Strategy is a word that has prestige. Being a strategic thinker is often a key step on the way to the C-suite. For the marketer, it can separate you from the pack.

If you put the word "strategic" in front of almost any other term—such as strategic thinking or strategic analysis—it sounds more impressive. Considering the importance of strategy to most organizations and CEOs , consultancies that are known for strategy (such as McKinsey & Co., Bain, and Boston Consulting Group) command high regard in the marketplace—as well as a price premium (read: high billable rates).

Yet what's interesting about the word "strategy" is that there is no universal, agreed-upon definition. Many pundits, academics, and business people define it differently, with some definitions overly complex and convoluted, while others consisting of a simple checklist.

My aim in this article is to define some of the general parameters of strategy and attempt to put some sort of working definition around it in relation to terms such as "goal" and "objective."

Most marketers understand the power of words—fretting over a definition and its connotations and denotations is serious business, make no mistake.

Define Your Terms

It's been said that over 50% of all competitive debates are definitional debates. In other words, it's all about defining your terms. In general, the most powerful definition is the one that is conventional vs. a dictionary definition of some sort. Nevertheless, it's always interesting to see how various dictionaries define a particular term.

Two definitions of the word strategy on are a good segue into its derivation or etymology:

  • The science and art of using all the forces of a nation to execute approved plans as effectively as possible during peace or war

  • The science and art of military command as applied to the overall planning and conduct of large-scale combat operations

Given the military flavor of the definitions above, it's not surprising that the word strategy comes from the Greek word strategia or strategos, which means "generalship" or the "art of the general."

Since there is no one definition of strategy, the dictionary definition above is not enough, especially for use in the business arena. To synthesize a more comprehensive definition of strategy, I will review the following:

  1. The origins or roots of business strategy

  2. A brief history of strategy in the business world

  3. How numerous strategists and institutions define strategy

  4. A strategic question set

I'll end with some foundational questions that all companies should ask themselves, and a synopsis of this article.

The Roots of Business Strategy

Military historians and strategists have been studying and defining strategy for centuries.

You can't begin a discussion of strategy without mentioning the famous general Sun-Tzu. He lived in northeastern China about 2,500 years ago and was considered an expert in military strategy due to his many victories on the battlefield. Sun-Tzu defined 13 principles (each one a chapter) in his enduring book, The Art of War, which has often been acclaimed as the authoritative work on military strategies and tactics for its time.

Key concepts in the book include the following:

  • Developing plans

  • Developing strategies

  • Developing tactics and maneuvers

  • Attacking weak points and leveraging strengths

  • Using reconnaissance and spies

Sun-Tzu postulated some general principles of strategy that have stood the test of time and have been utilized by numerous business executives and managers in crafting strategy. Similar to Generally Accepted Accounting Principles or GAAP, the widely accepted accounting standards used to standardize financial accounting of public companies, there is quite a bit of discretion in how the principles are applied. Sun-Tzu's principles are still applicable today as they are a general guide for strategists to follow, not strategy du jour.

Another well-known military strategist was Carl von Clausewitz, the famous Prussian general and the person often termed the father of modern strategic study. Clausewitz defined strategy as "the employment of battles to gain the end of war." A key principle, which I'll discuss further, is that there is an end or goal in mind and the strategy is a way to reach a desired state. In fact, a well-known military model for strategy revolves around the "ends," "ways," and "means" triumvirate, which I'll discuss in more depth later in the article.

A Brief History of Strategy in the Business World1

Strategic planning and a focus on strategy began to take some shape in the 1940s and '50s with Alfred Chandler and Peter Drucker. In Drucker's 1946 book, Concepts of the Corporation, he analyzed and wrote about not only General Motors but also General Electric, IBM, and Sears Roebuck. A key theme identified by Drucker was that the best companies had a centralized planning function and were good at goal-setting. He also highlighted (one of the first to do so) that the purpose of a business is to satisfy customer needs.

There were a number of influential events and thinkers during the 1960s, many of them in the marketing arena. Theodore Levitt's famous Harvard Business Review article, "Marketing Myopia," put a new perspective or lens on corporate strategy and re-visioning the business function. H. Igor Ansoff's 1965 book, Corporate Strategy, outlined a highly detailed road map for planning a firm's objectives, growth plan, and product-market positions, among other areas.

