The word strategy is quite common in our daily language. However, it is an important business concept. Therefore, we have compiled the list of definitions of strategy. Subsequently, we have provided a simple explanation of what strategy means.
Contents
Origins: what strategy means for the military
Strategy as a concept originated in the military. The word comes from ‘stratēgia‘ which means ‘generalship.’ Most importantly, the success of military conquests depends heavily on the approach of attack or defense. Similarly, corporate strategy in the simplest of terms is how you compete and thrive against competing firms.
Most notably, great thinkers like Sun Tzu and Kautilya wrote war treaties. They described policies, ploys, and tactics to win battles. There are some similarities between competing against an enemy and a business rival. Therefore, some scholars have transposed many of these concepts to business context. However, there are some key differences between the military and business use of the word:
How is military strategy different from corporate strategy?
| Military strategy | Corporate strategy |
|---|---|
| It is defined as the ‘art’ of assesment, planning and execution of military assets and operations to improve the chances of winning. | It is essentially an approach developed by a firm to create competitive advantage. |
| ‘Plan’ oriented | Broader orientation than simple planning |
| Primarily driven by political aims | It is primarily driven by economic aims |
| Immediate moves are called tactics | Immidiate moves are called market ploys |
Definition of strategy
Corporate strategy is defined as an approach developed by a firm to create a competitive advantage.
Broadly speaking, a strategy is an action plan that links our objectives to the ways of achieving it. When we devise the strategy, we should include vision. Vision is a clearly defined long term goal. Vision is the guide for developing missions for the firms. Thereafter, we work on the mission through well-coordinated actions.
There are many different definitions of strategy. We have enlisted some of them below:
Strategy as a long-term goal: Chandler
“Strategy is the determination of the basic long-term objectives of an enterprise and the adoption of courses of action and allocation of resources necessary to achieve these goals” — Chandler 1962
Managers in the early 1960s started using the strategy as a management term. Alfred D. Chandler wrote the book ‘Strategy and Structure’ in 1962. In this book, he described the success process of companies like General Motors and Dupont. He attributed their success to their ‘strategy.’ Though he used this term, he did not define it clearly as to what strategy means for the firms.
Strategy as means to an end: Liddell Hart
The art of distributing and applying military means to fulfill the ends of policy — Liddell Hart 1967
Here we have included the definition of strategy by Lidell Hart. He was one of the most famous historians who worked on strategy. Some of his concepts can be transposed into the management strategy. Most importantly, he tried to unify the concept of strategy from military as well as a political perspective.
Strategy as decision making: Kenneth Andrews
“Strategy is the pattern of decisions in a company that determines and reveals its objectives, purposes, or goals” —Kenneth Andrews, 1971
Kenneth Andrews was also a professor at Harvard Business School. He was one of the founders of Strategy. His first book was The Concept of Corporate Strategy, which came out in 1971. He opined that strategy aligned the decision making with the firm’s objectives. Thereby, he propagated the case-based method of teaching. In this method, the students learn by getting into the shoes of the decision-maker. It is also interesting to note that he published widely and holds a second PhD in English.
Vision driven strategy: Steiner & Miner
“Strategy is the formulation of missions, purposes, and basic organizational goals, policies, and programs to meet them, and the methods needed to ensure that strategies are implemented to achieve organizational objectives.” — Steiner & Miner, 1977
Steiner and Miner published an important book ‘Management policy and strategy’ in 1977. They provided new directions to this field in this book. Firstly, they presented a number of relevant cases and readings. Secondly, the book was also important as a textbook covering the fundamentals of strategy.
He has not just defined what strategy means but also provided with a roadmap. A roadmap that discusses the process of understanding how to advance towards the objectives of the organization.
Strategy is about differentiation: Michael Porter
“It means deliberately choosing a different set of activities to deliver a unique mix of value“ —Michael Porter, 1996
Michael Porter is one of the most prolific academics. Most notable for Porter’s 5 forces. However, this definition comes from his essay ‘What is strategy?’. He published it in 1996. Wherein, he proposed two ways to stay competitive.
Firstly, firms can do something different from their competitors.
Secondly, firms can do things differently than their competitors.
A firm needs to perform activities differently than others. The firm sets a unique position in this way. As a result, it can remain competitive. However, there is mounting criticism of this approach of defining strategy. The pursuit of one perfect competitive position may a narrow way of defining strategy.
What strategy means for firms today
We have looked at various definitions of strategy. Finally, can we summarize what the strategy means for the firms?
Modern academics define strategy into one or more of the three broad areas:
- Differentiating from the competition
- Exploring ways to improve your value proposition
- Emergent approach where you adapt to the environment
Michael Porter is the father of the differentiation approach of strategy. Above all, he proposed the concept of being a cost leader or a differentiator. Firms can achieve this through various mechanisms.
Secondly, firms can explore new ways to delivering value. The advent of Industry 4.0 presents new opportunities. Firms must be proactive in assessing how they can leverage it.
Thirdly, emergent approach proposed by Prof Henry Mintzberg. He opined that strategy is more about how we adapt to changing set of internal and external variables.
FAQs on definitions of strategy
Strategy comes from Greek word ‘stratēgia‘ which essentially represents the art of the general or ‘generalship.’ Therefore, we can say that origin of strategy is from the military.
Corporate strategy is defined as an approach developed by a firm to create a competitive advantage.
Corporate strategy is defined as an approach developed by a firm to create competitive advantage
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