Strategy: Definitions and Meaning

© Fred Nickols 2000

Abstract

The concept of strategy has been borrowed from the military and adapted for
use in business. A review of what noted writers about business strategy have
to say suggests that adopting the concept was easy because the adaptation
required has been modest. In business, as in the military, strategy bridges
the gap between policy and tactics. Together, strategy and tactics bridge the
gap between ends and means. This paper reviews various definitions of
strategy for the purpose of clarifying the concept and placing it in context. The
author's aim is to make the concepts of policy, strategy, tactics, ends, and
means more useful to those who concern themselves with these matters..

Some Language Basics

Strategy is a term that comes from the Greek strategia, meaning

"generalship." In the military, strategy often refers to maneuvering troops into
position before the enemy is actually engaged. In this sense, strategy refers
to the deployment of troops. Once the enemy has been engaged, attention
shifts to tactics. Here, the employment of troops is central. Substitute
"resources" for troops and the transfer of the concept to the business world
begins to take form.

Strategy also refers to the means by which policy is effected, accounting for
Clauswitz’ famous statement that war is the continuation of political relations
via other means. Given the centuries-old military origins of strategy, it seems
sensible to begin our examination of strategy with the military view. For that,
there is no better source than B. H. Liddell Hart.

Strategy According to B. H. Liddell Hart

In his book, Strategy [1], Liddell Hart examines wars and battles from the time
of the ancient Greeks through World War II. He concludes that Clausewitz’
definition of strategy as "the art of the employment of battles as a means to
gain the object of war" is seriously flawed in that this view of strategy intrudes
upon policy and makes battle the only means of achieving strategic ends.
Liddell Hart observes that Clausewitz later acknowledged these flaws and
then points to what he views as a wiser definition of strategy set forth by
Moltke: "the practical adaptation of the means placed at a general’s disposal
to the attainment of the object in view." In Moltke's formulation, military
strategy is clearly a means to political ends.

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Concluding his review of wars, policy, strategy and tactics, Liddell Hart arrives
at this short definition of strategy: "the art of distributing and applying military
means to fulfil the ends of policy." Deleting the word "military" from Liddell
Hart’s definition makes it easy to export the concept of strategy to the
business world. That brings us to one of the people considered by many to be
the father of strategic planning in the business world: George Steiner.

Strategy According to George Steiner

George Steiner, a professor of management and one of the founders of The

California Management Review, is generally considered a key figure in the
origins and development of strategic planning. His book, Strategic Planning
[2], is close to being a bible on the subject. Yet, Steiner does not bother to
define strategy except in the notes at the end of his book. There, he notes
that strategy entered the management literature as a way of referring to what
one did to counter a competitor’s actual or predicted moves. Steiner also
points out in his notes that there is very little agreement as to the meaning of
strategy in the business world. Some of the definitions in use to which Steiner
pointed include the following:

 Strategy is that which top management does that is of great

importance to the organization.
 Strategy refers to basic directional decisions, that is, to purposes and
missions.
 Strategy consists of the important actions necessary to realize these
directions.
 Strategy answers the question: What should the organization be
doing?
 Strategy answers the question: What are the ends we seek and how
should we achieve them?

Steiner was writing in 1979, at roughly the mid-point of the rise of strategic
planning. Perhaps the confusion surrounding strategy contributed to the
demise of strategic planning in the late 1980s. The rise and subsequent fall of
strategic planning brings us to Henry Mintzberg.

Strategy According to Henry Mintzberg

Henry Mintzberg, in his 1994 book, The Rise and Fall of Strategic Planning
[3], points out that people use "strategy" in several different ways, the most
common being these four:

1. Strategy is a plan, a "how," a means of getting from here to there.

2. Strategy is a pattern in actions over time; for example, a company
that regularly markets very expensive products is using a "high end"
strategy.
3. Strategy is position; that is, it reflects decisions to offer particular
products or services in particular markets.
4. Strategy is perspective, that is, vision and direction.

Mintzberg argues that strategy emerges over time as intentions collide with

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and accommodate a changing reality. Thus, one might start with a
perspective and conclude that it calls for a certain position, which is to be
achieved by way of a carefully crafted plan, with the eventual outcome and
strategy reflected in a pattern evident in decisions and actions over time. This
pattern in decisions and actions defines what Mintzberg called "realized" or
emergent strategy.

Mintzberg’s typology has support in the earlier writings of others concerned

with strategy in the business world, most notably, Kenneth Andrews, a
Harvard Business School professor and for many years editor of the Harvard
Business Review.