In the 1970s some influential work was carried out by Henry Mintzberg and Ansoff, but it was the 1980s that two writers emerged who have had a deep impact on the concept of strategy: Kenichi Ohmae and Michael Porter (both strategists are discussed in subsequent sections of this article).

The late 1980s and 1990s, Gary Hamel and C.K. Prahalad, two academic/consultants out of the University of Michigan, wrote about core competencies and companies' collective learning abilities. During the same period, other authors revisited corporate strategy in terms of looking at how a parent company could feed, mentor, and care for its operating companies.

During the late 1990s and early 2000s, the dot-com frenzy offered creative, strategic variants around building beachheads, monetizing "eyeballs," and the replacement of bricks with clicks. It was all about new, innovative business models and the creation of low asset-intensity cost structures via the Internet.

After the dot-bomb, however, many thinkers began to revisit and revive the tried-and-tested approaches to strategy. It was evident that the fundamental "laws" of business had not changed.

Strategy According to Keniche Ohmae

Keniche Ohmae's 1982 book, The Mind of the Strategist: The Art of Japanese Business, is a far-reaching tome that illustrates the power and persuasion of combining rigorous strategic analysis, healthy intuition, and unabashed willpower in striving for global dominance.

The ex-McKinsey partner and Ph.D.-trained nuclear engineer puts forward a highly structured approach to "doing" strategy. Key concepts in his 1982 book include the following:

  • Key factors for success

  • Initial and rival hypotheses

  • Constraint analysis

  • The profit equation

  • Building company, customer, and competitive-based strategies

Keniche is fond of tree charts and decomposition and illustrates that strategy is all about creating and vetting options to reach various end states or goals. He asks a fundamental question for any strategist: "What does success look like?"

Ohmae's operating principles for a strategist are timeless:

  • Dichotomous thinker—strategists need to be flexible in their thinking, not binary, and be open to creating "strategic degrees of freedom."

  • Perils of perfectionism—there is no perfect strategy or information; the strategist is always bounded in some way.

  • Keeping details in perspective—the 80-20 principle has stood the test of time as it forces the strategist to look for the key drivers or levers to any problem.

  • Focus on key factors—many issues and industries can be distilled down to a fundamental equation of some sort. For example, banking is all about the interest spread between the cost of funds (e.g., demand deposits) for the bank and the cost of funds for their customers (e.g., interest rate for a loan).

Strategy According to Treacy and Wiersma

Treacy and Wiersma wrote the 1995 best-seller The Discipline of Market Leaders. The main premise of the book is that companies can achieve a leadership position by narrowing their business focus, which has been promulgated by various strategists in terms of "sticking to one's knitting" or focusing on the core business. The authors identified three "value-disciplines" that can form the basis for one's strategy:

  1. Operational excellence: Think of Wal-Mart and its supply chain capabilities and focus on everyday low prices.

  2. Customer intimacy: Think of insurance giant USAA, with its intense focus on the customer and its roots in successfully serving the military community.

  3. Product leadership: Think of the Medtronic and its drive to develop innovative and life-saving medical technologies and devices.

Although each company is likely to have some competencies in each of the value-disciplines, one is usually primary, because each has a different set of requirements. In today's world of shorter product lifecycles and better operational analytics, more and more companies are primarily focused on customer intimacy.

Witness the inexorable rise of customer relationship management (CRM) software and strategies across a multitude of industries. There also seems to be a greater focus on customer loyalty and lifetime value metrics, which are key measures for the customer-intimacy approach.

Strategy According to Michael Porter

Michael Porter, the noted strategist out of Harvard Business School, is world renowned for his work on competitive strategy, which is focused on competitive differentiation and positioning.

In Porter's well-known 1996 Harvard Business Review article "What is Strategy," he wrote that competitive strategy "means deliberately choosing a different set of activities to deliver a unique mix of value." Porter added that "the essence of strategy is in the activities—choosing to perform activities differently or to perform different activities than rivals." According to Porter, competitive strategy is about differentiating your company in the eyes of the customer and about adding value through a unique configuration of activities that is different from your competitors'.

