The Strategist

Strategy: Just a plan or something more?

04/03/2020 - 06:47

Is it possible to equal a plan to a strategy, as some companies do? What is the mistake of this approach? What is a strategy at all? The questions seem simple, but there can be some pitfalls.

Until the 70s of the XX century, business success was considered to be a matter of presence in attractive markets. And since everyone adhered to this principle, competition in these markets was intensifying, and profits were far from ideal. In the fight for profitability, each company had to think not only about which markets it should be present in, but also how to defeat other companies trying to do the same. And then a strategy came into play.

Since strategy development involves some preparation, we tend to identify a strategy with the plan. This is dangerous. The desire for certainty can lead into a trap and make you create perfect plans in isolation from reality.

Strategy is a system of means for achieving a goal. It is more than science; this is application of knowledge in real life, development of the original idea in accordance with constantly changing circumstances, the art of acting under pressure from the most difficult circumstances. This radical concept was formulated as far back as the century before last. Essentially, it rejects the point of view (entrenched so firmly that it is often taken for granted), which states that strategy is a long-term plan, in contrast to “operations”, which are short-term actions.

The first task of a strategist is to ensure availability of resources and their distribution. Allocation of resources should initially be correct, since subsequently it is difficult to correct the mistakes made. So long before any action is taken, a detailed plan must be drawn up.

The strategy aims to achieve the "highest goal" available with the available funds. Limited funds partially determine the content of the strategy.

If we had unlimited resources at our disposal, we would not have to worry too much about strategy. Indeed, in this case, having made an attempt to do something and having failed, it would have been possible to write off losses, attract additional resources and make another attempt. But not one of us is in this position, and the more limited our resources are, the more thoughtfully we need to act. We must make decisions about how to use them.

Theoretically, one could set the direction, indicating both the general course and the destination. However, we most likely will not succeed in doing either. In the long run, in conditions of high uncertainty, we will not be able to determine exactly where we want to be in the future. For example, it is known that in the field of technology and legal regulation serious changes can occur that will determine the situation in the markets over the next years. However, the exact nature and timing of these changes is unknown.

Strategy involves continuous decision making; these solutions should not be ideal (at least, as is the case with ideal plans, this should not be sought); it is enough to fit the circumstances. It is necessary to make decisions, "one way or another right at the moment," to take actions to change the situation, and then move on to the next decisions.

So we manipulate luck, opening up further opportunities. And we will certainly surpass all those who are trying to make one big decision, how to do everything, or those who do not make any decisions at all.

Based on "The Art of Action. How Leaders Close the Gaps between Plans, Actions and Results" by Stephen Bungay

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