How Do You Define Strategy?

By Virgil Carter

So, just what is strategy?  It’s a term that every executive is familiar with, isn’t it?    The fact that there are so many differences among executives and management specialists may help to explain why organizations often struggle with strategy.  In a recent article in Strategy+Business, authors Ken Favaro, with Kasturi Rangan and Evan Hirsh share their experience with strategy.

According to the authors, “Strategy is different from vision, mission, goals, priorities and plans.  It is the result of choices executives make, on where to play and how to win, to maximize long-term value”.

“Where to play” specifies the target market in terms of the customers and the needs to be served.  “How to win” spells out the value proposition that will distinguish an organization in the eyes of its target customers, along with the capabilities that will give it an essential advantage in delivering that value proposition.  “To maximize long-term value” means to select those options that will give the greatest sustained increase in a company’s economic value.

“Every company faces innumerable options for where to play and how to win”, write the authors.  And the reality, in the marketplace, is to never stop looking for higher-value options, according to the writers.

“In the end”, the authors suggest, “To define the fundamentals of you business strategy, you only need to answer three questions”:

·        Who is the target customer?

·        What is the value proposition to that customer?

·        What are the essential capabilities needed to deliver that value proposition?

“Without clear and coherent answers to these three questions, you may have an exciting vision, a compelling mission, clear goals and an ambitious strategic plan with many actions underway, but you won’t have a strategy”, the authors conclude.

Can you answer these three questions clearly and succinctly?