Plan, path, pattern, position, or perspective – which is your perception of the development of business strategy? Depending upon the way that your organization develops and utilizes your strategy, you may have a different perception of how strategy is developed. The definition of strategy does not change based on this perception. It is still defined as a statement of where and how the organization competes. But different organizations experience different routes to their current statement of strategy.
Strategy development as a plan is often the expectation. Organizations often go through a periodic process of analyzing the external or market environment and their own internal position. Based on this analysis, a certain preferred business strategy is chosen from a set of alternatives. It is chosen because it is perceived to be the optimal route to maximizing value. Then a series of actions are laid out and implemented with the intent of growing the firm into what the strategy defines. The organization is following a plan to move from where they are to perhaps a more effective strategy.
Strategy development as a path is often the actual process, especially for smaller business. Along the path, the organization adapts to new business opportunities and changing internal capabilities as it evolves. Over time then there becomes an emergent strategy, which can be quite different at various stages in the life cycle of the firm. If this evolution is managed wisely, the firm grows in capabilities and continually moves to higher value opportunities. Or the firm has a growing awareness of the market environment or evolving customer needs and is opportunistic in moving forward and adapting its strategy to greater opportunities.
Strategy development as a pattern is built around an inward view of the organization. This is a behavioral pattern based on some beliefs about why the particular organization exists or a vision of what the firm should be. For example, a company that sells luxury goods may have several business units but all follow some type of high-end strategy. Its pattern is one of operating in exclusive realms and the strategy it develops is constrained by the pattern that it perceives as appropriate for itself.
Strategy development as a position is built around a market or downward view by the organization. Its reason for existing is to serve some type of market or customer need. For example, there are several companies that are an agglomeration of various restaurant chains. The parent company perceives its strategy as providing a dining experience to certain segments of the consumer market, then acquiring or building various restaurant concepts to do so. The business strategy grows out of the position that the firm expects to occupy.
Strategy development as a perspective is more of an outward or upward view by the organization. The organization’s goal is loftier, such as a technology company that wants to apply technology to improve the consumer’s daily life. The perspective most likely comes from a desire to serve mankind or to make the world a better place. This vision then drives the development of the organization’s strategy.
What is the driving force behind your organization’s strategy? What route have you followed as your organization developed and evolved?