Fundamentals of a Successful Strategy
by Alain Bolea
Misunderstandings about the nature and purpose of strategy abound. Some business people confuse the analysis of competitive forces as the strategy itself. Others equate strategy with their annual budgeting plan. For many strategy remains a vague, powerless concept that does not apply to them.
At its purest, a strategy is what you want to accomplish as an organization and the steps you need to accomplish it. Strategy, therefore, is important to all organizations because it gives them a context for the everyday decisions that move the organization in the desired direction. Michael Porter, the Harvard University strategy professor, states: “…strategy is completely useless unless the result of the strategy process… is understood broadly. The #1 purpose of strategy is alignment. It is really getting all the people in the organization making good choices, reinforcing each other’s choices because everyone is pursuing the common value proposition, the common way…”
To be an effective tool, a strategy must fulfill the organization’s major objective of remaining fully relevant to its stakeholders over the long run. What it comes down to is whether the combined efforts of leadership and staff can create sustainable economic value, that is to say, generate outputs that are greater than its inputs.
So how does a strategy help an organization create and sustain economic value? The main mechanism is to make clear to everyone how the organization is going to deploy its resources to tackle two of the most challenging questions an organization can ask: 1) how effectively does it currently operate?; and 2) how well does it adapt to changing conditions? At the end of the day, organizations are economically sustainable when they can integrate and manage the complexity of their own system while managing the changes in their environment in a timely manner.
Alain Bolea is a former managing director for Deutsche Bank in New York in charge of telecom financing. He is currently a management and sustainability consultant with Business Advisors Network.
Category: Sustainable Small-B