Types of Strategy

In building business strategies, there is no one method. The most common approach of developing a strategic vision, then trying to work out how to reach that vision, is just one of a number of alternative views of strategy.

The textbook approach to developing strategy uses a simple approach - Where are we today? Where do we want to be tomorrow? How are we going to get from here to there. 

In practice, at any point in time, few companies can answer these questions directly. Looking at the business today, who are your customers and what do they think of you and really want you to deliver? Who are and how do you compare to your competitors? Where is the real value added in your supply chain, and the most margin available? What are real internal competences and where is there serious business vulnerability? What does "the company" mean to staff and employees and how do they feel about the organisation? Where is the market going in terms of technology and growth?

Where does the company want to be is a question of that "vision-thing". Often the "vision" is little more than a financial goal say "to double the size of the company." But what are the key trends in your marketplace? What are the likely technology enablers and barriers (and who is developing these technologies)? Where are the competitive threats coming from and how are the rules changing in your sector or industry?

The question of how, is then a question of allocating resources to face the challenges that exist between today and tomorrow, and in deciding in what order to make changes to reach the final goal. Far simpler to say in a sentence, than to do in reality. Do you buy in? What do you invest in? Do you wait and see what technologies emerge? Do you takeover other businesses?

In fast-changing markets, this textbook approach is all very well, but what happens if two weeks into the new strategy, your two biggest competitors merge or the stock market crashes or an unknown start-up introduces some revolutionary new technology into your market, or there is a major safety scare.

One test of a good vision is therefore that it is resilient and purposeful. Far better to have a vision that is a more radical statement of intent, for instance "Our vision is to make the keyboard a thing of the past", than a vision based on projections from the here and now, or that rely on the views of one person. Such an approach gives you a differentiation, a sense of direction and changes the sorts of questions you ask and the way in which you think.

Even with a resilient, purposeful vision, the second problem that occurs is that companies play an all or nothing game with their strategy "Our technology X will dominate the world for keyboard-less computers". If it doesn't what are you left with. Far better is to take a portfolio approach investing a little in everything. Even if you "know" technology X will happen some day, the winning combination is very rarely predictable. Better then to invest a lot of possible winners (including competitors) on the basis that something will win, we don't quite know what, but we have to be there when the winner starts to pull ahead. This can also be extended to an "invest in your threats" approach.

And of course, in pursuing one strategy it shouldn't be such that eyes are closed to other opportunities. Man didn't launch into space with the specific objective of testing a non-stick material for pans, nor were CDs the most obvious spin-off from laser technologies.

An alternative approach to the traditional textbook way of viewing strategy as moving from here to there, is to see strategy as a process of evolution. Here, a company is in a symbiotic state with the market and customers. As markets and customers change, the company has to adjust. Change becomes an essential part of a company's culture because if you can't change or adjust, customers will leave.

So for a company to remain aligned with the customers, it has to continually test and probe with new ideas, seeing which work and which don't, adjust investment as necessary, spin-off new ventures, work with and invest in the competition, refine and adjust processes and continually ask "stupid" questions of itself.

Here is a simple thought experiment (a stupid question). We are told customers buy benefits not features, solutions not technology, services not products. If your company was to give away the products it makes for  "free", how would it make money?

And if you think it is a stupid question - consider mobile phones and satellite TV where the product (handset or decoder) is free.