What is Strategy?

Introduction

“For every action, there is an equal and opposite reaction.” Newton’s Law of Motion is one of the cornerstones of Physics. But it has parallels in strategy execution and benefits realisation, as nothing operates in isolation. Given that strategy is the means of delivering an organisation’s vision and value proposition, there needs to be a seismic change if organisations are going to arrest the systemic lacklustre performance in successful strategy execution. In 2020, Bridges Business Consultancy International found that only 52% of organisations successfully achieved their strategic objectives. Unfortunately, 48% are still falling short.

Nonetheless, existing and evolving new technologies have, and will continue, to introduce a new dynamic to strategy execution. The integrated relationship between strategy, culture and execution is shifting, particularly with emerging technologies. If the adoption of current technologies is anything to go by, the next 10 to 20 years will see rapid changes, particularly once the digitalisation of society is complete. 

However, with digitalisation, organisations need to inevitably learn how to disrupt and drive continuous improvement or alternatively, learn how to be disrupted by others regardless of industry or sector. It’s about learning to establish a difference that organisations can preserve. Organisations must deliver their value proposition to customers or create comparable value at a lower cost, or learn to do both.

Being Different

It’s important to understand the concept of strategy and what it actually means since everyone has their own interpretation. Strategy typically involves setting organisational goals and priorities, determining actions to achieve those goals and mobilising available resources to successfully execute those actions. Harvard Business School Professor, Michael E. Porter, widely accepted definition of strategy, on the other hand, is the deliberate “choice to perform activities differently, or to perform different activities, better than market competitors” in the delivery of the organisation’s value proposition.

 A critical element of strategy is also the integrated relationship with benefit management to achieve what is known as “a clear line of sight’ in the successful delivery of strategic objectives through benefits realisation. More specifically, it is the extent to which both financial and non-financial benefits exceed the resources required to actually realise those stated strategic objectives (i.e. organisational goals and priorities) and value proposition.

A value proposition is a critical concept in strategy as it convinces a potential customer why your product or service will be of more value to them than similar offerings from your competition. In this context, strategy is the creation of a unique value proposition, involving a different set of activities. As such, a competitive strategy using digital technology is simply about being different. It is about making wise capital investment decisions to optimise the balanced scorecard segments of financial (competitive advantage), learning and growth, internal processes and customer relationships and then implementing with discipline and follow through. 

Where this struggles to occur, strategy becomes nothing more than an advert of a marketing campaign. Successful strategy execution is not the most important thing; it’s the only thing! As such, organisations that fall short of business model transmogrification towards continuous service improvement and innovation will likely face a future impacted by digital disruption.

The Yardstick for Strategy Execution

The yardstick measure for successful strategy execution, based on the Strategy Implementation Institute guidance, is the achievement of more than two-thirds of your organisation’s strategic objectives. However, this measure needs to be placed into perspective of strategy cadence or the rate at which strategic objectives are implemented and, most importantly, communicated and measured.

 Since what is measured relates to what is actually achieved in reality. Cadence is also another important concept in strategy as it enables organisations to create a sustainable rhythm of business activity. It enables organisations to balance the two critical elements of exploitation (or the organisation’s capability to exploit existing competencies) and exploration (or the organisation’s ability to simultaneously explore new opportunities).

 Many organisations are adept at refining their current offerings (i.e. running the organisation), but stall when it comes to innovating new value streams through radical new product and service offerings (i.e. changing the organisation).

 As such, ambidextrous organisations encompass two profoundly different types of business offerings. That is, those focused on exploiting existing capabilities for profit and those focused on exploring new opportunities for growth. To do this, successful organisations rely on hidden assets like resources or capabilities that are yet to be fully capitalised. The importance of an organisation’s overlooked, undervalued and/or underutilised assets to its strategic regeneration cannot be overstated.

Sense of Urgency

The sense of urgency to explore new opportunities and implement new strategies is different in each sector or industry and largely determined by the extent of digital disruption to the rhythm of their business activities. It is also influenced by culture, market, competition and customer characteristics. The three strategy cadences that organisations typically use are either slow (more than 5 years), medium (3 to 5 years) or fast (less than 3 years).

 In this context, it’s important to note the distinction between traditional and digital organisations. The former are those that primarily focus on products and services (e.g. think Blockbuster) to achieve their strategic objectives using a slow or medium strategy cadence While, digital organisations (e.g. think Netflix) are those that focus on projects as ecosystems and platforms to solve multiple customer problems at once do so using a fast strategy cadence. 

However, what is achieved, and by when, in terms of customers’ needs, is a crucial success factor in successful strategy implementation underpinned by a balanced scorecard and integrated strategy map. From an organisational perspective, “what is achieved” refers to benefits realisation and return on investment, since any investment not delivered effectively, or if they are delivered late, will inevitably have an adverse impact on strategy implementation.

References

1. Strategy Implementation Institute, United Kingdom. [2021]. “Strategy Implementation Body of Knowledge."

2. Harvard Business Review. [1996]. “What is Strategy?"

3. London Business School. [2014]. “Organisational ambidexterity - Understanding an ambidextrous organisation is one thing, making it a reality is another.”

4. Bridges Business Consultancy International.[2020]. “20-Year Results From Surveying Strategy Implementation.”