what is strategy?

disrobing some of the mystery of strategy for non-executive staff and small business owners.

Wondering what “strategy” is all about? ?

This article will help as an open and (reasonably) simplified exposé of strategy .

why are you here?

Perhaps it is because your organisation, like many others, struggles to effectively communicate the strategy to staff, or maybe you're not entirely clear on what strategy entails, even though you're expected to contribute to its success.

This lack of communication and transparency is a common reason for strategies not meeting their objectives. If you have a different purpose for being here, please let me know so I can adjust the content accordingly.

But, before we dive in, please take a quick moment to reflect on your current understanding of strategy. On a scale of 1, meaning 'no idea,' to 10, signifying 'extremely proficient,' consider your own self-rating. You don't need to share it now, but you're welcome to do so later if you wish.

the half-naked truth about strategy!

Strategy without a purpose is as pointless as an empty fishbowl. It may be nice, clean, even shiny but it just exists, sitting on a shelf, taking up space, vacant, achieving nothing of value, and certainly not a place to belong. The purpose of the organisation is what provides meaning. Strategy can only be effective when it aligns with this purpose and integrated within the organisational culture.

In essence, it all comes down to the 'why' and the 'how' of what we do.

Purpose represents the why, and strategy embodies the how.

purpose:

All organisations consist of individuals collaborating toward a common goal. This purpose is typically conveyed through various published statements, including the vision statement (for the medium to long term), the mission statement (for the short term), and a set of organisational values.

Together the vision, mission and values represent the broad parameters of an organisational odyssey. Driven by the guidance of the why we exist, the purpose, also considers the interconnected questions of who we are, what we value, where we make a difference, how we interact and by when to we hope to get there.?

strategy:

Purpose and strategy collaborate to shape the organisational journey. Purpose outlines the general scope and strategy acts as the map for the quest. Strategy is the guide path and the 'how'. Its purpose is to achieve the purpose of the organisation. As the guiding force, strategy and the 'how' also considers the interconnected questions of who, what, where, and when through the three main components of strategy being advantage, objectives, and the journey.

• advantage: Competitive advantage or strategic differentiation is a vital element in achieving strategic success. The core principle of marketing philosophy is to fulfill objectives by meeting customer needs and desires. In essence, the concept of competitive advantage entails providing something valuable to your customers in a manner that sets you apart from competitors. As stated by Michael Porter, one of the most influential strategists, "Strategy involves making choices; it's a deliberate decision to be distinctive." and “competitive strategy… means deliberately choosing a different set of activities to deliver a unique mix of value.” Competitive advantage encompasses the strategic choices you make, defining how you will compete and what you will avoid. It's equally about what not to do as it is about what to do. Organisations must decide where to direct their focus, and in alignment with their purpose set clear objectives.
• objectives: The strategic objectives of an organisation serve as goal posts and a performance gauge. Typically, organisations employ a mix of financial (e.g., revenue, profit, returns) and non-financial objectives (e.g., customer loyalty, employee satisfaction, staff turnover). Recently, there has been a heightened emphasis on environmental, sustainable and socially responsible non-financial objectives. The smart organisations understand the influence of these non-financial objectives in achieving the financial objectives. Forward-thinking organisations choose a blend of financial and non-financial objectives, incorporating both leading (future-oriented) and lagging (historical reflection) objectives. In accordance with the longer-term vision and shorter-term mission, objectives are typically established for a strategic horizon (often spanning 3-5 years) and undergo annual review during the business planning process, typically aligned with the financial year.

• journey: The framework for the strategic journey consists of both formation and implementation. At perple - people performance pty ltd (perple), we utilise the OPEN framework to delineate the four phases of this journey: organisational analysis, planning, embarking, and navigating. The first two phases encompass strategy formation, while the latter two involve implementation.

formation: this is the "thinking" part of the strategic journey.

• organisational analysis: This phase involves assessing and analysing the internal and external factors, risks, environments, and stakeholders (including competition) that influence the organisation's strategic direction, including strengths, weaknesses, opportunities, and threats, both current and future.
• planning: In this phase, strategic goals, objectives, drivers, action plans and responsibilities are formulated based on the insights gained from the organisational analysis. This involves defining the desired future state and identifying the steps required to achieve it.

implementation: this is the "doing" part of strategy. Sometimes also the rethinking and redoing parts.

