There is a semantic problem with the word ‘strategy’ –  it is one of the most overused but unfortunately rather vaguely defined words.  It is rare to find any two people who use it in the same way.  The consequences are disastrous.

 

95% of the typical workforce does not understand the strategy – Fortune Magazine

70% of CEO failures come not as a result of poor strategy, but of poor execution – Fortune Magazine

Only 1 in 10 companies successfully implement their strategy – Paul Niven

 

 

So what is strategy? I remember one company claiming: „Our strategy is to become number 1 in the market“.  That’s is not a strategy!  This is a goal – nothing more, nothing less.

Most companies are not successful because they don’t articulate their strategy clearly.  In many cases, the strategy is regarded as confidential, so will not be communicated to employees – only the top management should know what the strategy is!  That is not really the best way to get staff aligned, inspired, all working together towards a common goal and achieving success. On top of this, companies these days have a rather short-term view, being way too focused on the next quarter as well as shareholders’ expectations.  So it is hardly possible to articulate a strategy that would survive in the long term.

But where does the problem come from?   Why is it so difficult to articulate a strategy?

In popular language, the word ‘strategy’ is often used improperly instead of ‘tactics’.  But unlike tactics, strategy has long-term connotation:  the strategy is meant to be durable and not changing very often.  So if you are rather thinking short-term, the word ‘tactics’ would probably be the better word to use.  But nobody does.  Maybe because tactics has a background in the military as well as a negative connotation.

This is confirmed from a quick check in the dictionary.  According to the Collins English Language Dictionary, tactics are “the method that you use in order to achieve what you want when dealing with other people”.  This sounds manipulative.  Collins says that it is similar in meaning with stratagem and ploy.  According to Collins, another definition of ‘tactics’ is “the ways in which troops and military equipment are positioned and used in order to try to win a battle”.  So that’s why people use the word “tactics” so little: it does not sound particularly positive.  The Cambridge Dictionary of English also emphasises that ‘tactical’ has local impact, unlike strategy that is more like a grander plan: the example given is that “tactical weapons are for use over short distances and, especially in the case of nuclear weapons, have a local effect only.”

So once more, what is strategy?   If ‘tactics’ are short-term and local, strategy must be long-term and global. Going back to Collins: “a strategy is a plan you adopt in order to get something done, especially in politics, economics, or business”.  This sounds a bit like tactics, but without the idea of manipulating people.  Cambridge is a little more precise: “a detailed plan for achieving success in situations such as war, politics, business, industry or sport.”

All in all, these definitions remain rather general and vague.

So we had to look for another source.  We were lucky to find better explanations in a book from Robert Kaplan and David Norton, the fathers of the balanced scorecard.  The book is entitled “Strategy Maps: converting intangible assets into tangible outcomes”, published in 2004 by Harvard Business School Press.  Strategy maps is really the stage that is taking place before balance scorecard:  it is about describing strategies before these can be measured, and as a result, managed.

Kaplan and Norton’s definition is simple: “an organisation’s strategy describes how it intends to create value for its shareholders, customers, and citizens”.  However they observe that “no two organizations think about strategy in the same way”.  They go on to say “we found little help on a holistic framework from the prevailing wisdom of management thought leaders.  Strategic doctrines existed around shareholder value, customer management, process management, quality, core capabilities, innovation, human resources, information technology, organizational design, and learning.  While each provides deep insights, none provides a comprehensive and integrated view for describing a strategy.  Even Michael Porter’s approach, based in positioning for competitive advantage, does not provide a general representation of strategy…. A generally accepted way to describe strategy did not exist”.

They go on as follows: “Consider the consequences.  Without a comprehensive description of strategy, executives cannot easily communicate the strategy among themselves or to their employees.  Without a shared understanding of the strategy, executives cannot create alignment around it.  And, without alignment, executives cannot implement their new strategy for the changed environment…”

Kaplan and Norton go on to explain how strategy maps work.  Essentially, strategy maps describe how the organisation creates value.   The value creation takes place as follows:

STRATEGY

↑

Financial Perspective

↑

Customer perspective

↑

Internal perspective

↑

Learning and growth perspective

Financial perspective:  If we success, how will we look to our shareholders?
Customer perspective: To achieve our vision, how much we look to our customers?
Internal perspective: To satisfy our customers, which processes must we excel at?
Learning and Growth perspective:  To achieve our vision, how must our organisation learn and improve?

“Strategy Maps” is a really good book: buy a copy and read it, then you will know everything you need to know to articulate and describe your company’s strategy.