Strategy According to Kenneth Andrews

Kenneth Andrews presents this lengthy definition of strategy in his book, The
Concept of Corporate Strategy [4]:

"Corporate strategy is the pattern [italics added] of decisions in a company

that determines and reveals its objectives, purposes, or goals, produces the
principal policies and plans for achieving those goals, and defines the range
of business the company is to pursue, the kind of economic and human
organization it is or intends to be, and the nature of the economic and non-
economic contribution it intends to make to its shareholders, employees,
customers, and communities. (pp.18-19)."

Andrew’s definition obviously anticipates Mintzberg’s attention to pattern,

plan, and perspective. Andrews also draws a distinction between "corporate
strategy," which determines the businesses in which a company will compete,
and "business strategy," which defines the basis of competition for a given
business. Thus, he also anticipated "position" as a form of strategy. Strategy
as the basis for competition brings us to another Harvard Business School
professor, Michael Porter, the undisputed guru of competitive strategy.

Strategy According to Michael Porter

In a 1996 Harvard Business Review article [5] and in an earlier book [6],
Porter argues that competitive strategy is "about being different." He adds, "It
means deliberately choosing a different set of activities to deliver a unique
mix of value." In short, Porter argues that strategy is about competitive
position, about differentiating yourself in the eyes of the customer, about
adding value through a mix of activities different from those used by
competitors. In his earlier book, Porter defines competitive strategy as "a
combination of the ends (goals) for which the firm is striving and the means
(policies) by which it is seeking to get there." Thus, Porter seems to embrace
strategy as both plan and position. (It should be noted that Porter writes about
competitive strategy, not about strategy in general.)

Strategy According to Kepner-Tregoe

In Top Management Strategy [7], Benjamin Tregoe and John Zimmerman, of

Kepner-Tregoe, Inc., define strategy as "the framework which guides those
choices that determine the nature and direction of an organization."
Ultimately, this boils down to selecting products (or services) to offer and the

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markets in which to offer them. Tregoe and Zimmerman urge executives to
base these decisions on a single "driving force" of the business. Although
there are nine possible driving forces, only one can serve as the basis for
strategy for a given business. The nine possibilities are listed below:

1. Products 4. Production 7. Natural

offered capability resources

2. Market 5. Method of 8. Size/growth

needs sale

3. Technology 6. Method of 9. Return/profit

distribution

It seems Tregoe and Zimmerman take the position that strategy is essentially
a matter of perspective.

Strategy According to Michel Robert

Michel Robert takes a similar view of strategy in, Strategy Pure & Simple [8],
where he argues that the real issues are "strategic management" and
"thinking strategically." For Robert, this boils down to decisions pertaining to
four factors:

1. Products and 3. Market segments

services

2. Customers 4. Geographic areas

Like Tregoe and Zimmerman, Robert claims that decisions about which
products and services to offer, the customers to be served, the market
segments in which to operate, and the geographic areas of operations should
be made on the basis of a single "driving force." Again, like Tregoe and
Zimmerman, Robert claims that several possible driving forces exist but only
one can be the basis for strategy. The 10 driving forces cited by Robert are:

1. Product-service 6. Sales-marketing
method

2. User-customer 7. Distribution method

3. Market type 8. Natural resources

4. Production capacity- 9. Size/growth

capability

5. Technology 10. Return/profit

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Strategy According to Treacy and Wiersema

The notion of restricting the basis on which strategy might be formulated has
been carried one step farther by Michael Treacy and Fred Wiersema, authors
of The Discipline of Market Leaders [9]. In the Harvard Business Review
article that presaged their book [10], Treacy and Wiersema assert that
companies achieve leadership positions by narrowing, not broadening their
business focus. Treacy and Wiersema identify three "value-disciplines" that
can serve as the basis for strategy: operational excellence, customer
intimacy, and product leadership. As with driving forces, only one of these
value disciplines can serve as the basis for strategy. Treacy and Wiersema’s
three value disciplines are briefly defined below:

1. Operational Strategy is predicated on the production

Excellence and delivery of products and services. The
objective is to lead the industry in terms of
price and convenience.

2. Customer Strategy is predicated on tailoring and

Intimacy shaping products and services to fit an
increasingly fine definition of the customer.
The objective is long-term customer loyalty
and long-term customer profitability.

3. Product Strategy is predicated on producing a

Leadership continuous stream of state-of-the-art
products and services. The objective is the
quick commercialization of new ideas.

Each of the three value disciplines suggests different requirements.

Operational Excellence implies world-class marketing, manufacturing, and
distribution processes. Customer Intimacy suggests staying close to the
customer and entails long-term relationships. Product Leadership clearly
hinges on market-focused R&D as well as organizational nimbleness and
agility.

What Is Strategy?

