Thinking Paper #3

WHAT IS A STRATEGY ANYWAY?

Increasingly in these turbulent times of globalization and flattening (Friedman, 2005) you here the cry for strategy.  Leaders need a better strategy.  Organizations need to be more focused on strategy.  Some enterprises are even forming a Strategy Management Office (SMO) to better manage and execute their strategies.  Well, just what is a strategy, anyway?

Tregoe and Zimmerman (1980) define strategy as the framework which guides those choices that determine the nature and direction of an organization.  They see strategic thinking as having two critical facets: (1) what the organization wants to be, and (2) how it should get there.

In their 1991 book, Thinking Strategically, Avinash and Nalebuff relate strategic thinking to game theory.  A game is a situation of strategic interdependence: the outcome of your choices (strategies) depends upon the choices of another person or persons acting purposively.  For example, think about playing a game of Chinese checkers.

Probably the best principles and practices for aligning strategies is outlined by Kaplan and Norton (2005), in their book, Strategy Maps.  Building on their prior work on Balanced Scorecards, they break strategy formation into four perspectives of frames: (1) financial, (2) customer, (3) internal, and (4) learning and growth.

In the Financial Perspective, you answer this framing question: "If we succeed, how will we look to our shareholders?"  For public sector and non-profit organizations, the framing question is slightly different: "If we succeed, how will we look to our taxpayers (or donors)?"

In the Customer Perspective or frame, you address this question: "To achieve our vision, how must we look to our customers?"

For the Internal Perspective, the focus is on answering, "To satisfy our customers, which processes must we excel at?"

Lastly, in the Learning and Growth Perspective, you address this question, "To achieve our vision, how must our organization learn and improve?"

Together, these four perspectives form a system to better align efforts and balance conflicts.  Initially, at least, you also need a healthy dose of transformational leadership to implement strategy mapping.

REFERENCES

Dixit, Avinash K., and Nalebuff, Barry J.  (1991).  Thinking Strategically: The Competitive Edge in Business, Politics, and Everyday Life.  New York: Norton.

Friedman, Thomas L.  (2005).  The World Is Flat: A Brief History of the Twenty-First Century.  New York: Farrar, Straus and Giroux.

Kaplan, Robert S., and Norton, David P.  (2004).  Strategy Maps: Converting Intangible Assets into Tangible Outcomes.  Cambridge, MA: Harvard Business School Press.

Tregoe, Benjamin B., & Zimmerman, John W.  (1980).  Top Management Strategy: What It Is and How to Make It Work. New York: Simon and Schuster.