When asked to define the terminology “strategy” many business executives appear to have numerous explanations that dance around the concept but don’t necessarily encapsulate the fundamental idea of what the said word means.
Just quite recently, I uncovered a description that not only dispelled any uncertainty about the noun but also offered rich insights into how a company can go about embarking on worthwhile innovation.
The question that instinctively came to mind was this – do all business owners know precisely what it means to be strategic? Do they all have the right definition of strategy?
According to Michael E. Porter (economist, researcher, author, advisor and professor at the Harvard Business School):
Let’s examine the aforementioned explanation.
Strategy is “choosing to perform activities differently”
There is a strong theme of disruption that reverberates in the first half of the definition of strategy.
Particularly, it highlights how companies can profoundly alter how they conduct their business, and also, how consumers experience their brand in the process.
For the illustrative purposes, let’s use Starbucks to offer some clarity.
Historically, coffee shops, like any other business at the time, were pretty transactional in nature: customers went in, placed their orders, paid, picked up their items, and then left.
Standard – no muss no fuss.
Starbucks turned the coffee shop experience on its head by making its stores the “third place between home and work”. They did sweat the small stuff: everything from the incredibly friendly disposition of the Baristas, to drink customisation, personalisation of the drink orders (by writing the customers name their cup), to the overall inviting ambiance of the stores.
Starbucks created the ultimate customer experience that primarily changed the palate and the perception of the coffee-drinking consumer.
Other typical examples of brands that have performed activities differently are Uber and AirBnB just to mention a few.
Strategy is “performing distinctly different activities than rivals”
The last bit of the definition of Strategy focuses on a distinguishable competitive advantage that one brand has over its rivals.
Let’s use Apple, the “bastion of creativity” to also illustrate this idea.
Unabashedly, Apple has consistently made its brand one of the most desirable by creating compelling and unique selling propositions by differentiating itself from its chief competitors (like Microsoft Blackberry and Google to mention a few).
The creation of:
- iTunes: (a platform made with the sole purpose of creating an ecosystem for syncing music, e-books, radio/podcast etc.) was a game-changing move that set the iPod apart from all the available MP3 players that existed at the time
- iPhone: revolutionized the mobile phone experience with the touch-screen technology that was intuitive, fun, and less arduous than the way mobile phones at the time were manufactured by brands like Motorola, Nokia, and tragically, Blackberry.
Some other examples of brands that champion this definition of strategy are:
- LUSH – a cosmetic brand that has differentiated themselves from other female make-up brands by selling a viewpoint (ethically sourced and pure ingredients) rather than just actual products to girls who have had enough of the standard beauty messaging
- Nest– this gizmo has etched itself in the mind of consumers not as just a thermostat device, but as a thoughtful and humane device that intuitively understands human behaviour.
Hopefully, this explanation now equips you with the right definition of the business terminology – strategy. And also, gives you sound outline of how to go about developing ground-breaking tactics to take your organisation to the next level.
As always, I welcome feedback and would love to hear your thoughts on this topic.
Written by David Fastuca @Locomote