What, then, is strategy? Is it a plan? Does it refer to how we will obtain the
ends we seek? Is it a position taken? Just as military forces might take the
high ground prior to engaging the enemy, might a business take the position
of low-cost provider? Or does strategy refer to perspective, to the view one
takes of matters, and to the purposes, directions, decisions and actions
stemming from this view? Lastly, does strategy refer to a pattern in our
decisions and actions? For example, does repeatedly copying a competitor’s
new product offerings signal a "me too" strategy? Just what is strategy?

Strategy is all these—it is perspective, position, plan, and pattern. Strategy is

the bridge between policy or high-order goals on the one hand and tactics or
concrete actions on the other. Strategy and tactics together straddle the gap
between ends and means. In short, strategy is a term that refers to a complex
web of thoughts, ideas, insights, experiences, goals, expertise, memories,

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perceptions, and expectations that provides general guidance for specific
actions in pursuit of particular ends. Strategy is at once the course we chart,
the journey we imagine and, at the same time, it is the course we steer, the
trip we actually make. Even when we are embarking on a voyage of
discovery, with no particular destination in mind, the voyage has a purpose,
an outcome, an end to be kept in view.

Strategy, then, has no existence apart from the ends sought. It is a general
framework that provides guidance for actions to be taken and, at the same
time, is shaped by the actions taken. This means that the necessary
precondition for formulating strategy is a clear and widespread understanding
of the ends to be obtained. Without these ends in view, action is purely
tactical and can quickly degenerate into nothing more than a flailing about.

When there are no "ends in view" for the organization writ large, strategies
still exist and they are still operational, even highly effective, but for an
individual or unit, not for the organization as a whole. The risks of not having
a set of company-wide ends clearly in view include missed opportunities,
fragmented and wasted effort, working at cross purposes, and internecine
warfare. A comment from Lionel Urwick's classic Harvard Business Review
article regarding the span of control is applicable here [11]:

"There is nothing which rots morale more quickly and more completely
than . . . the feeling that those in authority do not know their own minds."

For the leadership of an organization to remain unclear or to vacillate

regarding ends, strategy, tactics and means is to not know their own minds.
The accompanying loss of morale is enormous.

One possible outcome of such a state of affairs is the emergence of a new

dominant coalition within the existing authority structure of the enterprise, one
that will augment established authority in articulating the ends toward which
the company will strive. Also possible is the weakening of authority and the
eventual collapse of the formal organization. No amount of strategizing or
strategic planning will compensate for the absence of a clear and widespread
understanding of the ends sought.

The Practical Question: How?

How does one determine, articulate and communicate company-wide ends?

How does one ensure understanding and obtain commitment to these ends?
The quick answers are as follows:

The ends to be obtained are determined through discussions and debates

regarding the company's future in light of its current situation. Even a SWOT
analysis (an assessment of Strengths, Weaknesses, Opportunities and
Threats) is conducted based on current perceptions.

The ends settled on are articulated in plain language, free from flowery words
and political "spin." The risk of misdirection is too great to tolerate unfettered
wordsmithing. Moreover, the ends are communicated regularly, repeatedly,
through a variety of channels and avenues. There is no end to their

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communication.

Understanding is ensured via discussion, dialog and even debate, in a word,

through conversations. These conversations are liberally sprinkled with
examples, for instances, and what ifs. Initially, the CEO bears the burden of
these conversations with staff. As more people come to understand and
commit to the ends being sought, this communications burden can be shared
with others. However, the CEO can never completely relinquish it. The CEO
is the keeper of the vision and, periodically, must be seen reaffirming it.

Ultimately, the ends sought can be expressed via a scorecard or some other
device for measuring and publicly reporting on company performance.
Individual effort can then be assessed in light of these same ends. Suppose,
for instance, that a company has these ends in mind: improved customer
service and satisfaction, reduced costs, increased productivity, and
increasing revenues from new products and services. It is a simple and
undeniably relevant matter for managers to periodically ask the following
questions of the employees reporting to them:

 What have you done to improve customer service?

 What have you done to improve customer satisfaction?
 What have you done to reduce costs?
 What have you done to increase productivity?
 What have you done to increase revenues from new products and
services?

The Decisions Are the Same

No matter which definition of strategy one uses, the decisions called for are
the same. These decisions pertain to choices between and among products
and services, customers and markets, distribution channels, technologies,
pricing, and geographic operations, to name a few. What is required is a
structured, disciplined, systematic way of making these decisions. Using the
"driving forces" approach is one option. Choosing on the basis of "value
disciplines" is another. Committing on the basis of "value-chain analysis" is
yet a third. Using all three as a system of cross-checks is also a possibility.