• embarking: This phase marks the launch of the strategic implementation process. It involves communication, facilitating understanding, allocating resources, and mobilising the necessary actions to initiate the strategic initiatives and tactics identified during the planning phase.
• navigating: This phase entails actively managing, reviewing, and adapting the strategic journey as the organisation progresses. It involves monitoring the implementation progress, evaluating performance, and making necessary adjustments to risks, challenges, and changes along the way. Through the OPEN strategic journey framework, perple emphasizes a holistic approach to strategy, highlighting the ongoing nature of this journey and the significance of each stage.

strategy is a never-ending story:

Every story and journey has a beginning a middle and an end, just like chapters in a book. However, strategy does not always work in a linear fashion and is actually an ongoing story, where the end of the final chapter is like the beginning of the next sequel. The journey has measurement, feedback, and review channels within, to allow organisation to adapt. Just like a yacht navigating the open seas in a story may have to change direction to either avoid an oncoming storm or exploit more favourable winds.

strategy & risk:

Strategy and risk are closely related yet distinct aspects of business. Think of them as non-identical twins in a family.

risk:

Risk management systems in organisations are designed to monitor, manage, and mitigate various types of risks, considering factors such as the likelihood and impact of specific events. Risks consider both the internal and external environments encompassing categories like financial, regulatory, reputational, and technological risks.

At the board level, risk is addressed through a Risk Appetite Statement (RAS), which directors collectively agree upon to outline the organisation's stance on different risk categories. The enterprise-level Risk Management system is then developed based on the RAS, delving into specific risk classifications, and assigning risk responsibilities to the executive team and functional areas.

strategic risk:

This is the risk of not achieving the strategy, (hence the purpose) of the organisation. It is usually aligned to the achievement of strategic objectives; however, it should consider all three components being the strategic advantage, objectives, and journey. In fact, based on the large, amassed research on why strategies fail, perple, would argue that one of the biggest strategic risks for an organisation is the actual strategic journey they choose, specifically the lack of transparency, inclusion, diversity, and equity within both the strategic objectives and the strategy formation and implementation frameworks.

why are there so many strategies?

There is a multitude of different 'strategies' circulating in the business universe. Below is a word cloud I swiftly generated, though it's far from an exhaustive list.

To clarify, the central focus revolves around the overarching strategy for the organisation, commonly known as the group, organisational, corporate, or business strategy. In larger organisations, the probability of various 'other' strategies existing increases. These can encompass strategies for business subsidiaries, distinct functional areas (e.g., acquisition strategy, foreign exchange strategy, diversity strategy, etc.), and different components of the marketing mix, including products/services, pricing, distribution, promotion, people, process, and physical environment. All these 'other' strategies should align with 'how' the individual teams contribute to the group strategy's purpose and strategy.

where do I strategically fit in?

Now, let's dive into the most crucial piece of this strategic puzzle: you.

Where exactly do you fit in?

If we step back for a moment and review, every organisation has a reason for its existence - a purpose, a vision, or a mission. These are guided by a set of principles of interaction and values. From this vision of the future, organisations craft a strategy to navigate towards their desired destination. This strategy is forged through the lens of competitive advantage, with a set of objectives and a process for formulation and implementation. Moreover, every organisation comprises various teams - subsidiaries, business units, or specialized functional areas, all contributing to the strategy and governance of the overarching vision. Team objectives and business plans detail how each team bolsters these efforts.

Each team, in turn, is a collective of individuals, just like you. Everyone has a role to play in the collective purpose, strategy, and risk priorities of the organisation. Good organisations ensure that teams align with the group strategy through their objectives. This alignment cascades to individual roles, meaning your job should harmonise with the purpose, strategy, and risk priorities of the organisation. Oftentimes, it is when this alignment is lacking, that individuals may feel their personal purpose is at odds with the organisation's.

why "half-naked" strategy?

perple was born with a vision to openly enable a new inclusive global strategic paradigm. Our vision, mission, and values guides our own competitive strategy, which we demonstrated through our unique blending of strategy + inclusion (strategic inclusion) and combination of open strategy, strategic risk, organisational alignment, proactive flexibility, and open sharing.?

We believe that the key to the alignment of people, purpose, and performance for both individuals and organisations alike is a more transparent, inclusive, diverse, and equitable method of developing strategy and purposeful belonging. That’s why we put this together to openly disrobe some of the strategic mystery.

We can't completely uncover all the mysteries in such a short period hence the "half-naked" title. Now that you’ve spent the last five minutes or so with me, I want you to think again how you would rate your understanding of strategy now from 1 “no idea” to 10 “extremely proficient”?

If this article has assisted a better understanding of strategy then please share with other likeminded individuals, friends and colleagues who could benefit from understanding how we strategic-ally belong.?

Cheers,

john myers

founding director

perple - people performance pty ltd

Sydney, Australia

LinkedIn Links:

Read: perple Stratistics (Strategic Inclusion): Why Strategies (don't have to) fail?

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#strategy #strategicinclusion #halfnakedstrategy #smallbusiness #whatistrategy Natalie MacDonald