What is Strategy? It Starts with the Kernel

What is Strategy? It Starts with the Kernel

What do we mean by strategy? Many what answer, “Strategy is what ever you want it to mean.” Unfortunately, today it is a catchall word. Every executive use the word strategy from “service strategy”, “acquisition strategy”, “branding strategy”, “competitive strategy”, or whatever strategy one has in mind. But for those who think through the meaning of strategy, whether it is a CEO of an established firm, division president, or entrepreneur, strategy integrates an overarching concept of how the business will achieve its objectives.  Accordingly, it is a coherent action supported by argument, an effective mixture of thought and action with a basic underlying structure.

Too often many draw on Porter’s Five Forces Analysis to think of strategy as a matter of selecting industries and segments within them. Others dwell in game theoretical frameworks as a set of choices about confronting with adversaries and allies. When adding in core competencies, hyper-competitiveness, value chains, and other powerful tools, what is missing is the hub…strategy. And let us not be fooled that a strategy consists of a template outlining a mission statement, a vision statement, and financial projections to make up the strategy.

Let us step back and look at strategy. The kernel of strategy, the central core, consists of three elements: a diagnosis, a guiding policy, and a set of coherent actions.  You must define or explain the nature of the challenge, a diagnosis of the issues. In dealing with the challenge, an overall approach to cope with or overcome the obstacles that the diagnosis identified, must be chosen, which is designing the guiding policy. Then a set of coherent actions in carrying out the guiding policy must be made in steps that coordinate with one another to meet the objectives.

So many companies have multiple goals and initiatives that do not have a coherent approach to achieve progress, other than spending more and trying harder to ultimately fail. This was the case of Apple Computer prior to the return of Steve Jobs. Under Gil Amelio, Apple had multiple goals and initiatives through four business groups: Macintosh, printers and peripherals, information appliances, and alternative platforms. Apple was hemorrhaging cash. Steve Jobs retrenched Apple to a single goal and initiative by simplifying the company to its core competency. This was to stave off Apple from falling into bankruptcy.  Apple was shrunk to scale and scope, as a niche producer, with one line of Macintosh computers. Steve Jobs had to develop the kernel first to combat the obstacles the company faced.

See: Corporate Strategies—Avoiding the Flawed Strategy and Strategy: Good Strategy or Bad Strategy? 5 Lessons to Follow

References

Remult, R.P. (2011). Good Strategy Bad Strategy. Crown Business Publishing

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