Strategies are more important than ever. As everything around us becomes more complex and the pace of change speeds up, strategies make it easier to set the framework, determine the direction and navigate effectively.
The terms strategy and strategic are mentioned at most business meetings and are widely used in a variety of contexts.
It seems as if the more we talk about strategies and the importance of thinking and acting strategically in our organizations, the more confusion there is. Discussions take place without those involved really understand the basics of what strategy is.
“One of the most common mistakes is thinking that we have a strategy, when actually, we don’t
Hence, this article presents three clarifying questions about the basics of strategy followed by our answers.
- What is a strategy?
- What are the essential elements of a strategy?
- What’s the difference between a good strategy and a bad one?
Our intention with this article is to reduce confusion. We would also like to inspire the development of strategies that are actually executed and which create tangible business value within the organization. Please keep in mind that our approach applies to strategizing in general and is not limited to IT strategies only.
What is a strategy?
If you look up the definition of strategy, what the details vary depending on which dictionary use. On general we meet two very different definitions of strategy:
- A general, long-term plan to achieve one or more goals.
- A course of action; a method.
At IT ADVISORY we define strategy as “a plan designed to achieve a long-term or overall objective under conditions of uncertainty”. This definition also says a lot about what a strategy is not.
A strategy is not a:
- Project description
- Lists of important projects and tasks
- Set of business or financial goals
- Series of statements about an organization’s mission, vision or ambitions
- Description of an organization’s values and culture
All of these elements are relevant and important in every organization, but they are not strategies. If the word strategy is used to describe the items on the list above, that will contribute to the confusion around strategic planning.
When we try to communicate what a strategy is, it is important to be aware that strategies can be about a variety of things, and a lot of the time it is a good idea to have multiple strategies that support each other. This makes it possible to ensure that individual strategies are focused, concrete and meaningful in relation to the specific problem area. In the field of IT, you can have a general IT strategy that sets out guidelines for the general direction for the organization, as well as a number of underlying strategies to set the framework for and manage categories such as cloud, sourcing, software development, and integrations.
In our other articles you can read more about the advantages of having multiple strategies as well as so-called strategic landscapes.
What are the essential elements of a strategy?
With the working definition of a strategy determined, we can go a step further and consider the content. In other words, what does a good strategy consist of?
To come up with a qualified expert assessment we lean on UCLA management professor Richard Rumelt and his book Good Strategy/Bad Strategy, which we think should be required reading for every leader who would like to work seriously with strategy. If you would like to get some quick insight, before reading the whole book, Rumelt’s article “The Perils of Bad Strategy” (published in McKinsey Quarterly) is a good place to start. Below is a condensed version of Rumelt’s principles and fundamental ideas combined with our own approach and experiences.
According to Rumelt, a good strategy has a kernel that consists of a diagnosis, a guiding policy and coherent action.
The three elements of the strategy kernel are elaborated on below.
Diagnosis: To make a diagnosis of the central challenge, it is best to look at things from a helicopter perspective. The focus is to identify the primary problem or challenge before determining the best strategy for managing or solving it. The problem is considered from multiple angles with workshops, design thinking and other measures to support that purpose. Many businesses do not devote enough resources to the diagnostic phase and there can be serious consequences. The critical challenge or problem does not get solved, and a lot of time and money is spent trying to solve the wrong problem.
Guiding policy: A guiding policy consists of the strategic choices, principles and guidelines that are in play when managing or solving the critical challenge/problem (diagnosis). Guiding policies have to be specific and clearly communicated so that they are easily understood and followed by everyone involved during strategy execution.
Coherent action: Coherent action is the coordinated step-by-step process made up of actions that carry out the guiding policies and the central challenge or problem to be solved. In this phase the strategic work becomes action-oriented and binding. Depending on the nature of the strategy, coherent action could be a list specific executable actions or priority areas that need to be broken down into operational action plans or projects.
It is important to emphasize that the kernel of a good strategy is not intended to be a process, even though it is natural to work with the three areas sequentially.
What’s the difference between a good strategy and a bad one?
We hope that by defining what a strategy is, and describing the three elements of the strategy kernel, that we have given you a better starting off point for strategic planning.
It is worth mentioning that a solid kernel of a strategy in itself is no guarantee that the strategy will succeed.
We have to tell it like it is: Strategic processes are complicated and require domain knowledge, insight into strategic tools and models, analyses and facilitation competences, understanding of human behavior and conflicts, as well as a good portion of artistic creativity.
To increase the chance of success with a given strategy, the strategic planning process must yield a strategy that is focused, concrete and meaningful.
Ultimately everyone involved will be thinking to themselves:
That’s the direction we need to go. Obviously.
You can read more about this in the article IT strategies that take people’s habits and behavior into account are more successful. Would you like to know why?
In the figure below we have summed up some of the characteristics of good and bad strategies to help you on your way.
Our Strategic Approach
Here is our take on strategy, condensed to a single figure.