– Thoughts on Strategy and Management

The Terminology of Strategy – When Leaders Mistake Execution for Strategy

There is an interesting article about the terminology of strategy at strategy + business: How Leaders Mistake Execution for Strategy (and Why That Damages Both) by Ken Favaro. Its subtitle is When leaders substitute visions, missions, purposes, plans, or goals for the real work of strategy, they send their firms adrift. This article is exactly in line with my personal experience.

When I worked with managers from middle management up to senior executives in the process of strategy development, I often found that they have problems with the terminology of strategy. There seems to be a lack of clarity about the real meaning of terms like strategy, vision, mission, plan, strengths, opportunities and so on.  Hence, a concept is used without proper understanding. A strategy that is developed on that basis is not a strategy but a compilation of thoughts and ideas labeled with some strategic terms. Not surprisingly, such a “strategy” will hardly deliver the expected results.

Ken Favaro’s article confirms this observation. He writes:

When discussing strategy, executives often invoke some version of a vision, a mission, a purpose, a plan, or a set of goals. I call these “the corporate five”. Each is important in driving execution, no doubt, but none should be mistaken for a strategy. The corporate five may help bring your strategy to life, but they do not give you a strategy to begin with.

Nevertheless, they are often mistaken for strategy—and when that happens, real damage can ensue. If the corporate five are the cart and strategy is the horse, leaders who put the cart first often end up with no horse at all.

Ken suggests that in the first step, companies need to address five more fundamental, and difficult, questions. He calls them “the strategic five”:

  1. What business or businesses should you be in?
  2. How do you add value to your businesses?
  3. Who are the target customers for your businesses?
  4. What are your value propositions to those target customers?
  5. What capabilities are essential to adding value to your businesses and differentiating their value propositions?

In the reminder of his article, Ken explains what problems will arise when leaders mistake the issues related to execution for strategy and thus miss to answer the really strategic questions. He illustrates his point with IBM’s Lou Gerstner as an example for how it is done right.

I think Ken touches an important issue with this article. The terminology of strategy is well known and very popular to use. Many people give in to the temptation to improve their speeches and presentations with some strategy terms. Unfortunately, and as one of the comments to this article points out, most people have their own understanding of what these terms mean. So they talk to each other using the same words but having potentially different things in mind. The result will be more confusion than a fruitful strategic conversation.

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