To kick start the strategy theme of this blog, I want to begin by going right back to basics, with the question: What is strategy?
The word “strategy” is rooted in a military origin. Strategy describes the method in which the enemy should be engaged. Some examples of military strategies include:
- flanking manoeuvres
- attrition warfare
- air superiority
These are all methods that position the body of troops during armed conflicts. After the battle has begun, a military general will then switch his focus to tactics to ensure victory. Tactics could include the weapons selected or the even the timing of sending troops over the top. Tactics, therefore, describe the exact execution of a plan but avoid the bigger picture.
The military language of strategy has been translated over time into business terminology with many terms interchanged; e.g. troops for resources and enemies for market competitors. This military analogy can be helpful in describing where strategy fits in.
A Modern Definition of Strategy
A great quote describing a modern definition of strategy goes as follows:
Strategy is the craft of figuring out which purposes are both worth pursuing and capable of being accomplished.
Rumelt implies that strategy details the goals one intends to achieve. This, however, does not encapsulate the exact path needed to achieve these goals, a clear distinction between strategy and tactics. The most common goal of a business is to create value for its shareholders (in the form of profit) and to its customers (through the delivery of products or services). Strategy defines the route a company will take to achieve this, while tactics are the actual actions taken to achieve this.
At the start of any business venture, a vision is created. To deliver on this vision, a strategy stating how the company engages the market must be laid out, followed by tactics describing the specific actions the company will take. Strategy and tactics, therefore, “bridge the gap” between a vision and the delivery of that vision.
Corporate strategy takes a slightly more narrow focus than just strategy. In a modern business context, corporate strategy defines how a company will achieve its aims. It defines the companies position and perspective, reflecting decisions to offer particular products or services in chosen markets.
Although company’s departments/businesses often work independently, it is the corporate strategy which ensures that there is no conflict between these individual’s actions with regards to the overall direction of the organisation.
Corporate strategy is defined as:
- How to achieve its goals.
- Where the company positions itself in the market
- The pattern of decisions that a company makes over time
Often corporate strategy and business strategy are used interchangeably. Corporate strategy tends to refer to multiple businesses all falling under one umbrella corporation; referring to the position of the corporation, looking outward into the market. Business strategy, on the other hand, tends to describe the strategy of small businesses, making functional decisions such as how the business differentiates itself or lowers costs.