Strategy is one of the most used words in the business lexicon. In Business Schools, it is seen as the Holy Grail, with rock star strategy experts like Michael Porter, creating a larger than life image for the practice. This has perhaps made it more drawn out from reality than it should typically be. We share our thoughts on how entrepreneurs can frame an understanding of what strategy is in a realistic and useful way.
Strategy is not in the talking, neither is it a document. It is simply a case of choice and outcome. Let’s make this quite simple. Imagine you are at a bus stop and about to take a bus home but the bus stop is very crowded. In business speak, the market will be termed to be over saturated. At that point you have to make a choice to either walk to the bus stop before or after the 0ne you currently are in. It is a choice with a specific outcome. You will either move to a less crowded bus stop, but there is also the possibility of moving to a similarly or worse still, more crowded bus stop. The question is, relative to the possible crowd level in the other bus stops, would it make sense to deploy the energy to move to the other bus stop.
This is essentially what business strategy is; a set of choices on what to do and possible outcomes. Most people reading this will certainly have found themselves in one situation or the other similar to this.
Let’s say a gentleman desires to learn trade, say tailoring. He has several options to choose from. He could go to a place where the skill can be acquired at a low cost and the output will also be low value targeting a more mass market. He could also go to a place where the learning experience is of a high quality, he pays a premium and targets customers who can pay premium. He could also find a middle ground. In strategic management, option 1 will be a cost leadership strategy, delivering products or services at low costs to customers whilst targeting a broad market. Option 2 will be a differentiation strategy, offering unique features and high quality service at a high price to customers. Option 3 will be a hybrid / integrated strategy, offering a combination of both.