On Strategy: Part 1, definitions.

It is Friday, so here I am again with another post.

I have spent this week reading about strategy, and while there is still a lot to cover, this week I focused only on its definition. For this purpose, I consulted a handful of books, articles and podcasts (I provide the full list of them at the end of the post).

What I will be doing here is sharing with you a summary of those definitions, and next week I will attempt to deconstruct a couple of personal and professional past objectives or plans by applying the learned definitions and decide whether, according to these, they were a strategy or not.

What is Strategy

My favourite of all consulted materials is the book “Good Strategy, Bad Strategy” by Richard Rumelt, so you will see more quotes from him than anyone else.

He says that:

“A strategy is a way through a difficulty, an approach to overcoming an obstacle, a response to a challenge. If the challenge is not defined, it is difficult or impossible to assess the quality of the strategy”, R. Rumelt.

He goes onto saying that for a strategy to be a good one, it has to always have three elements which he calls the strategy kernel. There may be others, but if one of these three is missing, then the strategy is incomplete or bad.

The first of these elements is a diagnosis that defines or explains the nature of the challenge that needs to be addressed.

In the book Strategic Storytelling Dave McKinsey deconstructs techniques that consulting firms use to create persuasive business strategy presentations.

Similarly, he finds that the first step taken in this consulting work is a definition of the problem with an understanding of the impact and an assessment of it that indicates whether it can be addressed by the key decision maker. Again, a problem needs to be identified.

Bob Caporale says: “a strategy is a plan to achieve a goal”. In his book, Creative Strategy Generation, he argues that:

“Many people believe that strategy begins with a vision. While this is an important part of a strategy, your vision is usually derived from a base motivation or an overarching reason for wanting to make something happen in the first place. This base motivation is where your strategy ultimately begins”.

When you read further you realize that this motivation might as well be Rumelt’s diagnosis, and McKinsey’s problem, because before getting started you need to have a reason to get started, or you will do a bad job. This reason can be a change in your reality that you want to modify, a request by someone that is important for you to satisfy, a promising opportunity you don’t want to miss.

This element is also found in the book Product Leadership where, in the context of product strategy, it is emphasised that one cannot start with features, but with the bigger problem and why it needs to be solved. There was not much of value in the rest of this book in the topic, and there were, in fact, a few problems with how they talked about strategy according to the “Bad Strategy” section of Rumelt’s work.

For example, they make a subtle reference to time when talking about strategy: “four or five or six things that are going to be accomplished during the year”, which indicates that strategy for them are things done in that time span. But consider these words by Rumelt (again, my favorite:)):

“Opportunities, challenges and changes don’t come along in nice annual packages. The need for true strategy work is episodic, not necessarily annual”.

Moving on with other authors.

In Inspired, Marty Cagan defines product strategy as a “sequence of products or releases we plan to deliver on the path to realizing the product vision”. He suggests that teams build their strategy around a series of product-market fits.

If we all agree that a product-market fit is pretty much a target group (market) that we have validated gets significant value from our product as to choose it over other competitors, we can infer from this that a product strategy by this definition, also needs a diagnosis of the need or problem that this target group needs satisfying. That is what gets us to design the product, right?

Until here we have an element that defines strategy: a problem or challenge to overcome, or an opportunity or motivation driving us forward.

Next is the element of coherent action, of coordination.

“A strategy coordinates action to address a specific challenge”.

“Strategy is about action, about doing something. The kernel of a strategy must contain action (…). To have punch, actions should coordinate and build upon one another, focusing organizational energy”, R. Rumelt.

Rumelt argues that decentralized decision-making doesn’t do everything and may fail when cost and benefits are not directly held by the actors. Coordination or centralized decision-making helps in these situations that would otherwise result in pursuing unrelated challenges, or create conflict. But coordination goes against specialization so this should only be used when the benefits are high.

What confuses me about this is that I read everywhere that the difference between success and not is on having a strategy, and in designing a strategy one is required to make a handful of centralized decisions, so how can this be used sometimes only? Or what is being said here is that this type of approach is applicable to business always, but not to other forms of human organizations like countries? Which is why CEOs are not elected but appointed unlike Presidents of democratic countries?

But that’s a problem for another time.

