“What is strategy?” This is one of the most popular questions about strategy. Although many answers have been suggested to address this question, I found these answers are too formal. While formal answers are useful, especially for academicians, they are less useful for practicians, like entrepreneurs and business people. For these people, a true understanding of strategy is more useful than a formal definition. This is what we will cover in this post.
So, what is a Strategy? The best way to understand the concept of strategy is via an analogy. For example, Jane lives in London. She needs to attend a wedding in Paris. A friend of hers, a strategy consultant, suggested these ten options, i.e., she can:
Take the Eurostar train from St. Pancras station.
Fly from one of the London airports.
Drive a car via the Eurotunnel.
Take a bus from Victoria coach station.
Take a ferry across the English Channel.
Carpooling/ride sharing by using the carpooling apps.
Book a cab or private car transfer.
Ride her bike via Dover/Calais or Newhaven/Dieppe route.
Walk (and take Ferry).
Swim across the English Channel.
So, what is the best way for Jane? (i.e., what is the best strategy for Jane?) The answer to this simple question depends on five things.
First, the exact goal of Jane. This is because the ‘best’ criteria depend very much on Jane’s exact goal. For example, cycling can be the best option if she wants to enjoy scenic views along the way and has time. But, if Jane needs to be in Paris within a couple of hours, cycling is not an option. This is why a goal must be specific. ‘Need to go to Paris’ is not specific enough. Knowing when Jane must arrive will help us cross out many options. As you can see, we can only determine the best option once we fully understand Jane’s goal.
Second, the internal conditions of Jane. Knowing these will help us cross out many options too. For example:
(i) Does Jane own a car? If not, can she borrow or hire a car?
(ii) Does Jane have a driving license?
(iii) Is Jane a good swimmer with open water swimming experience?
(iv) Is Jane’s travel budget restricted? Can she afford the train ticket, or does she need to take a bus?
(v) Where in London Jane lives? For example, although St. Pancras station is in Central London, it may not be convenient for Jane if she lives more to the west, near Heathrow airport.
It is the same in business: (i) asset ownership, (ii) regulation restriction, (iii) firm’s capability, (iv) access to capital, and (v) positioning in the market – they limit a firm’s available options.
Third, the external environments Jane faces. For example, Jane may be an excellent swimmer who has swum across the Channel twice, but what if the weather forecast predicts there will be a storm and high waves over the Channel? Another example, taking the Eurostar train is normally the most convenient for Jane, but what if industrial action and train strikes are happening? Or if it is a peak season and the price jump up far higher than Jane’s available budget? What about the long security check, road closure, traffic jams, and border queues? Any of these external events can affect the definition of “best” for jane. Similarly, in business, a firm’s available options are influenced by many external factors.
Fourth, the thoroughness of the analysis, i.e., has Jane considered all options? The ten options above may sound comprehensive but are far from complete. Perhaps, Jane has a bigger budget and can charter a private jet. Maybe, Jane is a stewardess and can sit on one of the flights for free. Perchance, Jane owns a boat and can sail to Paris. Perhaps, Jane’s neighbor is an HGV truck driver who regularly drives to France. As you can see, the best option can lie in these unidentified options. It is the same in business: a firm can only make the most optimum choice if it can see the complete options.
Fifth, the executability of the option, i.e., the ease of implementation. Regardless of the internal and external conditions, some options are easier to implement and have fewer risks (e.g., driving own car). On the other hand, some options are harder to implement and have more risks (e.g., swimming across the English Channel). Knowing the importance of the goal will affect the ‘best’ options. For example, is the wedding attendance critical (e.g., Jane is the best maid who cannot be late for the wedding)? Or is it more casual (i.e., it will be nice to attend but no big deal if Jane misses it)? The answer will determine if Jane can afford to take the riskier options.
As you can see from the analogy above, a Strategy is the best way to achieve your specific goal, given your internal and external conditions, after considering all the available options and their executability. It is as simple as that.
Continue to explore the secrets of Winning Strategy here.
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