approximation to reality.

    Complexity is a dust in the eyes of those who know no better. It gives them illusion of activity, self-importance and false sense of deliberate and expected activity. IF things don’t work – they mostly don’t – they always have the complexities of life, bad luck or weather to blame.

    Take care,
    H.

    [Reply]

    Greg Reply:

    Good points. Have a great week!

    – Greg

    [Reply]

  2. Mark permalink
    August 21, 2011

    Okay it’s official I will bear your children. This is a brilliant analysis of what is a strategy. It took me years of being beaten around the head by the best and the brightest to learn what you have put here. This should be a requirement of anyone in HC advertising, Pharma, marketing etc. Throwing the tactic du jour at things is not strategic as seen by pharma’s venture into FB.

    [Reply]

    Greg Reply:

    Thanks Mark! (Although, if you don’t mind, I’ll keep making babies with my wife:-)

    – Greg

    [Reply]

    Mark Reply:

    Sorry trying to use humor late on a Sunday. Oh well

    [Reply]

    Greg Reply:

    No problem. I thought it was funny.

    Have a great week!

    – Greg

  3. August 21, 2011

    I always go back John Kay’s great quote – “strategy means expensive” – http://www.johnkay.com/1998/08/05/strategic-advantage

    I think the other thing to keep in mind is that a real strategy makes you say “no” to some opportunities. If that doesn’t happen, you’re not really making choices.

    [Reply]

    Greg Reply:

    Agree 100% Tim. Nice to see you back btw.

    – Greg

    [Reply]

  4. August 23, 2011

    Tim, like the other readers, I really enjoyed this post largely due to your tenet that “strategy is parsimonious”. Strategic thinking is not only embellished to obscurity, but it’s also elevated to meaninglessness. Maybe a corollary is that strategy must keep its feet on the ground? I also very much enjoyed your thoughts at the beginning of the post about no one being a screw-up any more, just “not strategic.” “Strategic” substitutes for “visionary”, “creative”, “forward thinking” and other related terms. The idea of choice is often completely lost. Thanks for a great post!

    [Reply]

    Greg Reply:

    Thanks Olaf!

    Greg

    [Reply]

  5. August 27, 2011

    Strategy is important in every endeavor. It is just abused too often by either overusing the word, doing strategy in a primitive way or neglecting it.

    [Reply]

    Greg Reply:

    Couldn’t agree more, Stan.

    Greg

    [Reply]

    Stan Yanakiev Reply:

    And I agree with what you wrote that strategic skills do not come merely through a promotion to a higher position. Strategy has to be learned, practiced and mastered like any science or a craft before one can claim he or she is a ‘strategist’.

    [Reply]

    Greg Reply:

    Absolutely. btw, along those lines, I do think that Henry Mintzberg’s is putting the best stuff out right now. Anybody who wants to become a strategist should read his classic, Strategic Safari, which gives a great overview and perspective on the last 30 years of study into strategy.

    http://www.amazon.com/Strategy-Safari-Complete-Strategic-Management/dp/0273719580/ref=sr_1_2?ie=UTF8&qid=1314619829&sr=8-2

    Greg`

  6. September 15, 2011

    Nice summary. Very parsimonious.
    I agree with your statement saying that “strategy should service execution not the other way around.” If strategy doesn’t push execution its really just vaporware.
    In order for there to be coherent and substantiated logic for making one set of choices rather than another there has to be a SMART tactical plan. The SMART method was defined decades ago by Dale Carnegie and still holds today. Specific. Measured. Attainable. Realistic. Time focused. Leave any of the functional attributes out and your back in vaporware again.
    The meaning strategy and int’s place and impact on strategy was made clear to me by a VP I had that was anything but strategic. But he new it. And that was his value. He focused on executing. He relied on me for setting and communicating vision, goals and direction. He told me one day when I was trying to get him to be more strategic, “You’re the architect. I’m the master builder.” So simple. Understanding the relationship between the two isn’t complex either (echos of what Hayk said above). It’s as stunningly simple as letting the fly out the the bottle. Or seeing clearly what’s right in front of you and where it wants to go and getting there before you need to.

    [Reply]

    Greg Reply:

    Good stuff there. Thanks Jay!

    – Greg

    [Reply]

  7. September 15, 2011

    Apologies for the typo’s.

    [Reply]

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