What is Strategy?
Posted on February 7, 2014
It seems like a silly question, but the concept of “being strategic” can be difficult to truly grasp. Once you reach a certain level of leadership and are no longer tasked with the day-to-day operation of the business, people expect you to “be strategic.” But how many leaders really know how to do that?
There are many definitions of strategy, but strategy expert Richard Rumelt provides a simple way to think about it: “A strategy is a way through a difficulty, an approach to overcoming an obstacle, a response to a challenge.”
If it’s still not clear exactly what strategy is, it might help to talk about what strategy isn’t:
Strategy is not one-and-done
Strategy is not something that is determined in one meeting; it is more like a journey taken over time. Executives need to devote time to becoming true experts on their industries so they can more easily spot trends and be prepared to adapt to changes.
Also, it is not enough to establish a strategy and never revisit it. To be effective, you must define what success looks like relative to your goals, continually measure your progress and adjust your strategy accordingly.
Strategy is not your mission, vision and values
While it’s important to have a mission and vision statement, as well as company values, these things are not strategy. Instead, strategy is the way to achieve your mission and vision.
Strategy is not your goals and objectives
Too often, organizational leaders try to put together a strategic plan and come out with a set of goals instead. Take this goal, for example: “Increase sales by 15% in the next 12 months.” But how will you do that? You need a strategy to guide you toward achieving a goal. The goal itself is not the strategy. A good way to determine a strategy for achieving a goal is to add “by” after the goal—for example, “Increase sales by 15% in the next 12 months by expanding into three new markets.”
The output of a strategic planning meeting can become a laundry list of objectives everyone would like to see happen. This presents the same challenge as goals—*objectives are a good thing to have, but you will need a strategy to accomplish them.*
Strategy is not fluff
Fluff is a dangerous but all-too-common component of strategic planning. Fluff states the obvious and throws around popular buzzwords but generally lacks any real meaning. For example, take this so-called strategy statement from a major retail bank: “Our fundamental strategy is one of customer-centric intermediation.”
Now let’s examine it more closely: the definition of “intermediation” is accepting deposits and lending money— so, being a bank. Although being “customer-centric” is certainly not a bad thing, the bank does not have any policies or initiatives that would make this a point of differentiation. Remove the fluff from the strategy statement and you’re left with, “Our fundamental strategy is to be a bank.” It’s easy to see how such a weak “strategy” could be dangerous for any organization!
Get actionable advice on becoming more strategic in Paycor’s whitepaper, 7 Steps to Becoming an Expert Strategist.
Having a solid strategy is vital to the success of your business. Yet, executives are only spending 15% of their time on strategy. How can you free up more time to focus on strategizing, and ensure you have the data you need to fuel strategic decision-making? Paycor’s custom reporting and employee administration solutions can help. Get in touch with us to learn more.
Sources: “The perils of bad strategy” (McKinsey Quarterly, 2011), “Becoming more strategic: Three tips for any executive” (McKinsey Quarterly, 2012), “How effectively executives spend their time” (McKinsey & Company, 2011)