Porter also has some insightful thoughts as to why so many companies fail to have a strategy. "Although external changes can be the problem," Porter points out, "the greater threat to strategy often comes from within. A sound strategy is undermined by a misguided view of competition, by organizational failures, and, especially by the desire to grow." Porter ends his article by highlighting the power and necessity of making trade-offs. The strategic agenda demands discipline and decisions, not compromise and confusion.

Porter also developed a strategy model around generic competitive strategies (see figure 1).

In his 1980 best-seller Competitive Strategy: Techniques for Analyzing Industries and Competitors, Porter simplified a previous model and distilled it down to the three best strategies: (1) cost leadership, (2) differentiation, and (3) market segmentation (or niche/focus). The niche or focus strategy is relatively narrow in scope, whereas both cost leadership and differentiation are relatively broad in market scope. Like most parsimonious models, you can add nuance and depth to the model by tiering each area in terms of high, medium, or low or by using some other scheme.

Strategy According to the Army (A Strategy Function)

Although developing a strategy is not an algorithmic exercise per se, there are certain anchor points for crafting some sort of strategic function or equation. A function that the military uses is depicted below:

Strategy = f(ends + ways + means)*

f: function
Ends: goal or objective (the desired or goal state)
Ways: the various options or approaches to reach the ends
Means: the resources, programs, or instruments utilized in the "way" to achieve the ends

* Arthur F. Lykke, Jr.'s Army War College strategy model

As you think about crafting a strategy or helping a team develop one, the strategy model is a good bridge to begin the dialogue and discussion (see figure 2 for a graphical depiction). The key questions are axiomatic:

  • What are the ends that you're trying to achieve?

  • What are the various ways to reach your ends?

  • What means can you utilize in executing the way to reach your ends?

As simple as the strategy function appears, however, it is important to remember that complexity results from combinations of simple elements. For example, all colors can be created from RGB (or red, green, and blue combinations). The genetic information of every animal is built from four nucleic acid bases.

In other words, the nuance and complexities of strategy can result when you have numerous ends, a multitude of viable ways, and various means, with each combination having an intertwining bundle of costs, benefits, and risks.

Defining Strategy

Per the title of this article, and in synthesizing the various strategy perspectives as outlined above, there are a number of key characteristics in defining strategy:

  • A "way" to close a gap using certain "means"

  • A system or pattern of unique activities, actions, or tactics aligned to a purpose

  • A clear focus or position that involves trade-offs

  • A "how" to achieve a "what" (goal or objective)

  • The path, the course, the approach, the route to achieve some "ends"

  • A "what-if" perspective (all angles; comprehensive and holistic)

  • A general framework to accomplish something

Strategy has all of those characteristics and more. It is a composite concept that encompasses various ideas, perspectives, and approaches. As working definitions, however, the strategic equation and question set can help you to put it into action, along with having an operationalized set of metrics in which to measure, monitor, and track progress.

The Strategic Question Set

If strategy is all about how (the way) to get from where you are today to where you want to be in the future, then it's obvious that the strategic question set (as depicted in figure 3) comes up quite often in making business decisions. The strategy decision is analogous to deciding on the way to get from point A to point B—do you take a plane, train, automobile or boat, for example.

To reiterate, a prerequisite to crafting a credible strategy is having a clear understanding of your desired or goal state.

A goal is a general statement about where you want to be in the future. An objective is a more specific type of goal and is typically defined with measurable parameters. The idea of having SMART (Specific, Measurable, Achievable, Realistic, and Time-stamped) objectives is a ubiquitous concept in the business world. It should be unmistakable as to whether you have met an objective.

The strategic question set is not a "rocket science" concept to understand. The hard work is in the analysis, the synthesis, and the gaining of alignment with all the stakeholders, along with the issue of effectively executing on the strategic intent, vision, and plan.

Marketing Strategy

Developing a marketing strategy uses all of the tools, concepts, and definitions described above. Marketing has various ends or objectives that are relevant to its efforts, such as increasing market share, improving customer loyalty, or effectively launching new offerings. The marketing strategy is generally embedded within or subsumed under the larger corporate or competitive strategy, but it nonetheless is a strategic plan to achieve some sort of objective or end.