Continuing with the definitions, and going back to Marty Cagan’s Inspired, there he talked about 5 product strategy principles found in “good” strategies, and 3 of those 5 make clear reference to alignment and synchronization among the different parts of a business.

Principle 3: “Product strategy needs to be aligned with sales and go-to-market strategy”.

I also read the HBR article What is Strategy?, by Michael E. Porter. He defined it as: “…the creation of a unique and valuable position, involving a different set of activities.”

He describe how is “fit” of one activity on the other that builds up a chain, and it is this chain what makes a strategy, and by extension, a company competitive and sustainable. This fit is what I interpret as Rumelt’s coherence.

“In all three types of fit, the whole matters more than any individual part. Competitive advantage grows out of the entire system of activities. The fit among activities substantially reduces cost or increases differentiation. Beyond that, the competitive value of individual activities-or the associated skills, competencies, or resources-cannot be decoupled from the system or the strategy.”, Michael E. Porter.

Des Traynor and Paul Adams talk about Product Strategy being a part of or deriving from the company strategy, and from this we can also infer coherence. Or how a product positioning while carried out by marketing, and product strategy by the product team, are closely intertwined, so if we expand this to the company strategy, while different, the activities of these different business functions must be interrelated and support one another.

Up until this point we have two elements: a problem or motivation, and a set of coordinated actions.

Let’s move to the final: focus, or what we say NO to.

Rummelt says that “a good strategy works by harnessing power and applying it where it will have the greatest effect”. Focus to Rumelt is one of several fundamental sources of power used in good strategy. He says that at the core strategy is about focus, but companies tend to “pursue multiple goals at once, not concentrating enough resources to achieve a breakthrough in any of them”.

On this element, Martin Cagan says that “the product vision should be inspiring, and the product strategy should be focused”.

In a similar way, Porter explains that when choosing a unique strategic position, companies make trade-offs with other positions. These trade-offs are naturally imposed when choosing one position over another, because each of them requires activities with specific skill sets, management styles, resources, even behaviours that differ from the other. Trying to ignore these trade-offs results in ineffectiveness for the business, or in the lost of trust of customers who will be put off by the inconsistency.

Imagine a toddlers yoga trainer now having to teach yoga to the parents, not really knowing how to deal with adults, but being great with kids. Now the space, which fits 15 toddlers barely fits half that number of parents. The skill set of this person is not being properly used, just like the space, and most parents probably will feel stupid or uncomfortable with a teacher that keeps making references to the ABC and cartoon characters during the class. A completely different thing would be a yoga class for parents with their kids, but that is why we have to know what we are solving. And in this example, who are we solving for.

Now, here is an important differentiation that Porter makes along his article starting from his opening argument: operational effectiveness is not the same as having a strategy, but both are important.

“While operational effectiveness is about achieving excellence in individual activities, or functions, strategy is about combining activities”, Michael E. Porter.

Combining all these elements into a single definition, I get to this:

A strategy is a plan to overcome a challenge or take on an opportunity, by focusing power on a set of coordinated actions within a system whose existence and motivation derives from that challenge or opportunity.

Simple, hu? 🙂

Next week, I will attempt to reverse engineer a couple of personal and professional old plans or objectives and apply these definition to see if they met it.

For now, I leave you with full list of the materials I consulted in case you want to check them out:

• Book (Goodreads link): Inspired: How to Create Tech Products Customers Love by Marty Cagan
• Book (Goodreads link): Creative Strategy Generation: Using Passion and Creativity to Compose Business Strategies That Inspire Action and Growth by Bob Caporale
• Podcast Episode (Google Podcasts): Dear Strategy 100: What Is a Strategy? by Bob Caporale
• Book (Goodreads link): Strategic Storytelling: How to Create Persuasive Business Presentations by Dave McKinsey
• Article (HBR link): What Is Strategy? by Michael E. Porter
• Book (Goodreads link): Good Strategy/Bad Strategy: The difference and why it matters by Richard P. Rumelt
• Podcast Episode (Google Podcasts): Intercom on Product, The intersection of company and product strategy , by Des Traynor and Paul Adams.

Happy Friday,
Maria 🌺

Originally published at https://marialasprilla.wordpress.com on November 29, 2019.