What is Business Strategy

Planning and implementing business concepts with a strategy; your plan is not your strategy!

Concisely, business strategy is the set of methods that defines the corporate vision and how management decides to conduct its plans. And it’s the same set that distinguishes the business from competitors.

Strategic thinking and planning is an important assets to organizational success. Usually, businesses need to set up a plan or a set of plans as a blueprint for their operations. However, businesses should not strictly follow their plan as they need to constantly monitor and modify them for performance enhancement purposes when applicable. The laws of change enforce us to apply a “plan life cycle” system to secure competitive advantages. Accordingly, plans are derived from constant change to enhance internal performance and react to external determinants. While the strategy is the way management decides to carry out these plans (such as marketing and managing resources plans amongst others).

According to Thompson et al. (2010:7) “the heart and soul of any strategy are the actions and moves in the marketplace that managers are taking to improve the company’s financial performance, strengthen its long-term competitive position, and gain a competitive edge over rivals.” Accordingly, senior managers should invest and devote most of their time to finding solutions on how to grow the business, outstand rivals, enhance operations, and perform competently with a foreseen market’s change pace. Being a market leader requires lots of thinking and then implementation. As Bonn (2001:65) noted “strategy is about ideas and the development of novel solutions to create competitive advantage. Strategic thinkers must search for new approaches and envision better ways of doing things.” Thinking becomes the main asset in directing or driving the business vehicle.

Strategic management should be thinking and searching for opportunities. According to Jeffry and Stephen (2007: 118) an opportunity is that which adds a significant value to customers, satisfies their needs, creates new demands, grants potential profit margins and growth, and fits with the position and timing of the marketplace. Opportunities can not be derived from routine and mechanical operations and procedures. Often we will need to drift away in order to think of something new or realize new opportunities.

Keep in mind that the dynamics of the external environment or marketplace are constantly changing in which new opportunities are created and some of the old ones are disregarded. As Jeffry and Stephen (2007: 118) stated “In a free market system, changing circumstances, chaos, confusion, inconsistencies, lags or leads, knowledge and information gaps, and a variety of other vacuums in an industry or market spawn opportunities.” And that is one of the reasons why companies invest in their R & D teams; to constantly think of the next best thing.

According to Cynthia (2003) “business strategy requires skills in thinking creatively as well as analytically.” Strategic management development should facilitate creativity and strengthen the conceptual skills that are critical to success, “transferring ideas from a non-business context to the realm of business strategy; results in enhanced understanding of concepts, more effective ways of communicating, and the invention of entirely new approaches.” (Cynthia, 2003)

According to David (1994) “The source of sustainable competitive advantage is likely to be found in different places at different points in time in different industries.” Let us take a look at the IBM case; IBM has transformed itself from primarily a computer hardware provider to a broad-based supplier of information technology services, solutions, and on-demand capabilities; shifting the company’s management strategy to revolve around customer needs. As Harreld, O’Reilly and Tushman (2006) stated “Palmisano’s On Demand Business campaign is taking the next step by transforming IBM from a set of conventional silos (e.g., hardware, software, and services) to an integrated structure oriented around providing solutions to customer needs.”

IBM management adopted three mechanisms which are: emerging business opportunities, corporate investment funds, and strategic leadership forms to solve major strategic problems. Note that lots of businesses realize and state in their strategies such mechanisms but yet they are not as successful as IBM. According to Harreld, O’Reilly and Tushman (2006) “What is different about the IBM approach is that they have an integrated set of mechanisms to both sense and seize opportunities. This allows the firm to consider trends in markets and technology, identify issues that are relevant to customers, examine them in detail, and reconfigure assets to address these.” But what also makes a difference is the execution of the strategy which is as important as the strategy itself.

IBM strategy making is a continual process instead of annual which is driven by line management based on the realities of the marketplace as noted in performance and opportunity gaps. “It has changed the role of the strategy group from that of a critic to a partner in fixing problems — and one that is aligned with general managers in identifying future problems and opportunities for the company.” (Harreld, O’Reilly and Tushman: 2006)

Note that competing industries may respond with a better solution or strategy, consequently, first movers will lose that particular competitive position but they in turn should be looking for new endorsements; continuous cycles of endorsements are necessary to maintain success. I have come to agree with Porter’s new set of management rules (1996) “companies must be flexible to respond rapidly to competitive and market changes. They must benchmark continuously to achieve best practices. They must outsource aggressively to gain efficiency. And they must nurture a few core competencies in the race to stay ahead of rivals.”

I believe that enduringly successful businesses are those which manage to succeed in every course cycle of the market’s change or evolution. According to Thukral et al. (2006) “opportunity recognition is, however, a necessary but not sufficient condition for success. Many strategists in firms recognize opportunity but far fewer recognize the pathways to capitalize on this knowledge.” For that, what matters the most is the pathway not only the gateway.

“Like crafting strategy, executing strategy is a job for the whole management team, not just a few senior managers.” (Thompson et al., 2010: 328) most firms do not seem to take this statement seriously. The organization should involve its entire members; “Plans need to include not only methods for informing employees about what managers expect of them, but also methods to enable employees to express their concerns and needs for successful implementation.” (Torrington et al., 2008: 69) employees’ participation methods will increase their loyalty and responsibility for new implementations and facilitate forwarding their behaviors and activities.

In brief, strategy is the path for business plans. For example, one of Coca-Cola's marketing strategies is to associate its products with consumers' daily lives and emotional experiences (cognitive marketing). Thus, they PLAN their marketing campaigns around this concept or STRATEGY.

References:

Bonn, I. (2001) ‘Developing strategic thinking as a core competency [Online]. Available from: https://elearning.uol.ohecampus.com/bbcswebdav/institution/UKL1/MBA/CRPSTR/Wk1/CRPSTR_Wk1_Developing_Strategic_Thinking.pdf (Accessed on November 7, 2009)

Cynthia, W. (2003) ‘ Out of Context: Using Metaphor to Encourage Creative Thinking in Strategic Management Courses’, Journal of Management Education, 27 (3), pp. 323–345, Sage [Online]. DOI: 10.1177/1052562903027003004 (Accessed: November 8, 2009)

David, J. (1994) Research Note: How Valuable Are Organizational Capabilities?’, Strategic Management Journal, 15 (8), JSTOR [Online]. Available from: https://www.jstor.org.ezproxy.liv.ac.uk/stable/2486815 (Accessed: November 13, 2009)

Harreld, J.,O’Reilly, A. and Tushman, L. (2006) ‘Dynamic Capabilities at IBM: Driving Strategy into Action’ [Online]. Available from: https://www.exed.hbs.edu/assets/dynamic-capabilities.pdf (Accessed: November 13, 2009)

Jeffry A., Stephen S. (2007) new venture creation: entrepreneurship for the 21st century. New York: McGraw-Hill/Irwin.

Porter, E. (1996) ‘What is Strategy’ [Online]. Available from: https://elearning.uol.ohecampus.com/bbcswebdav/institution/UKL1/MBA/CRPSTR/Wk3/CRPSTR_Wk3_what_is_strategy.pdf (Accessed: November 23, 2009)

Thompson et al. (2010) Crafting and Executing Strategy: The Quest for Competitive Advantage, Concepts and Cases. 17th ed. New York: McGraw-Hill.

Thukral et al. (2008) ‘ Entrepreneurship, Emerging Technologies, Emerging markets’, International Small Business Journal, 26 (1), pp. 101–118, Sage [Online]. DOI: 10.1177/0266242607084656 (Accessed: November 23, 2009)