Strategy – What is Strategy ?

Every time I hear or read the word “Strategy”, I have to pause and think, what is the person actually saying. Based on my assessment in most cases the term tactic passes as Strategy. But why is that ? You might say. Because Strategy sounds better, take a look at the following exchange that I overheard while I was shopping at a stationary store:
Person 1: We provide coupons help bring customers to our stores 
Person 2: Oh yeah, how has that strategy worked so far ?
Person 1: Well it paid off big time on black friday 
                                 What is wrong with this exchange. I was tempted to interject, but I stopped because it was a conversation between 2 people and they did not ask me for my opinion and secondly even if I was asked for my opinion I would have not been able to articulate it well. Why? Because their exchange had irritated me so much and along with the fact that my brain was flooded with so many ideas to correct these guys that my mouth would have not been able to keep up. I would have ended up sounding a like fool instead. 
                          But that exchange between the two people highlighted something that I deal with everyday. There are so many people that use the term strategy to make their idea (i.e. tactic) sound important. I am not saying that strategy is something that cannot change, it can and it should, what I am going to share in this blog post is the way I classify the term strategy. Strategy is all about capturing value i.e. you try to find a section of the market that is underserved or not being utilized and you build a product or service that generates value to the customer in an efficient, cost effective and profitable manner.  Strategy is ultimate simple word that hides a lot of complexity. Since humans are simple beings we tend to confuse a tactic as strategy (BTW just of the record that store providing coupons  to it’s customers was actually a tactic not strategy, the strategy of the store might be  to increase the sales per sq. foot or something) .
                       Strategy has its roots in  Economics, Organization Design, Finance, Accounting (yes Accounting), Marketing, Statistics, Supply Chain, and Sales.  So Strategy cannot work in isolation even when someone says “I am developing a Sales strategy”, it is assumed that the other elements have been optimized enough to support a particular sales strategy (a sales play is not strategy it is a tactic).

So what is a tactic ?  Tactic could either product, promotion, or service  it is the execution arm of strategy and tactic (product/service) can continue to change at a greater pace than strategy.  Strategy is turn is built upon a vision and hence strategy can change because it all about capturing value but maybe not at the same rate as a product (strategy is not about increasing sales. If you provide value the sales will follow). Vision of a company usually takes longer to change.
                                  Most of my friends know that  I am an Apple fanboy and it is not just because I am addicted to their products but Apple is one of the few companies that illustrates these points well (BTW I am not being paid by Apple to write this blog, I just love what they do).
Apple’s Vision: Enrich peoples lives with their products
Apple’s Strategy: The best integrated experience of software, hardware, and services
Apple’s Products: I think we all know these really well

Other companies that exhibit these traits are  Amazon, Johnson & Johnson, Brembo,  Lincoln Electric, P&G  etc. There are a lot a good companies that understand such distinction.

Maybe next time when I hear someone talk about coupons as a strategy, I might be able to collect my thoughts better and explain the difference.

(BTW I am not claiming that I am in expert in strategy or that  I know enough about strategy. Like the blog says these are just my musings. If you find something else that has better explanation of strategy please let me know)

You can contact me @ kkanakas on twitter with your comments


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