A statement of business strategy describes where and how the firm will compete in order to accomplish its objectives, meet customer needs, and obtain a superior financial return. Strategy sets the boundaries around future decisions, describing which business opportunities should be pursued, how to invest resources, which skills to develop, who to hire, etc. The statement of strategy needs to be clear, specific, and concise enough to say yes to the preferred choices that are consistent with the strategy and no to the choices that are distractions from the strategy. The statement of strategy must be useful to all decision makers within the firm to keep everyone and everything operating within the direction defined by the business strategy.
Too often firms are either unable or unwilling to state a clear, specific, and concise strategy. Instead we find what purports to be strategy but simply consists of a bunch of buzzwords, or an agglomeration of goals and objectives, a very general description of mission, or a set of actions. Such a weak statement of strategy does not serve its purpose of guiding the future decisions of the firm or of defining where and how the firm will compete.
“Our differentiating value-added strategy is transformational change to reach a new paradigm of performance.” A collection of buzzwords does not define a strategy because it can be interpreted to be about anything. It does not provide direction for decision-makers.
“Our strategy is to grow top-line revenue 20% per year for the next five years.” Goals and objectives are not the strategy but are a prerequisite for strategy. The goals and objectives define where the firm wants to go but not how to get there. The strategy statement is intended define the path and drive the firm to a course of action to achieve the goals and objectives.
“Our strategy is to provide metal stampings and other metal components and fabrications.” A mission statement is not a business strategy. It simply describes what the firm is but not where and how the firm will compete. It does provide a specific definition of how the firm will develop its competitive advantage, so it cannot guide decisions as the firm evolves.
“Our strategy is to increase our machine shop capacity.” An action plan is not a statement of strategy. The action plan is the implementation of strategy, the specific things that will build the competitive advantage defined in the business strategy.
All of the examples above lack the clarity and specificity required to guide decisions by the organization. On the other hand a statement such as “We provide high quality, large, flat, injection-molded parts to the high-end, low-volume business and medical equipment market” provides a clear direction for decisions. The members of the organization know where and how they compete and what will be the expectations of their customers. The decisions that are made throughout the organization are then consistent with this defined strategy.
What are some examples of both good and bad strategy statements that you have seen?
Does your organization have a clear, specific, and concise strategy?