What is strategy?

I shall not today attempt further to define the kinds of material I understand to be embraced within hard-core pornography, but I know it when I see it.
— Justice Potter Stewart – Jacobellis v. Ohio, 378 U.S. 184, 1964

The first hurdle I came across when I set out to research how strategists developed their skills and competencies was – what is strategy? If I couldn’t pinpoint what was strategy, how could I identify those involved as strategists?

We use the word strategy, actually we over-use the word, on a daily basis. What strategy is, and what it isn’t, has become confused to say the least. It is called: strategic planning, strategic management, strategy process, strategy formulation, strategy-as-practice, strategic thinking, strategic decision making, strategic implementation, strategic cognition and just plain strategy to name a few.

Adding to the confusion, every plan now has the word strategic put in front of it such as Strategic HR plan, Strategic Review, Strategic staffroom notice board reorganisation… In this sense the word strategic is simply being used to attract attention just in case management fails to allocate it time or money! The word strategy gets their attention even though the majority appear to know little of the subject while professing to be experts.

I won’t go into the actual definitions I employed for my research, as they were bound in the context of an academic research exercise, but for practical purposes, I believe all uses and derivations of the word strategy should be dumped apart from two:

  • Strategy – which refers to our planned actions, whether written down or not. (Emergent strategy, which I covered in my last blog, is therefore actually an oxymoronic term!)
  • Strategic management – the important concept which refers to the end-to-end process of managing strategy.

Your strategy is, therefore, a small part of your organisations overall strategic management process. It’s that simple. Everything else within your organisation isn’t strategic, it’s operational. Strategic management is about your direction of travel, everything else metaphorically makes your boat go faster. IT (remembering system follows process - always) will never be strategic unless your organisation is in the IT industry.

So, what is strategic management?

I learnt early in my research travels that academics do not agree on anything and there isn’t an agreed definition of strategic management. The following one, from within mainstream strategic management research, I found simple and sensible:

Strategic management can be defined as the formulation, implementation, and evaluation of managerial actions that enhance the value of a business enterprise.
— Teece (1990 cited in Nag, Hambrick, & Chen, 2007)

The traditional model that I use when teaching is below.

SM Process2.jpg

Your organisations strategy is a step in this iterative process but it is not an outcome itself. As one participant in my research wisely commented - Strategy stops with an outcome. If you don’t get the outcome it’s not really a strategy. Strategy that can’t be implemented isn’t a strategy.

To take the conversation to a slightly deeper level (I will cover the philosophical aspects of strategic management in the future), it is important to realise that this definition of strategic management is part of what is called “the dominant strategic management paradigm”. This view of strategic management relies heavily on military style thinking of command and control (Whittington, 2001), complemented by a strong influence from the field of economics (Rumelt, Schendel, & Teece, 1991).

In a series of distinct steps, a strategy, grounded in the economic theory that individuals are rational and act to maximise benefits for themselves, is formulated by those in command, promulgated through the organisational chain of command and executed by operational managers (Mintzberg et al., 1998a). The following definition of the dominant strategic management paradigm has been taken from Clegg et al. (2011)

Top-down control systems orientated towards performance as the means of achieving the overarching aim of whatever goals have been specified by top management. The stress is on practices that are held to be efficient and effective, using the rhetorical devices and the environmental modelling associated with orientations to financial and market performance, stakeholders and customer service. Efficiency and effectiveness serve as justifications for whatever human, organizational and environmental consequences ensue.

I think it’s important we understand strategic management in this light. If we apply it unthinkingly, it is a perspective and approach that uses strong neoliberalistic assumptions (see Other Side Consulting for more in this area) and primarily privileges financial matters over people. People are usually absent except as assets to be employed or disposed of as required. By understanding this limitation we can, however, still use it as a valuable tool but in a humanistic way that allows us to focus on intangible human outcomes as well as financial ones. Strategic management as a tool is neither good nor bad, it is how we, as managers, use it.

A question that I loved to pose to my MBA students (before my colleague and I were nudged aside for insisting on maintaining educational standards) was:

Is strategic management focused on getting an organisation to the future, the people in the organisation to the future, or both?