The four objectives of strategy

Ralph Fernando Agile Strategy, Book, Opinion Leave a Comment

What is the purpose of a “strategy”? Academics, management gurus and practitioners have spent decades debating the term, but ultimately strategy serves four objectives:

1. Set Direction

Strategy lifts the organisation’s collective head to focus on its longer-term future, beyond its near-term tactical and operational imperatives. This requires understanding and insight – both of the organisation and of the markets in which it operates.

This consideration of the future has one driving purpose: to set the organisation’s direction. This is sometimes misinterpreted as creating a purely aspirational future for the organisation. In practice, the focus should be on how to extend your current organisation into future opportunities – creating the bridge from the “here and now” to the “there and then”.

2. Create meaning

Setting direction is, in itself, not enough. Strategy requires purpose and context to engage, inspire and enable people to make the right choices consistently.

This “unifying purpose” creates meaning for stakeholders both within and outside the organisation enabling, for example, staff to relate their work to an organisation’s broader goals, and customers to engage with brands whose values, principles and self-image match their own.

3. Determine choices and actions

The consequences of setting direction and creating meaning find their ultimate expression in the choices and actions of individuals and teams across the organisation. All strategy is ultimately about choices – choosing both what to do and what not to do.

4. Create value

All the above are simply means to strategy’s ultimate end:  the creation of value, which is typically achieved in one of seven ways:

WHERE YOU PLAY

  1. Market selection/creation: Operating in attractive markets
  2. Value chain: Determining which part of the market’s value chain you serve
  3. Channel selection: Participating in the right channels
  4. Customer selection: Targeting the right customers

HOW YOU WIN

  1. Positioning: Positioning the offer and execution in the minds of the customer to create appeal
  2. Proposition: An offer that outshines the competition
  3. Performance: Superior execution through operational advantages

If this feels reductive, it is intentionally so. Strategy is a gritty and fundamental element of the business. As well as being commercially astute, strategy must be financially and operationally literate – considering the implications of key choices on the overall organisation.

This article originally appeared in the British Airways “Up to speed” magazine.

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