In an article about the meaning of strategy, Fred Nickols, a consultant, writes that "No amount of strategizing or strategic planning will compensate for the absence of a clear and widespread understanding of the ends sought."

In the tenth edition of his well-known textbook, Marketing Management, Phillip Kotler, after discussing how to set marketing objectives, outlines some key areas of a marketing strategy:

  • Target market
  • Positioning
  • Product line
  • Price
  • Distribution
  • Sales force
  • Service
  • Promotions
  • Advertising
  • R&D
  • Marketing research

The key areas that Kotler delineates fit well with the following definition: A marketing strategy outlines the way in which the marketing mix (the means) is used to attract and satisfy (the ends) the target market.

In the process of defining the ends and vetting the ways, there is a whole set of activities around outlining a mission and vision, conducting a situation analysis, and creating tactics (actions) to execute on the strategy.

There is a plethora of material to read on how to develop a solid marketing strategy or a strategic marketing plan, but the fundamental bedrock will always go back to the essence of good strategy, which is this:

  1. A clear and cogent articulation of the ends sought

  2. A rigorous analysis and synthesis of the various ways to reach the ends

  3. And a thoughtful presentation of the means that you can bring to bear in executing on the chosen way

It is important to note that a strategy should not be static; it is a dynamic process that involves continually scanning the environment and becoming fluent in the situational triggers that would suggest a change or adaptation. Thinking strategically is often like playing mental chess in terms of continually evaluating the landscape and making beneficial trade-offs or creative sacrifices to win the "game."

Some Foundational Questions

Whatever your definition of strategy is, the best companies continually ask the hard questions regarding their goals, objectives, strategies and actions. It is often the simple sounding questions as written out below that are among the most difficult for a company to answer. Successful firms, however, do not "hide" from them and continually attempt to answer the questions in a thoughtful and deliberate manner.

  • Corporate strategy:
  • What is your business?
  • What business should you be in?
  • What business do your customers think you are in?
  • Who is your customer?
  • What is of value to your customer?
  • Competitive strategy:
  • On what basis will you compete?
  • What is your growth strategy?
  • What product or services should you offer?
  • Why do customers buy your offerings versus a competitor?
  • Where are your customers migrating?
  • What competencies and capabilities will you need to satisfy your future customer?
  • What is your alliance/partner strategy and footprint?
  • How is your industry changing?
  • What are your competitors doing to leapfrog you?
  • What will you do to leapfrog your competitors?

Putting It All Together

This article is intended to stimulate some critical thinking and provide an outline for understanding and dissecting strategy. To reiterate, strategy is both simple and complex, with many nuances and layers underlying the "way" to achieve an objective.

As Harry R. Yarger writes in a U.S. Army college monograph titled Strategic Theory for the 21st Century: The Little Book on Big Strategy, "Strategy is neither simple nor easy, but the good strategist seeks to express the logic of strategy in the simplest, clearest terms." Yarger continues by noting the following:

Strategy assumes that while the future cannot be predicted, the strategic environment can be studied, assessed, and, to varying degrees, anticipated and manipulated.... Thus good strategy seeks to influence and shape the future environment as opposed to merely reacting to it.... Strategists must think holistically—that is, comprehensively. They must be cognizant of both the "big picture," their own organization's capabilities and resources, and the impact of their actions on the whole of the environment. Good strategy is never developed piecemeal or in isolation.

Lastly, as important as analysis is to developing a good strategy, synthesizing the disparate data elements is often the hardest part. Quoting an unconventional war games strategist, Malcolm Gladwell writes in Blink: "If you get too caught up in the production of information, you drown in the data.... You disaggregate everything and tear it apart, but you are never able to synthesize the whole."

Developing a strategy is like a lot of things that we do: It's rarely a black-or-white effort and is often built on the back of a moving target.

1 The section is adapted from The Financial Times Guide to Strategy by Richard Koch (2nd Ed.)

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Michael Perla is Sr. director & life sciences people leader, Business Value Services, at Salesforce.

LinkedIn: Michael Perla