Strategy Is Simpler Than You Think
Chances are, it’s not what you’ve been told
Until 2006, there were nine planets in the Solar System. Since 2006, there have been only eight.
No, a black hole didn’t suck a planet out of our world like a vacuum cleaner. In 2006, astronomers voted to reclassify Pluto as a dwarf planet.
Pluto didn’t change. It didn’t even know it was demoted. It’s still cruising through cold space, right where it’s been for centuries.
Our world is made up of facts and concepts. “Objects fall down, not up,” and “Everest is higher than Mont Blanc,” and “Politicians always lie” are facts.
Okay, the last one was a joke.
Marriage, by contrast, is a concept. A concept, or a “social construct,” has no natural meaning of its own. We agree on what it is—and then treat it as real. We used to call Pluto a planet, but we later changed our minds.
People often blur the two. For centuries, marriage was assumed to be only a union between a man and a woman. We used to treat it as a fact, though it was just a concept whose meaning we later revised.
Business strategy is also a social construct, not a fact. Though we often forget about it.
Nazi propagandist Joseph Goebbels said, “A lie repeated often enough becomes the truth.” We often see it in politics today. In business, a concept repeated often enough can also—often undeservedly—become a “fact.”
Strategy as a Cliché
Dear Club Members! I started the Strategic Seeing Club for people who question the obvious, don’t buy clichés, and think for themselves. In this article, we’ll bust a well-worn cliché in business strategy.
In 1954, Peter Drucker wanted to name his new book “Business Strategy.” But the publisher feared that such a ‘military’ title would scare away potential readers.
So, just 70 years ago, the term “business strategy” wasn’t nearly as common as it is today—when even 23-year-old McKinsey rookies pretend they know what it means.
The concept of strategy is far younger than business itself—which has been around since at least the 16th century—and even younger than the word “business,” which took off in the 18th.
People were doing business long before anyone wrote a dissertation on strategy.
But then, in the second half of the 20th century, a logical flip occurred. In Alfred Korzybski’s terms, the “map” became the “territory.” The concept of “business strategy,” coined by Drucker and other thinkers to explain why companies succeed, started to be treated like a law of nature.
In response to my previous post, a subscriber—a professional strategist—commented:
“Strategy: a plan to achieve a long-term or overall aim… It’s literally the definition of the word in the dictionary.”
Period.
And he’s not the only one who thinks so.
It’s not only that I disagree with the definition (more on that below). Since strategy isn’t a fact but a social construct, any definition should be treated as just one of the possible ones.
Let’s dive deeper and talk about why there’s no such thing as “strategy theory.”
The Strategy Theory
Imagine you’re running a successful business. Why would you need a strategy? Use the simplest words you can—don’t let fancy terms lead you astray.
In my view, you need a strategy to make the business stronger. That’s it.
Of course, your actions should be well thought out and lead to long-term success rather than quick wins.
You may have a lofty goal—or not. But any agreed-upon actions that help your business get stronger over the long term are a strategy.
Strategy isn’t an annual magic ritual; it’s the daily, systematic work of improving your operating practices. Note: this isn’t yet another definition by Svyatoslav Biryulin. I’m just trying to get to the core of strategy by stripping away the fancy-term fluff.
You need to think and act strategically every single day. You should dive into your customers’ needs, develop new products, and serve other stakeholders.
Of course, some days you think longer-term than others. But believing strategy demands different tools than operations is like thinking a longer drive requires a different steering wheel and pedals.
If someone pitches “strategic tools” you can’t use day to day, beware—it’s likely snake oil.
There’s no such thing as “strategy theory.” There are some fundamental business principles you should use to grow your organization. They are grounded in value exchange.
Value exchange
Every organization has six stakeholder groups:
1. Customers
2. Employees
3. Partners
4. Owners/investors
5. Regulators
6. Society
They are all equally important. That’s easy to prove—if at least one group stops supporting the business, it falters.
Every day, leadership puts the company’s assets and processes to work on two tasks:
delivering more value to stakeholders
capturing more value from them
The quality of the value exchange directly shapes an organization’s performance. The more value it creates for stakeholders—and the more it captures in return—the more it grows. Strategy is choosing how to maximize the value you create and the value you capture.
Of course, it’s easier said than done; that’s why so few companies succeed. However, in essence, that’s all you need to run a company.
I’m pretty sure no dictionary on earth carries that definition—and I’m not losing sleep over it. I see, day in and day out, how these simple principles help my clients make the right decisions.
There is another important idea I’d like to share.
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What’s wrong with goals?
If you’re not an Ivy League business professor, sipping coffee in a cozy office with a view of the oak grove, you know that definitions like “Strategy is a plan to achieve a long-term goal” don’t survive the brutal world beyond campus.
We have already dived into it a week ago, but here is the central idea.
You can have a plan that leads to your long-term goal under two conditions:
You know that (A) your goal is achievable and (B) exactly how to achieve it;
You don’t know those things, but you can bend the universe so it helps you achieve your goal.
Maybe I’ve missed something, but I’ve yet to see it work.
Sure, ambitious goals can at times move mountains. But more often, the more ink you spill perfecting a detailed plan, the more ink you’ll spend later rewriting it to fit reality.
So instead of setting goals you’ll soon revisit and plans you’ll end up rewriting, I help my clients choose:
(1) a general direction of travel for the business,
(2) an approximate pace of development, and
(3) a set of core strategic principles.
The core principles deserve a special mention.
If we treat strategy as a plan, we assume we can make most decisions upfront and then simply execute. Come on—let’s be realistic—that’s not how the world works.
So instead of trying to decide everything in advance, my clients and I set principles that let them make the right calls day after day.
· Which customers do we prioritize?
· Which products do we develop first?
· Who do we hire?
· Which processes do we automate?
Strategic principles are answers to 30–40 questions like these—the ones that let leaders across the company make day-to-day decisions.
That’s the point of strategy: your team can find answers to their questions in it.
Thinking about how to apply this to your business? Book a focused 60-minute call. Drop me a message here, and we’ll arrange it.
Want a deeper dive into these ideas? You’ll like my bookRed and Yellow Strategies: Flip Your Strategic Thinking and Overcome Short-termism
What an insightful reframe for me. The most powerful idea for me is defining the principles to determine which priorities are the right ones to take each day.
I like your focus on stripping strategy back to value exchange and daily practice. That’s where most companies lose the plot.
Where I diverge a bit is that “maximizing value created and captured” feels more like the outcome of strategy than its formula. In my view, strategy is the set of choices that determine where and how that value is created and captured — I refer to it as a Strategic Formula. Without those structural choices, even great execution just maintains parity.