What is strategy?

What is strategy? to use a simple yet powerful definition from 'The Economist', Strategy answers two basic questions: "Where do you want to go?" and "How do you want to get there?”

Traditional approaches to strategy focus on the first question. They involve selecting an attractive market, choosing a defensive strategic position, or building core competencies. Only later, if at all do companies address the second question. These types of approaches are incomplete, as they overemphasise the companies ability to analyse and predict which industries, competencies or strategic positions which will be viable and for how long, and they underemphasize the challenge of actually creating effective strategies.

Successful companies in rapidly changing markets must adopt a different perspective on strategy, one which lies in the recognition that strategy combines the questions of "Where" and "How" to create a continuing flow of temporary and shifting competitive advantages. Therefore the ability to make fast, widely supported and high quality strategic decisions on a frequent basis is the cornerstone of effective strategy. Because as Michael Dell, commented "The only constant in our business is that everything is changing. We have to be ahead of the game".

Effective decision makers create strategy by:

1. Building collective intuition that enhances the ability of the team to see threats and opportunities.

2. Stimulates quick conflict to improve the quality of the strategic thinking without sacrificing significant time.

3. Maintaining a disciplined pace that drives the decision process to a timely conclusion.

4. Defusing political behaviour that creates unproductive conflict and wasted time.

They also pay attention to innovation - related metrics such as sales from new products, time related metrics such as trends in average sales size per transaction, rates such as number of new product introductions per quarter, and durations such as the time it takes a launch a product globally.

Strategic decision making is the cornerstone of effective strategy, in high velocity competitive markets where traditional approaches to strategy give away to "competing on the edge", where strategic decision-making is the fundamental capability leading to superior performance. After all when strategy is a flow of constantly shifting competitive advantages, the choices that shape strategy matter greatly and occur frequently.