Management Buzzwords Explained: Strategy

This is the fourteenth in a series of essays that addresses management topics. The first ten explored "hot button" issues; the next ten satirize management "buzzwords." I base these essays on countless provocative lectures and irreverent discussions as a nutty professor of Business Administration.

What is your career strategy? What is your personal investment strategy? What is your retirement strategy? These are legitimate, and in fact very important, questions. "Strategy" is a term we use in our daily lives all the time, and we seem to be able to use it without suffering too many breakdowns in communication.

What is your firm's strategy? This is a common question too, but now we're in my backyard. When I teach "Strategic Management," I often feel frustrated that even after a semester, the word is not understood or used correctly. Maybe I'm just a mediocre teacher. But since this is not an online course in Strategic Management, I'll assume that you probably haven't thought about it a lot, one way or the other. You just use the word in the workplace like you would anywhere else.

What does bother me is when it's used as a cynical buzzword. A few years ago, when I was a tenured professor of Business Administration at a school that I won't name, I was assigned to a Strategic Resources Committee. In the first meeting, the Chair told us that the word "strategic" was just one of those meaningless management words that was being used for political correctness in the title of another useless committee. I politely sat through that first meeting, but I never went back because I knew it was pointless. I think it was Mark Twain who said "never argue with an idiot." Nobody noticed.

If you're like that committee chair, you wouldn't still be reading this, you'd be surfing for something more important like what Britney did overnight. If you're still with me, you probably are curious about whether or not you've been using this word correctly, or sounding foolish. Well, don't worry about sounding foolish, if you've come this far you're already ahead of all the other fools who'll use any word that sounds important.

Every textbook on management defines strategy. The thing I hate about definitions is that you have to first understand the word in order to understand the definition - ever notice that? So here, I'm going to give you my simple definition of business strategy, and then describe what a strategy should look like in real life.

AStrategy is how an organization plans to fulfill its mission. Now, I agree, I've snuck another buzzword in on you - mission. I'll get back to that one. I'm trying to focus on one buzzword at a time in these short essays.

What does this definition imply? First, it implies that strategic management is the responsibility of upper-level management.This is not to say that executives should exist on an ivory tower aloof from day-to-day operations. Indeed, there are models of strategy which insist on not only participation from lower level managers and operational employees, but that strategy should evolve in "grass roots" fashion. Either way, it is unavoidably the case that executives are the managers who will be held accountable for accomplishing the strategic interests of the organization.

Second, it implies that a strategy should guide everyone in the organization in a common mission, with common objectives. An organization has ONE strategy, or none at all. Hopefully this is accomplished seamlessly, in that the strategy helps to reconcile differences within the organization. At the very minimum, a strategy should not create conflicts of interest in the organization, or sub-optimize the interests of one unit for the benefit of others.

Third, the strategic view should address the longest relevant time frame. This has been a source of controversy in the development of strategy theory. Many people assert that the rate of change in the modern business climate makes planning not only a waste of time, but counterproductive. A more sensible position is that it depends on the competitive landscape (e.g., industry) under analysis. The nature of planning processes and plans should vary accordingly. Some industries still move slowly and are quite stable.

This means that discussions about strategy must go far beyond current events. Indeed, obsessing on immediate crises is exactly what strategic managers are accountable to avoid. This does not mean that strategic managers do not get involved in crises or day-to-day operations. It does mean that the resolution of crises and making operational decisions should be guided by a "big picture."

Fourth, a strategy commits an organization, an entire organization, to a direction that is very difficult or costly to reverse. A good strategy is flexible and adaptable to change but does not equivocate. A good strategy is clear about what the organization is, and will do. It is also clear about what the organization is not, and won't do.

Fifth - and this is perhaps the most common misunderstanding - a product is not a strategy. A product is just a product, though some have immense strategic consequences. A strategy is a plan, or at least a consistent pattern of choices and decisions and actions, a staked-out and defensible position in the marketplace, that involves moves and countermoves, and even politics, ploy, guile and deception.

There are one or two other parameters that guide strategy, but five make the point, I think.

Altogether, the golden fleece, the Mount Olympus, the ultimate goal of strategic management is to create and sustain a competitive advantage. This buzzword has also become obscenely overused in everyday management lingo, and is not self-explanatory. The hurdle that an organization must overcome in order to have a sustainable competitive advantage, is much more difficult than is implied in daily conversation. In fact, whereas it seems that every practicing manager boasts of his/her organization's competitive advantage, research shows that a sustainable competitive advantage is very rare! Stay tuned to find out why.