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What is Business Strategy Anyway?

Strategy is probably one of the most amorphous and elusive words in business with a multitude of origins.
What is Business Strategy Anyway?

I started writing the what is “x” anyway series to examine words that have become so ubiquitous as to render them useless. I review the source academic definitions and then layer in more recent observations to find a workable definition for today’s business context.

Strategy is probably one of the most amorphous and elusive words in business with a multitude of origins. The major strategy theorists of Mintzberg, Porter and Henderson each have their own equally valid postulations. Strategy in its most classic and simplest form is charting a long-term course of action to achieve stated goals.

Conditions that led to strategy becoming more and more valuable as a discipline were finite resources, limited information on competitors, a need for irreversible commitment of resources, some level of uncertainty in the environment and of course competition itself.

Increasing levels of uncertainty and volatility are the dimensions which have likely most influenced how strategy has developed over time. Consider that a Standard & Poor’s company today can expect to survive just 15 years. That’s down from 67 years in 1920. Disruption can arise from anywhere, and less flexible strategies often hinder progress.

In a recent a16z podcast, the term “strategy tax” was used to describe companies paying a price for being so entrenched in their existing longer term strategies, they can only manoeuvre to do things that “squeeze” into existing strategic plans. An example used was Amazon who had an advantage from not having legacy mobile devices to build interfaces on. Without the burden of past strategies they were able to get to market quicker with new devices than their competitors.

Strategy has however, evolved away from its classic “slow” approach to one that is adaptive and where success favours the swift. It runs counter to our default view of it as a long-range plan that creates sustainable competitive advantage. Strategy could now be more accurately defined as a series of experiments both proactive and reactive with a common set of core principles. Each experiment builds on cycles of temporary competitive advantage.

It is conceptually very similar to scrum methodology but with the distinction that practiced over time, the right strategy allows a business to focus on better experiments with outcomes that are ultimately transformative. Henderson also stated that this strategic discipline requires:

“the will to forego current benefits in order to invest in the future potential”.

In the face of finite resources, the best strategies exclude options intelligently, based as much on data as on intuition. The intuitive part relies on an acute awareness of business strengths on which to then double down on and commit resources to.

I read about all sorts of exotic concoctions of strategy through this journey: classic, emergent, visionary the list goes. At a fundamental level though, a “strategy” in whatever form it is described is a guide that is able to balance focus with dynamism within our current global business context of information obesity and uncertainty.

Follow me on twitter @kajalnyclon and LinkedIn for more on the “what is x anyway” series. I am on a quest to help the best European entrepreneurs successfully expand their businesses to the US with a robust go-to-market strategy.