What Is Strategy?

For instance, some people believe that you must analyze the present carefully, anticipate changes in your market or industry and, from this, plan how you'll succeed in the future. Meanwhile, others think that the future is just too difficult to predict, and they prefer to evolve their strategies organically.

Gerry Johnson and Kevan Scholes, authors of "Exploring Corporate Strategy," say that strategy determines the direction and scope of an organization over the long term. For them, strategy should determine how resources should be configured to meet the needs of markets and stakeholders. [1]

Michael Porter, a strategy expert and professor at Harvard Business School, emphasizes the need for strategy to define and communicate an organization's unique position, and says that it should determine how organizational resources, skills, and competencies should be combined to create competitive advantage. [2]

While there will always be some evolved element of strategy, planning for success in the marketplace is important. This means organizations need to take full advantage of the opportunities open to them, and anticipate and prepare for the future at all levels.

For instance, many successful and productive organizations have a corporate strategy that supports their vision and mission. Each business unit within the organization then has a business unit strategy, which its leaders use to determine how they will compete in their individual markets.

In turn, each team should have its own strategy to ensure that its day-to-day activities help move the organization in the right direction. At each level, though, a simple definition of strategy can be: "Determining how we are going to win in the period ahead."

We'll now look more deeply at each level of strategy – corporate, business unit and team.

Corporate Strategy

Corporate strategy refers to the overall strategy of an organization that is made up of multiple business units, operating in multiple markets. It determines how the corporation as a whole supports and enhances the value of the business units within it; and it answers the question, "How do we structure the overall business, so that all of its parts create more value together than they would individually?"

Corporations can do this by:

• Building strong internal competences.
• Developing strong relationships in teams and between teams.
• Developing a set of robust values that everyone in the organization can get behind.
• Sharing technologies and resources between departments and teams.
• Raising capital from investors.
• Developing and nurturing a strong corporate brand.

So, at this level of strategy, we're concerned with thinking about how the business units within the corporation should fit together, and understanding how resources should be deployed to create the greatest possible value. Tools like Porter's Generic Strategies, the Boston Matrix, the ADL Matrix and VRIO Analysis will help with this type of high-level analysis and planning.

The organization's design is another important strategic factor that needs to be considered at this level. How you structure your business, your people, and other resources – all of these affect competitive advantage and can support your strategic goals.

Business Unit Strategy

Strategy at the business unit level is concerned with competing successfully in individual markets, and it addresses the question, "How do we win in this market?" However, this strategy needs to be linked to the objectives identified in the corporate level strategy.

Competitive analysis, including gathering competitive intelligence, is a great starting point for developing a business unit strategy. As part of this, it's important to think about your core competencies, and how you can use these to meet your customers' needs in the best possible way. From there you can use USP Analysis to understand how to strengthen your competitive position.

You'll also want to explore your options for creating and exploiting new opportunities. Porter's Five Forces is a must-have tool for this process, while a SWOT Analysis will help you to understand and address the opportunities and threats in your market.

Your business unit strategy will likely be the most visible level of strategy within each business area. People working within each unit should be able to draw direct links between this strategy and the work that they're doing.

When people understand how they can help their business unit "win," you have the basis for a highly productive and motivated workforce. As such, it's important to have a clear definition of the business unit's mission, vision and values.

What Is Blue Ocean Strategy?

The Blue Ocean Strategy is a business concept that emphasizes creating new market spaces (or "blue oceans") rather than competing in existing markets (or "red oceans").

In red oceans, companies strive to outperform their rivals to grab a greater share of existing demand. As the market space gets crowded, prospects for profit and growth diminish, leading to fierce competition which often turns the ocean bloody red.

In contrast, the Blue Ocean Strategy encourages businesses to break out of the red ocean of competition by creating uncontested market space that makes the competition irrelevant. This involves redefining market boundaries, focusing on innovation, and creating value for both the company and the customer. The aim is to open up new demand and create high growth and profits.

A classic example is Cirque du Soleil. Instead of competing with traditional circuses, which were in decline and competed over a shrinking audience, Cirque du Soleil reinvented the circus experience. They combined elements of sophisticated theater and live music with stunning acrobatics, creating a new form of entertainment that appealed to a whole new adult audience, thereby creating a blue ocean.

Team Strategy Implementation

To execute your corporate and business unit strategies successfully, you need teams throughout your organization to work together. Each of these teams has a different contribution to make, meaning that each team needs to have its own team-level strategy, however simple.

Here are some considerations when implementing your strategy:

• Team strategy must align to the business unit and corporate strategies, meaning that all levels of strategy support and enhance each other to ensure that the organization is successful.
• Define the team's purpose and boundaries using, for example, a team charter; and to manage it using techniques such as Management by Objectives and use of key performance indicators.
• You need to be working efficiently to achieve the strategic objectives that have been set at higher levels of the organization. So, an important element of your team strategy is to implement best practices to help your team to meet its objectives. Activities that optimize supplier management, quality, and operational excellence are also important factors in creating and executing an effective team strategy.