In this post which originally appeared on his blog, SWF-supported PhD student Keith Elford writes about the meaning of ‘strategy’.
A strategy should be based on a lot of work, be rational and plausible, but it will, in the end, require you to make an act of faith and probably won’t work out as you intend.
In recent blogs I’ve been reflecting on the words that are used a lot in organisational change management. Today I turn from the “softer” words (mission, vision) to what many see as the hard business of planning: and to the word “strategy”. According to the OED strategy refers to “a plan of action designed to achieve a long-term or overall aim”. In practice I find that organisational people use the word in three related, but distinct ways. Firstly, it is used to describe the total process and content of planning for the future (including vision and mission). Secondly it is used to describe what might otherwise be described as the business model, that is, the basic process and understanding which governs how the organisation delivers value. The third way is again about planning and the future, but has a more limited meaning, that is, to describe the principal actions designed to move the organisation from its starting point to the achievement of its goals or desired outcomes – in other words, to realise the vision. Although I suppose all these uses of the term are valid, I tend to use it in the third sense. We are somewhere. We want to go somewhere. The strategy tells us how we plan to get there.
We are talking here about the principal actions or initiatives, not the detail, which I would understand as the concern of the next stage or layer down of the planning process, the business plan. The organisation has a mission in the world, an understanding of its role, embedded in a strong sense of fundamental purpose. It has a vision of what it wants to achieve, to become, within the medium to long-term. To this the organisation adds an assessment of its strengths and weaknesses, what it is capable of now. It then considers what it might be capable of in the future if it thinks or acts differently. It further analyses the opportunities and threats in the marketplace or wider environment. Putting all this together it decides on a set of initiatives that will deliver the outcome. This is then translated into a business plan which provides a detailed set of instructions for creating the future. (1)
It sounds great. But it will never work out as easily and logically as that sounds. I’ve been in plenty of meetings when we are discussing an ambitious set of future aspirations and someone says they like it but they want to see the detail that lies behind it, to have some assurance that the numbers add up, that the analysis supports the approach being considered. And who can argue with that? We all want assurance and to act responsibly. Any strategy must be the result of hard work, tough, rational consideration and as much knowledge as possible. But it is still only your best guess and unlikely to survive contact with reality intact. We simply can’t know or control enough and the further ahead we plan the more we don’t know and can’t control.
What does this mean? Does it mean we are wasting our time? Absolutely not. My experience is that those who don’t plan don’t go anywhere very much, or just live in a muddle. (Though it probably does mean there is no point in having a detailed business plan that looks further than two to three years ahead.) But it also means that we need to be flexible, both about the destination and the strategy for getting there. As the world changes, as our knowledge grows, we have to keep reviewing and modifying the vision and the strategy. It means that we are likely to end up arriving somewhere that looks significantly different from what we thought at the beginning. But, if we keep reviewing, thinking, ‘reading the runes’, it will be the (or a?) right place. And it means that strategy is never the entirely logical, rational, process some might prefer or imagine. In a meeting with a client the other day it was the hard-bitten FD who observed dryly that “all strategies are an act of faith”. A strategy is as much evidence of belief, determination and intent to get to a desired outcome as it is a guarantee or assurance that one will get there through a set of particular activities.
This blog should also be read as a companion piece to another recent blog on strategy.
(1) I’m aware that I am describing the organisation here as if it has a corporate consciousness or will. All the work is, of course, done by people in the organisation, not by an abstraction – but how many stakeholders and individuals participate varies considerably so it is difficult to know exactly how to describe the actors involved. Ideally it will not just be senior managers and boards.