What is Business Strategy: Basic Ways to Think About The Big Picture
February 7, 2023
6 min read
Strategy in business is the big picture. It is about picking goals for the enterprise and then figuring out what resources are going to be assembled to achieve those goals.
In order to discuss strategy development and implementation, we need to have a good idea about the various disciplines and functions that go into running a business. Now that you know how to drive the proverbial car, we need to think about where we want to go.
Etymology of Strategy
Etymology is the study of the origins of words and how their meaning has evolved over time.
The English word Strategy comes from the Greek στρατηγία which is pronounced stratēgia. In ancient Greek it means the “art of troop leader; office of general, command, generalship”. It was originally a military term.
The English word strategy comes from the Greek στρατηγία which is pronounced stratēgia, meaning “a general,” which in turn comes from roots meaning “army” and “lead.” The concept of strategy has always been tied up with leadership activities.
The Greek verb form means “to plan the destruction of one’s enemies through effective use of resources.” Many terms related to strategy like: objectives, mission, strengths, and weaknesses, were also developed through military usage.
Business is similar to military operations in many ways. In business we are looking to achieve goals through the effective use of resources, and we are looking to outperform competitors.
Strategy has to do with the view from the top of the organization and how it functions in its external environment. The external environment is made up of customers, competitors, and regulations.
Strategy is what leaders partake in developing, implementing, and monitoring. In a corporation it is the process that the C level executives plan and present to the Board of Directors for their approval. Then the CEO, COO, CFO and others get to work executing on that approved strategic plan.
The Board, and the shareholders or owners, then judge the executives on their ability to perform relative to the plan. That’s why they are called executives. Their job is to execute the plan.
There is an old saying:
Plan the work, and work the plan.
This is strategy.
Strategy is the practice of developing and executing a well thought out and detailed plan to achieve the goals of the enterprise. Strategy takes into account that the planning process is done under conditions of uncertainty and limited resources. You plan based on how your best guess of how the future will unfold and then you course correct as you encounter unanticipated events, circumstances, and obstacles.
Strategy is comprehensive. It takes the marshaling of all the resources at one’s disposal and directing them toward a defined goal while navigating through a landscape fraught with obstacles.
Strategy is used in many realms besides business. It is an important skill set anywhere that long range thinking and planning can be valuable. Remember: if you don’t know where you are going, you may not get there.
Some important areas that rely on strategy are:
• War and military operations
Taking the time and effort to formulate strategy is important because the resources available to achieve the goals we set are always limited. It is our responsibility to allocate and use those resources in the most productive manner possible.
Strategy involves setting goals, determining actions to achieve the goals, and mobilizing resources to execute the actions. It also takes into account whether the organization has the appropriate skills and abilities to achieve the proposed objectives.
A strategy describes how the ends, the goals, will be achieved by the means, the resources available.
Strategic planning begins as intentional. It is planned. But we are working with imperfect knowledge when planning and must acknowledge that strategy will emerge and change as the organization confronts its competition and adapts to its environment. These are the two different types of strategy:
· Intentional: which is the plan that then becomes implemented
· Emergent: the changes and course corrections and adaptations that are developed in response to encounters with the world.
Strategy is a general term for a set of activities. It involves activities such as strategic thinking, strategic planning, strategic implementation, the measurement of results, and course corrections. These steps are interconnected and repeat in a continuous cycle as the organization acts and evolves. This process is called Strategic Management.
Management of the strategic process also entails communicating the strategy throughout the organization and analyzing and implementing feedback. Strategy drives tactics, and tactics inform strategy.
The terms tactics and strategy are often used interchangeably but are two distinct phases of the process of leading an organization. Tactics are the actual means used to achieve a goal. Strategy is the overall plan of which tactics and resources to deploy.
A business strategy is based on a set of guiding principles for the organization usually outlined in the mission statement. These principles are communicated and form the criteria for organizational decision-making in the tactical stage.
Strategy forms the criteria for the alignment of all the day-to-day decisions that are made within an organization.
Strategy informs people throughout an organization on making decisions and allocating resources in order accomplish key objectives. Strategy is the roadmap. It sets guardrails for the actions people in the business should take, and the things they should prioritize to achieve desired goals.
Strategy also defines what the business is not. This helps people in the organization know what not to do and what not to prioritize.
Great Reads on Strategy
There is a rich literature on strategy and strategic thinking and there are lots of fascinating books on the subject. Some classics are:
• Art of War by Sun Tzu
• On War by Von Clausewitz
• The Prince by Niccolo Machiavelli
And some recent business strategy classics are:
• Blue Ocean Strategy by W. Chan Kim and Renee Mauborgne
• Competitive Strategy by Michael Porter
Mind of the Strategist bt Kenichi Ohmae
SWOT is an acronym for Strengths, Weaknesses, Opportunities and Threats. It is a popular and quick study undertaken to identify internal strengths and weaknesses, as well as its external opportunities and threats. They are laid out in a 2x2 matrix.
Also internal resources and capabilities need to be taken into account when doing a SWOT analysis.
Check out my MBA ASAP podcast episode with Brenner Adams and his “So What” template. Brenner had the great idea of rearranging the boxes in the 2x2 SWOT matrix to make the analysis better linked to implementation.
Share this post
Author, Entrepreneur, & Teacher
Receive my 7 day email course
Take your finance skills to the next level with my 7-day corporate finance email course. You'll learn all the essential topics from financial analysis to risk management in a fun, engaging format. Each day, you'll receive an email with practical examples, exercises and resources. Perfect for aspiring finance pros or anyone looking to expand their knowledge. Get ready to transform your finance game!
Thank you! Your submission has been received!
Oops! Something went wrong while submitting the form.
If you like this article. Here are some more articles I think you might like.