Posted in Entrepreneurship on Apr 27, 2018
People love to say “strategy” and “strategic” because it makes them sound, well, strategic. But in my experience, most people have only a vague idea of what it really means. This includes me, although I’ll give myself credit for not thinking I could just toss the word around to sound cool. For years I’ve been searching in vain for a really good definition, so eventually I made up my own.
My definition of strategy:
A strategy is a plan to prioritize resources to achieve the desired objectives optimally, while considering the most important constraints and circumstances.
I’ll break that down bit by bit.
A plan. A strategy elucidates, at least at a high level, how you will achieve a stated goal. More precisely, it lays out the best way to achieve the goal. The strategy is the means to the end.
To prioritize resources. Inherent in the notion of achieving the goal in the best way is that the strategy deploys resources—such as time, money, or talent—in such a way as to amplify their contributions to the goal. In other words, the strategy is a statement of the way to get the most leverage from assets.
To achieve the desired objectives optimally. The strategy is not the objectives. It’s the best way to achieve the objectives. Sometimes I hear people say things like “our strategy is to reach $10 million in recurring revenue within 5 years.” That’s usually a mistake; that’s usually1 a goal or objective.
While considering constraints and circumstances. A strategy doesn’t exist in a vacuum. It’s a way to balance resources with headwinds and tailwinds to get leverage. What macro forces and trends make the strategy the right strategy? An arm wrestler’s strategy might be to try to make their opponent laugh, thereby weakening their arms; or it might be to anger their opponent and make them expend energy inefficiently and tire quickly. It depends on their opponent’s characteristics, and you don’t know it’s the right strategy unless you know what weakens the opponent. Similarly, if a company has a lot of cash but not much market visibility, and another company has little cash but an incredible reputation, their strategies for market dominance should probably be different.
A strategy, therefore, should answer the questions how do we think we can best achieve our goals? and why have we decided to do X instead of Y? It should give people context while they’re trying to execute, communicating commander’s intent so they can adapt to situations they haven’t been instructed about explicitly. They should be empowered to make good decisions in the battlefield, when the conditions on the ground demand swift adaptation and checking in with commanding officers isn’t an option. The strategy doesn’t answer what, though. That’s what the objective is for.
“Take the hill!” is the objective. “Under cover of darkness because it’s a new moon, at peak fog time when the enemy spotlights won’t work” is the strategy.
Here are some other folks’ definitions, which I’ll update if you tweet me yours and I think it’s good or thought-provoking: