Strategy as Choices
In a recent hippoBrain conversation, Ramesh Mangaleswaran explained strategy very well. He described it as a set of choices that a business needs to make, and then decide on the resources (human, capital). Strategy needs a combination of big bets and not so big bets (options). The big bets need to be counterbalanced with a safety net if things go wrong. Strategy also needs to be thought at two levels – like looking through a telescopic (long-term, directional) and microscope (near-term, specific actions).
One exercise that Ramesh had suggested for Netcore was the following: start with a From-To (where we are today, and what do we want to become), list out 3-4 Must-Dos and 6-8 Choices. For the Choices, if the decision is to be made now, then they need to be backed up with resources; if the decision is to be made later, then a date needs to be set by when the decision will be made.
Too often, we do not understand what strategy is, and apply the term to any forward-looking thinking that we do.
Business World had an interview with Michael Porter where he builds on the “Strategy as Choices” thinking:
Porter also warned about the overuse of the word strategy. He simplified the definition in business as a set of choices that are long term and articulate the competitive advantage that companies will seek to create, in order to win.
The strategy also should not be confused for goal and aspirations. It is more than just particular actions – it is holistic. At the same time, it is not a mission statement or values. It is not vague, it is specific.
…“Strategy cannot be a popularity contest where everyone gets a vote because the essence of strategy is about choices,” he concluded.
Farnam Street had this to add: “Really, strategy is about making specific choices to win in the marketplace. According to Mike Porter, author of Competitive Strategy, perhaps the most widely respected book on strategy ever written, a firm creates a sustainable competitive advantage over its rivals by “deliberately choosing a different set of activities to deliver unique value.” Strategy therefore requires making explicit choices— to do some things and not others— and building a business around those choices. In short, strategy is choice. More specifically, strategy is an integrated set of choices that uniquely positions the firm in its industry so as to create sustainable advantage and superior value relative to the competition.”
So, going back to what Ramesh said, here are three questions to answer: what is your From-To, what are your 3-4 Must-Dos, and what are the 6-8 Choices that you need to make. Take some time with your senior management colleagues and answer them, and you will hopefully have a better view of your own business and its future.
Tomorrow: Part 53