Strategic thinking is purposeful, and one purpose is to spark strategic insights. These insights make it easier to make decisions.
This article’s proposition is that strategy involves three choices by the strategist: choice of scope, choice of objective, and choice of advantage. These choices do not constitute strategy, but answering them puts you on the course to actually having a strategy and not just a list of goals and initiatives.
What is the scope of our venture?
Scope is a term used to mean what is “in” and “out” of consideration. In other words, what is the definition of the venture? It could refer to the firm, the program, the team, or the individual.
The following sub-questions can help the strategist in partitioning and defining the scope of strategy:
- Are we thinking big, or small?
- Where is our geographic domain? Local, regional, expatriate, or global?
- When we think about the venture as a “solution provider,” to what extent do we want to produce the solution, sell the solution, and service the solution? Stated differently, what part of the value chain do we want to operate in? Are there unexploited or under-exploited opportunities to capture value?
- Is there anything that the venture explicitly won’t do?
What objective(s) do we choose to pursue?
The strategist first considers the circumstances – diagnosis – and selects an objective that best fits her diagnosis of the situation. Next, they choose an objective that is most sensible for the stakeholders.
The following sub-questions can help the strategist in identifying strategic objectives:
- How do we think about success?
- If we commit to a stretch goal, can we acquire the resources that will get us to the goal?
Critical thinking is a component of strategic thinking. Activate the logic to see if the objective is sensible.
For example, I once worked for a CEO said, “We grew revenues 35% last year, so our goal for next year is 35%.” That probably qualifies as a BHAG: a Big Hairy Audacious Goal. BHAGs can be be useful if they are based on a logic and commitment to apply resources. They can be discouraging if there is no underlying design.
Who or what are we trying to gain advantage over?
Most people have heard this joke.
Two campers come upon an angry bear. The first says, “I’m glad I wore my running shoes.” The second says, “you can’t outrun the bear.” The first says, “I don’t have to outrun the bear, I just have to outrun you.”
Sometimes it is only a small advantage that allows our success. But nevertheless, it is an advantage. Strategy is about leveraging a small advantage – and combining it with other advantages – so as to gain a more significant advantage.
Here are three sub-questions that help to identify the areas where the strategist can find advantage:
- Who are the competitors and where is their focus and power?
- What alternatives are available (including the “do nothing” alternative)?
- Is the identified advantage actually important to the customer (or other important stakeholders)?
As it pursues its objectives, the venture needs to provide something of value to its stakeholders. There are always competitive alternatives and substitutes available to these stakeholders; for customers, its other product/service offerings; for not-for-profits, it is a competition for attention for funding or policy.
These three decisions do not comprise a complete definition of strategy, but they do provide a useful framing perspective. Insights are often simple ideas that tell us about the essence of something.
As you consider your answers, consider how you would blend them together into a problem-solving or opportunity-capturing design.
Do you agree that this is a simple way to think about strategy? How can a strategist apply the questions?