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Saturday, August 5, 2017

Strategy as 'direction' or strategy as 'plan'. What's your viewpoint?

Strategy as 'direction' or strategy as 'plan'. What's your viewpoint?


Proponents of strategy as a plan asserted that through careful consideration of options, organisations are forced to understand their environments, in turn stimulating new ideas, which ultimately produce economic value (Thompson & Strickland, 1987; Steiner, 1979). This link between performance and planning has not been unanimous, with authors often questioning any systematic link between the two (Shrader et al, 1984; Pearce et al, 1987; Armstrong, 1986). Furthermore, as ideas and best practice rapidly spread, operational effectiveness increases across sectors often reducing the positive correlation between planning and performance close to zero; Powell (1992) calls this the ‘planning equilibrium’.
This view of strategy as a plan is commonplace. Drucker (1974) defined it as “purposeful action”; it is created consciously with a goal in mind prior to any actions (Mintzberg 1987a). More broadly, strategy is concerned with achieving success (Grant, 2016), allowing organisations to focus on what really matters (Sminia, 2014), driving performance (Sminia & de Rond, 2013). For Porter (1991) it is the fundamental core of whether an organisation wins or loses, in order to succeed organisations must create unique and differentiated propositions made up of different activities (1996). Simply put, it is about doing things differently or doing different things from the competition.
The creation of long-term strategic plans can be important, particularly for branded products, set against a backdrop where maintaining market leadership and with it the ability to sustain superior profits is ever more challenging (Gehlhar et al, 2009). However, Mintzberg (1987b) cautions that although strategy is needed to outsmart competitors, which is at the essence of its formulation (Porter, 1979), it can sometimes obfuscate the need for operational excellence, moreover, at times it may be better to proceed without the straitjacket of a clear plan in uncertain waters.
As instability and uncertainty have increased in the business environment, strategy has become less about detailed plans and more about direction. This century has seen a plethora of new challenges and an accelerating pace of change which has meant that strategy has become less about plans and more about options for the future (Grant, 2016). Mintzberg (1987a) calls this strategy as ‘perspective’, it has become more about “an ingrained way of perceiving the world” (p.16) which then sets course for future actions. Williamson (1999) seeks to meld both planning and perspective, critical of the deficiencies in strategic planning’s ability to correctly forecast the future with any accuracy, he suggests combining planning with opportunism. Companies should plan the capabilities needed and new potential markets in order to give them room to manoeuvre, creating strategic options that can be utilised when the time is right.
The change in emphasis from strategy as a plan to strategy as direction does not mean that its importance has lessened, whether adapting to and exploiting digital technology, creating strategic alliances or matching up to the changing demands of social and environmental responsibility, strategy in this context has an increased importance for organisations (Grant, 2016).
In today’s competitive marketplace organisation’s require a constant focus to ensure consistency between internal strategy and the external environment in order to stay relevant and respond to customers’ needs and wants. Indeed, for companies to outperform the market they achieve a sustainable competitive advantage (Aaker, 1989; Porter, 1989), which means that the organisation must create a superior value proposition for its customers. In order to do this the company must have sufficient understanding of its external environment, specifically its target market, so as to be able to create this superior value (Narver & Slater, 1990).
If your organisation needs to evaluate it's existing strategy, or indeed need help in creating either an Organisational or Marketing Strategy in order to compete in today's ever competitive business environment, feel free to get in touch and let us help you compete both now, but also for the future.


‘The only thing that we know about the future is that it is going to be different’ (Drucker, 1973). The change alluded to by Drucker is applicable for all things but is particularly resonant for business. Failure to adapt to change has led to the demise of numerous organisations’ both large and small over the past 15 years (Forbes, 2013). Those companies that have managed to stand the test of time have understood Drucker’s assertion and been able to adapt their business and strategy to fit the external forces shaping their markets. Invariably when thinking about strategy, the word plan is often the first that comes to mind (Martin, 2014). This is no surprise as although the conception of strategy has developed over the last fifty years planning, through the financial budgeting and corporate planning of the mid-twentieth century, was the keystone of strategic management.

Thomas McAlinden & Ryan Lydon

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