What is Strategy?

Most business books say you must follow a strategy.
Few actually spell out what a strategy is.

Strategy is simply the key success factors that mean you reach or miss your goals.
To think of your strategy start with active verbs and statements of urgency, for example: we must, it is essential that, we have to, there must be….

The smartest author on strategy is Michael Porter of Harvard University. Anything he writes is worth learning. Porter has summarized strategy as a matter of choices. However – and this is the main point – strategy isn’t what you do. It’s what you don’t do.

You can’t be all things to all customers, so you have to choose.

Porter says the essence of strategy is the position your products or organization seizes in the market. To position yourself is to choose activities that are different from your rivals.

The three strategic positions are:

1. Offering a variety of products or services to your target customers. (one-stop shopping, for example). A lawyer I know markets his firm as the one providing “all the law your business needs.”
2. Serving all or most of the needs of a group of customers or segment of the market. TravelCUTS is a world-class Canadian-based travel company that dominates the student traveler market.
3. Segmenting customers who are accessible in different ways (focusing on a region or providing a service on the Web, e.g. Porter mentions a successful US chain of small-town movie theaters. The company avoids head-to-head competition with the big chains that compete in major markets.

Make your priorities clear

A successful strategy is only sustainable if your organization makes trade-offs: more of one thing means less of another. It is inefficient to refuse to trade off. By choosing to compete one way and not another, you make your priorities clear.

A discount airline, for instance, needs to provide limited passenger service (no meals or seat assignments), with a high utilization of aircraft, highly productive ramp crews, and frequent, reliable departures on short routes from secondary airports. The airline’s procurement, training, maintenance, and other functions all must fit together to support the strategy.

Lock out your competitors

With a strategic position and strategy, companies or any organization can focus on combining activities that support the strategy. Fitting all your firm’s or organization’s activities together defends your strategic position in the marketplace and locks out your competitors.

As you grow, strategy becomes more important because bigger investments are at stake and compete for attention. If you don’t have a strategy, as the futurist Alvin Toffler said, you become part of someone else’s strategy.

To find out more about our strategy services, call Marc Zwelling at 416.733.2320.