What is NOT strategy?

In business and management, the term ‘strategy’ has become very notorious; but unfortunately, not all the mentions come with the right meaning, associations, and interpretations. Thus, it is important to understand what strategy is not rather than only stating what it is.

First, it is important to grasp that strategy—if effective—does lead to accomplishing a long-term goal, but it is not one itself. So, the managers stating their strategy is “to become leader in certain category” are essentially confusing strategy with an objective/goal.

Second, it is tempting to attribute a business’s top position to its strategy, but Michael Porter made an important distinction between operation effectiveness and strategy by referring to the success of Japanese companies during the 1980’s (Porter, 1996). Operational effectiveness helps firms to become most cost effective and hence lead the profitability game. However, such a success is not sustainable because, over time, competitors can also achieve economies of scale, go up on the learning curve, hence, down on the cost curve.

What then is strategy?

Think of the Chess game. Your goal to checkmate your opponent, and there are several combinations of individual moves that can lead that outcome. Which move becomes activated and at what time depends on what your opponent does and how they respond to your moves. Note that in this case, you can do not decide on a particular combination and insist on playing even if, due to competitor’s choices, the combination becomes irrelevant. Instead, you have a favorite combination—or two even several—and you use them in contingencies. When you play this way, over time, some useful generalizations would surface; for example, you might come to recognize that you are a better defender/attacker.

Strategy is analogous to this; moves representing activities, checkmate representing success, and combination representing the firm strategy.

Therefore, strategy is a deliberate choice of set of activities that firm picks to perform for creating superior value for its customers either in the form of premium product, lower cost, or both. Strategy has long-term implications for the firm. Strategic decisions are either impossible or difficult to reverse. In a firm there are marketing, human resource, operations, customer, and many other forms of strategy each necessarily consistent with the overall business strategy which in turn needs to be consistent with the corporate level strategy.

Porter, M. E. (1996, December 1). What Is Strategy. Harvard Business Review.