Aligning Strategy, Leadership, Culture and Purpose

This is paper 3 in the 4 paper collection and focusses on key elements of strategy and its connectivity to achieve effective organisational development.

As a topic, Strategy has a lot of ‘air-time’, as witnessed by simply googling ‘strategy’: you can get  About 2,120,000,000 results (1.15 seconds) but this can vary considerably.

Definitions abound and can vary with author emphasis. Strategy is important because the resources available to achieve goals are usually limited. Strategy generally involves, setting goals and priorities, determining actions to achieve the goals, and mobilizing resources to execute the actions. A strategy describes how the ends (goals) will be achieved by the means (resources). Strategy can be intended or can emerge as a pattern of activity as the organisation adapts to its environment or competes. It involves activities such as strategic planning and strategic thinking.

Alfred Chandler (1962) postulated:

“Strategy is the determination of the basic long-term goals of an enterprise, and the adoption of courses of action and the allocation of resources necessary for carrying out these goals.”⁽¹⁾

Michael Porter (1980) defined strategy in more detail as:

“.(a) broad formula for how a business is going to compete; what its goals should be and what policies will be needed to carry out those goals” and the “…combination of the ends (goals) for which the firm is striving and the means (policies) by which it is seeking to get there.”⁽²⁾

Components of Strategy

Richard Rumelt (2011) pointed out that good strategy has an underlying structure which he called a kernel, which has three parts:

1) A diagnosis that defines or explains the nature of the challenge;

2) A guiding policy for dealing with the challenge; and

3) Coherent actions designed to carry out the guiding policy.⁽³⁾

President Kennedy of the United States illustrated these three elements of strategy in his 1962 Cuban Missile Crisis Address:

1. Diagnosis: “This Government, as promised, has maintained the closest surveillance of the Soviet military build-up on the island of Cuba. Within the past week, unmistakable evidence has established the fact that a series of offensive missile sites are now in preparation on that imprisoned island. The purpose of these bases can be none other than to provide a nuclear strike capability against the Western Hemisphere.”

2. Guiding Policy: “Our unswerving objective, therefore, must be to prevent the use of these missiles against this or any other country, and to secure their withdrawal or elimination from the Western Hemisphere.”

3. Action Plans: First among seven numbered steps was the following: “To halt this offensive build-up a strict quarantine on all offensive military equipment under shipment to Cuba is being initiated. All ships of any kind bound for Cuba from whatever nation or port will, if found to contain cargoes of offensive weapons, be turned back.

Rumelt went on to identify that three important aspects of strategy include:

1. Premeditation,
2. The anticipation of others’ behaviour, and
3. The purposeful design of coordinated actions.

Formulation and Implementation.

Strategy Formulation involves analysing the environment or situation, making a diagnosis, and developing guiding policies. It includes such activities as strategic planning and strategic thinking.

Implementation refers to the action plans undertaken to achieve the goals established by the guiding policy.⁽³⁾⁽⁴⁾

Henderson (1981) stated that:

“Strategy depends upon the ability to foresee future consequences of present initiatives.”

To be able to produce a solid strategy, Henderson noted a number of factors had to be in place, including:

1) Extensive knowledge about the environment, market and competitors

2) The ability to examine this knowledge as an interactive dynamic system; and

3) The imagination and logic to choose between specific alternatives.

In response to the ‘why bother?’ question (the process requires a lot of time and effort), Henderson faces the reader with the need to lead and manage through strategy development due to:

1. “finite resources,
2. uncertainty about an adversary’s capability and intentions,
3. the irreversible commitment of resources,
4. necessity of coordinating action over time and distance,
5. uncertainty about control of the initiative; and
6. the nature of adversaries’ mutual perceptions of each other.”⁽⁵⁾

Management Theory.

From about 1960 onwards, business strategy emerged as a field of study and practice.  It blossomed as a well-studied subject area, not least due to the rise of the management consultancy and academic interest through business schools. Much has been written, strategy tools abound but it is often dealt with in isolation of other key aspects of an effectively operating organisation.

In 1998, Mintzberg described five definitions of strategy but here I want to refer to just one.

‘Strategy as perspective: executing strategy based on a “theory of the business” or natural extension of the mindset or ideological perspective of the organization.⁽⁶⁾

This statement demonstrates the necessity of performing effective work on organisational strategy within the context of the organisation’s leadership thinking, its purpose and most definitely its culture as the underpinning of the whole edifice.

This is why it is important to have available the capability to bring these interweaving aspects of a business together to optimise the chances of a successful performance over the long term.

References.

1 Chandler A, (1962): Strategy and Structure: Chapters in the history of industrial enterprise, Doubleday, New York.

2 Porter, M E (1980). Competitive Strategy. Free Press. ISBN 978-0-684-84148-9.

3 Rumelt, R P, (2011). Good Strategy/Bad Strategy. Crown Business. ISBN 978-0-307-88623-1.

4 Mintzberg, H, Quinn, J B, (1996). The Strategy Process: Concepts, Contexts, Cases. Prentice Hall. ISBN 978-0-132-340304.

5 Henderson, B (1981). “The Concept of Strategy”. Boston Consulting Group https://www.bcg.com/publications/1981/concept-of-strategy

6 Mintzberg, H. Ahlstrand, B. Lampel, (1998) J. Strategy Safari : A Guided Tour Through the Wilds of Strategic Management, The Free Press, New York,