«Strategy” of an organisation is a paramount term in strategic management. Unfortunately, there is no general agreement as to what is meant by strategy, even amongst strategy professionals. As I will use it often in my blog, so I will describe here what I understand by it and what is the major shortcut to strategy to avoid.

What is Strategy about?

Strategy is about “what really matters” in an organisation. It is the explicit representation of how organisational success looks like. Strategy can be described as direction, a collection of goals or objectives, a plan to create value and a model with a set of assumptions. The following three figures are analogous representations pointing out the position of strategy.

• Strategy generally means direction. Direction is about articulating a well-designed strategy that is results-oriented, understandable to everyone, and ruthlessly prioritised. .

• Strategy is a plan to create value.

• Strategy is a collection of goals or objectives, stating the results an organization wants to attain , including its own creation or transformation as “Enabler”.

• Strategy is an assumed model of how the organization is intending to create value and a set of assumptions about cause-and-effect relationships.

• Strategy and business model are synonyms?

As far as a business model describes “the rationale of how an organization creates, delivers and captures value,” strategy and business model seem to be practically the same things. The next chapter gives a short overview of the key components of that model.

What are the key components of a Strategy?

The key components of the organization’s strategy are the stakeholder value proposition and the core competencies required to deliver the value proposition, as well as the key resources (tangible and intangible) that underlie the core competencies.

Action-oriented strategy: The shortcut to avoid

Some strategy professionals define strategy as a set of activities (i.e. , Abegglen 2009 in , ) or as an umbrella term encompassing goals, objectives, measures, and initiatives that together spell out the direction in which, the organization is heading (i.e. in , , ).

Let’s consider the following statements:

• In order to move to the desired direction, an organisation has to do something.
• In order to become reality, a strategy needs to be executed.
• For a plan to be implemented, actions must be taken and fulfilled.
• To be achieved, objectives need activities.
• Finally, only actions produce results.

Do you agree with all that? I suppose yes. And this is where the temptation arises to describe a strategy with actions as a kind of recipe for organisational success. This is called an “action-oriented strategy”, which means the strategy is expressed as a collection of initiatives or projects .

What are the problems with the shortcut approach to strategy?

• Firstly, action-oriented strategy is immeasurable.
• Secondly, an action-oriented strategy leads to confusion of success with the completion of initiatives or projects.
• Thirdly, the lack of an objectives-based strategy means there is no reference to what success looks like in order to assess, to what extent the organisation is successful.
• Fourthly, and most importantly, an action-oriented strategy does not allow an organisation to learn properly. It risks remaining a single-loop learner, always trying new sets of activities without truly understanding and challenging the assumptions and underlying root-causes.

The Strategic Package

I call the “action-oriented strategy” a Strategy Execution Plan (SEP). It is a central part of the strategic duo I call Strategic Package but not the strategy itself and cannot be used as its substitute. A true strategy answers the question “What does the organisation want to achieve?” while a Strategy Execution Plan explains how this can be done.

In conclusion

Every organisation needs an objectives-based and results-oriented strategy as a starting point for the organisational learning process. It needs to formulate properly the strategic goals and specify the assumptions with cause-and-effect relationships.

References