Some Fundamental Questions

Regardless of the definition of strategy, or the many factors affecting the

choice of corporate or competitive strategy, there are some fundamental
questions to be asked and answered. These include the following:

 Related to Mission & 1. Who are we?

Vision 2. What do we do?
3. Why are we here?
4. What kind of company are we?
5. What kind of company do we

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 want to become?

6. What kind of company must we

become?

 Related to Corporate 1. What is the current strategy,

Strategy implicit or explicit?
2. What assumptions have to hold
for the current strategy to be
viable?
3. What is happening in the
larger, social and educational
environments?
4. What are our growth, size, and
profitability goals?
5. In which markets will we
compete?
6. In which businesses?

7. In which geographic areas?

 Related to 1. What is the current strategy,
Competitive Strategy implicit or explicit?
2. What assumptions have to hold
for the current strategy to be
viable?
3. What is happening in the
industry, with our competitors,
and in general?
4. What are our growth, size, and
profitability goals?
5. What products and services
will we offer?
6. To what customers or users?
7. How will the selling/buying
decisions be made?
8. How will we distribute our
products and services?
9. What technologies will we
employ?
10. What capabilities and
capacities will we require?
11. Which ones are core?
12. What will we make, what will
we buy, and what will we
acquire through alliance?

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 13. What are our options?

14. On what basis will we

compete?

Some Concluding Remarks

1. Strategy has been borrowed from the military and adapted for
business use. In truth, very little adaptation is required.
2. Strategy is about means. It is about the attainment of ends, not their
specification. The specification of ends is a matter of stating those
future conditions and circumstances toward which effort is to be
devoted until such time as those ends are obtained.
3. Strategy is concerned with how you will achieve your aims, not with
what those aims are or ought to be, or how they are established. If
strategy has any meaning at all, it is only in relation to some aim or
end in view.
4. Strategy is one element in a four-part structure. First are the ends to
be obtained. Second are the strategies for obtaining them, the ways
in which resources will be deployed. Third are tactics, the ways in
which resources that have been deployed are actually used or
employed. Fourth and last are the resources themselves, the means
at our disposal. Thus it is that strategy and tactics bridge the gap
between ends and means.
5. Establishing the aims or ends of an enterprise is a matter of policy
and the root words there are both Greek: politeia and polites—the
state and the people. Determining the ends of an enterprise is mainly
a matter of governance not management and, conversely, achieving
them is mostly a matter of management not governance.
6. Those who govern are responsible for seeing to it that the ends of the
enterprise are clear to the people who people that enterprise and that
these ends are legitimate, ethical and that they benefit the enterprise
and its members.
7. Strategy is the joint province of those who govern and those who
manage. Tactics belong to those who manage. Means or resources
are jointly controlled. Those who govern and manage are jointly
responsible for the deployment of resources. Those who manage are
responsible for the employment of those resources—but always in
the context of the ends sought and the strategy for their achievement.
8. Over time, the employment of resources yields actual results and
these, in light of intended results, shape the future deployment of
resources. Thus it is that "realized" strategy emerges from the pattern
of actions and decisions. And thus it is that strategy is an adaptive,
evolving view of what is required to obtain the ends in view.

This paper has taken a broad, multi-faceted look at the subject of strategy.
Some readers might go away disappointed that no final, unambiguous
definition of strategy has been provided. The quick response is that there is
none, that strategy is a broad, ambiguous topic. We must all come to our own
understanding, definition, and meaning. Helping the reader do so is the chief
aim of this paper.

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References

1. Strategy (1967). B. H. Liddell Hart. Basic Books.

2. Strategic Planning (1979). George Steiner. Free Press.
3. The Rise and Fall of Strategic Planning (1994). Henry Mintzberg.
Basic Books.
4. The Concept of Corporate Strategy, 2nd Edition (1980). Kenneth
Andrews. Dow-Jones Irwin.
5. "What is Strategy?" Michael Porter. Harvard Business Review (Nov-
Dec 1996).
6. Competitive Strategy (1986). Michael Porter. Harvard Business
School Press.
7. Top Management Strategy (1980). Benjamin Tregoe and John
Zimmerman. Simon and Schuster.
8. Strategy: Pure and Simple (1993). Michel Robert. McGraw-Hill.
9. The Discipline of Market Leaders (1994). Michael Treacy and Fred
Wiersema. Addison-Wesley.
10. "Customer Intimacy and Other Value Disciplines." Michael Treacy
and Fred Wiersema. Harvard Business Review (Jan-Feb 1993).
11. "The Span of Control." Lionel Urwick. Harvard Business Review
(May-Jun 1956).

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