A strategy is a plan of action designed to achieve a vision. It derives from the Greek “στρατηγία” (strategia), “office of general, command, generalship” e.g., (Wikipedia, 2014). Dixon P. suggests that Business strategy “is the battle plan for a better future”.
Strategy is about changing unfavorable circumstances into a favorable situation by reorienting an existing business in a new competitive environment. In order to achieve this goal, strategists will shape the future of an organization involving every part of the company in the business process redesign/reengineering.
Business’ can have more than one strategy. For example, a firm may have an overall corporate strategy guiding the business as a whole, whilst its individual branches have their own strategies that compliment and support the main strategy.
Strategy aims to guarantee the long-term success and survival of the company. In doing this, the strategy is often far longer than one year. Due to changing markets and consumers the business strategy must adapt alongside market evolution.
Strategist aim to anticipate the market changes, thus only needing small changes to be made to the strategy canvas.
In order to monitor the market evolution a feedback structure is set to anticipate market changes, thus allowing the firm to react and to minimize their impact for the company.
The essential elements of a strategy are:
1) Value based orientation
1) All relevant stakeholders have to see clearly the advantages (added value) related to the product or service offered by the company. Most of all the added value must be clear to customers to encourage adoption of the product or service. Such advantage can be established and defended through superior values in customers key competing factors.
2) The strategy must display profit potential through a clear and structured business plan.
The business plan is the direct consequence of a strategy and it is a set of, well documented, actions to be followed to implement the strategy in the real world. This action plan will include numbers and information to give strength to the strategy and to direct the business redesign/reengineering.
In game theory, a strategy refers to one of the options that a player can choose. That is, every player in a non-cooperative game has a set of possible strategies, and must choose one of the options that a player can choose. e.g., (Wikipedia, 2014)
Chess is a classic high-end strategic game. It is a two-player board game played on a ‘chessboard’, a square-checkered board with 64 squares arranged in an eight-by-eight grid. Each player begins the game with sixteen pieces; each of these types of pieces moving differently.
A chessboard is the equivalent to the business market in which the company competes in. The Chessboard’s boundaries are known and unchangeable. In the company business market boundaries should also be well known but changeable. One of the strategists’ tasks is to figure out how to enlarge the company market boundaries in order to increase the number of customers.
In chess there are two players. In the company business market there could be several players that have an interest in competing with the company. Strategists need to know those players and their strategies to be able to better focus the company business plan.
In chess, both players start the game with the same type and number of pieces being allowed to move within a strictly defined set of rules. In company business market there could be big, small, national and international players. Some of them will be able to move aggressively (ex. dumping price policy) to conquer a new market. This gives them an advantage over other firms and therefore various firms must adapt their strategy to play on their own strengths and against the competitions weaknesses.
In the company business market legal rules are set but it is left great freedom to act. A good strategist needs to be aware of the environmental (legal, political, consumer) changes to be ready to re-focus company strategy. A better strategist will anticipate these occurrences.
The object of chess game is to ‘checkmate’ the opponent’s king by placing it under an inescapable threat of capture. In addition to checkmate, the game can be won by the voluntary resignation of one’s opponent,
which may occur when too much material is lost, or if checkmate appears unavoidable.
In the company business market the objective is to reach a position of value based orientation and profitability that are unchangeable like checkmate for chess players.
Chess strategy consists of setting and achieving long-term goals during the game – for example, where to place different pieces – while tactics concentrate on immediate maneuver. These two parts of the chess-playing process cannot be completely separated, because strategic goals are mostly achieved by the means of tactics, while the tactical opportunities are based on the previous strategy of play. e.g., (Wikipedia, 2014)
In chess, tactics mainly concentrate on short-term actions – thus allowing them to be calculated in advance by a human player or by a computer. The possible depth of calculation depends on the player’s ability. In quiet positions with many possibilities on both sides, a deep calculation is more difficult and may not be practical, while in “tactical” positions with a limited number of forced variations where much less than the best move would lose quickly, strong players can calculate long sequences of moves in order to give them the best possibility of winning. e.g., (Wikipedia, 2014)
A great strategist will be able to evaluate more variables while defining the strategy and like a good chess player he will be able to reconsider the strategy, analyzing the other players’ actions through an effective and efficient feedback system. Unlike chess, where only two players are involved in the game, strategists have to deal with several direct and indirect players (stakeholders) and they need to be aware that underestimating their influence will increase the risk of failure. Since companies are made of people, a good example could be found looking at employees. People tend to create a comfort zone around themselves, where they don’t feel in danger and where they are not stressed. Some of them may be reluctant to accept changes related to the introduction of a new strategy since changes would move them out from their comfort zone. On the other hand, it is also possible that some of these people may have a vested interest in the status quo and they will try to obstacle any change in the existing strategies. A strategist has to deal with this problem by himself and by using facilitators. A facilitator is someone who helps a group of people to understand their common objectives. Some facilitator tools will try to assist the group in achieving a consensus on any disagreements that preexist or emerge in the meeting so that it has a strong basis for future action.
Author: Carlo Olmi