A strategic way to enter the new era of strategy

Jean-Louis Schaan, Professor and Faculty Director of the Ivey Executive Program, discusses the new era of strategy and what it means for executives.

Google the term “strategy” and you get hundreds of millions of hits on the topic, not to mention plenty of pithy quotes about how essential it is to business success.

In the words of Michael Porter, the essence of strategy is “choosing what not to do.” Porter, of course, also argues that a sound strategy “starts with having the right goal." These are not just nice quotes. After all, without the right goal, an organization’s strategy is not actually strategic. And as Peter Drucker nicely stated: "There is nothing so useless as doing efficiently that which should not be done at all.”

Why am I going on about strategy when it is one of the most-taught aspects of business? Simple. Most organizations have extensive management discussions on the topic. But that’s not enough anymore.

The business world has changed and we are entering a new era for strategy. Indeed, we went from strategic planning to strategic management and now we are transitioning from strategic management to strategic prototyping.

And in the new era, strategy isn’t something to think about only when someone calls a gathering of senior executives to discuss it. It needs to be on the minds of all concerned all the time. And even that’s only a good thing if everyone across all levels of the organization shares the same view about what strategy actually means. Unfortunately, that is not always the case.

If truth be told, too many things are being labelled strategic today. As a result, the meaning of the term is often blurred in people’s minds, not to mention during planning meetings, escalating the amount of time and energy wasted by organizations. As Sun Tzu noted, “strategy without tactics is the slowest route to victory.” But confusing the two is just as bad.

The good news is, to avoid developing a non-strategic strategy, all you have to do is develop a shared understanding.

Simply put, strategy is not about how to achieve operational excellence or enhancing the marketing plan. It is what dictates how everything within an organization is put in motion by defining what you want to achieve as a business, while tactics are tools deployed to achieve the objectives identified by your strategy. In other words, strategy is about making choices and setting limits on both the demand side and supply side of the business so your limited resources can be focused on offering valued products or services in a clearly-targeted market.

To get the ball rolling in the right direction, think about addressing the following questions:

• What does success look like for us and how does that translate into objectives?
• What business or businesses are we in and what ones are we not in?
• What value proposition sets us apart from our competitors?
• What activities do we perform internally and what activities do we outsource to beat our competitors, and how do we conduct these activities differently?

After these questions are answered, of course, the job is not done.

Indeed, given that the nature of strategy is becoming more and more transient every day, strategy development is a never-ending process—one that needs to be managed and adjusted as market conditions shift and the competition landscape changes (due to technological innovations, new entrants, alternative products, etc.).

And keep in mind that one can’t manage a flexible, rapidly evolving strategy with traditional tools and linear thinking. So when the solutions needed to ensure future survival can’t be sufficiently scoped out quickly enough, managers must adopt an act-learn-adapt approach. Strategy change also often requires finding a more appropriate alternative to the existing organization structure.

Furthermore, when it comes to strategic renewal, senior management must avoid being blindsided by the confidence and complacency that often stems from strong performance. Indeed, as environments become more turbulent (more terrorism, more natural disasters, more competition from emerging market firms, etc.), competitive advantage relies more than ever before on the ability to be faster with developing/testing/validating new ideas and bringing them to market. So strategic renewal is directly tied to an organization’s ability to successfully integrate project activities into its operational activities, while keeping a watch on how full or empty the project activity pipeline is.

Finally, while management is responsible for strategy development, it is important to understand that strategy is not owned by an organization’s managers—at least not by managers alone. For a strategy to work, it must be “owned” and supported by the daily decisions and actions of all employees at all levels across an organization.

As a result, managers and supervisors need to understand how every single one of their actions and decisions will impact the organization’s ability to execute its strategy and they must make sure that every member on their team understands this as well. This is also a never-ending job. After all, when your strategy changes, understanding of it across the organization must all change or your chances of achieving the new goals will be greatly diminished.

Following the above isn’t a strategy, but it is a good tactic to help you enter the new era of strategy.