Playing To Win
Strategy, Strategy Everywhere
The idea for this post started with a tweet to me asking for help in making sense of all the business terms of the form ‘X Strategy.’ I answered suggesting that maybe I should do a post on it and numerous other readers chimed in enthusiastically. That prompted me to write my 37th Year III Playing to Win/Practitioner Insights piece on Strategy, Strategy Everywhere: But Can You Figure out What to Drink? You can find the previous 147 PTW/PI here.
This started with the tweet from Vash in which he rhymed off a list of 13 examples of X Strategy and asked for help on making sense of all these strategy things. More piled on (The Generic Generalist, Andres, John, Felipe, Martin, Simon, Tony and Jorge — and I might be missing someone). I stopped keeping track at the 25 listed above — but promised to write a piece on what I referred to as Everything Strategy.
I have mixed feelings on the subject. On one hand, if strategy applies to everything in business, it means nothing. And I certainly don’t like some of the strategy terms on the list above (which I will discuss below). But on the other hand, there are multiple types of strategy and having multiple terms makes sense. The key is to be really precise in the use of strategy terms/words.
As I have argued before, I don’t like the plural of strategy. Whenever I see the use of the term ‘strategies,’ I see it accompanied be a list of initiatives, and typically a laundry list of them, not an organized one. Strategy is singular. It is a thing: an integrated set of choices. But that doesn’t imply that there is only one locus of strategy. Strategy involves making choices under uncertainty, constraints, and competition, and that happens in lots of places across the company.
The most core form of strategy is strategy for a line business — whether service or product. I will call that ‘business strategy.’ That is how the practice of strategy started and most strategy writing is about business strategy.
For a small company in a single product in one jurisdiction, strategy is unitary. It has one single business strategy. But most companies are sizable and diverse. For such companies, there are levels of business strategy. There is a corporate strategy — for example, at P&G the strategy for competing against Unilever, Johnston & Johnston, Colgate-Palmolive, Kimberley-Clark, SC Johnson, Henkel, etc. There might be business sector strategy — for example, at P&G, its beauty care strategy to compete against Unilever, L’Oréal, Estée Lauder, Shiseido, etc. There may be category strategy — for example at P&G its hair care strategy to compete with Unilever, L’Oréal, Kao, etc. And there could be individual product or brand strategy — for example at P&G its Head & Shoulders brand strategy to compete with Kenvue’s (J&J’s CPG spin-off) T-Gel, Sanofi’s Selsun Blue, Kramer Laboratories’ Nizoral, etc.
That is potentially a lot of strategy for a company like P&G. But there is an upside. I believe that P&G is now the world’s greatest CEO factory because it has to have great strategy at so many levels. For example, at the lowest level, Brand Strategy, it has 25 $1 billion+ brands, each of which needs a strategy.
But P&G is not alone. PepsiCo needs a corporate strategy, a sector strategy for its Frito-Lay business, a category strategy for Frito-Lays potato chip category, and a brand strategy for its Lays chips brand. And B2B companies like Siemens, Boeing and Caterpillar need strategy at multiple tiers like the B2C giants.
It is tricky. It would be much easier for these companies if they had one product line. But they wouldn’t be nearly as large. The price they must pay for the diversity is that each strategy needs to be carefully nested so that each fits with and reinforces the others. That is hard work.
Functions also have a strategy as I have written about in the pages of Harvard Business Review — finance strategy, marketing strategy, operations strategy, etc. There are some who argue that the line business creates strategy, and the functions execute. I think that argument is lacking any logical rigor and I reject it out of hand. If a function has a budget authorizing it to make investments (capital and operating), it needs a strategy to guide those investment choices. The role of the line business unit is to specify the desired outputs that it needs and is it up to the strategy decisions of the function to figure out how to deliver those outputs.
For multi-geographic businesses, geographies can have strategies too. How the business is run will determine how appropriate/necessary it is. Sometimes line businesses run in a truly global fashion and there isn’t a necessity for strategy for each geography because that is encompassed in the global line business strategy. But in other cases, a geography has a budget authorizing it to make investments (capital and operating), it needs a strategy to guide those investment choices, just as with functional strategy.
Other strategy terms on the above list are subordinate to existing functional strategies. For example, client strategy is nested within sales strategy, funding within finance, innovation within R&D, pricing within marketing, and comms/PR within IR/ER. Similarly, you could have a Germany strategy within a European geographic strategy.
As with the nesting of functional and geographic Strategy under business strategy, it is not illegitimate to nest sub-functional and sub-geographic strategy under functional and geographic Strategy. But here it is important to be practical and not too precious.
As I have discussed before in this series, at some point as you go lower in the organization, you hit the indivisible building blocks of strategy. It is important for P&G to have distinctive strategies for Head & Shoulders and Pantene shampoos. They have different customers, competitors, and value propositions. While it could say that it needs separate strategies for Head & Shoulders Classic Clean versus Head & Shoulders Deep Moisture, it would probably be a net-negative waste of time. So be careful and stop when going one level lower would not result in distinctively different choices.
Strategy Terms that Suggest the Absence of a Real Business Strategy
There are a number of strategy terms whose use immediately makes me suspicious that the user doesn’t have a business strategy worth shaking a stick at.
Companies whose strategy doesn’t entail having strategically important content (e.g., AT&T) look enviously at the companies that do (e.g., Disney or Netflix) and decide they need a content strategy (e.g., AT&T buying Time Warner for $85 billion). Attempting to bolt a content strategy onto whatever you think is your business strategy is unlikely to produce success against competitors that don’t have a content strategy because content is an inherent, integrated part of their core Business Strategy.
Does Facebook have a digital strategy or data strategy? I don’t think so. It has a strategy for which ‘digital’ and ‘data’ are integral components. I was on the board of Thomson Reuters for 14 years. It is the leading provider of must-have, real-time, on-line data to financial, legal, and accounting professionals. But we never had a ‘data strategy.’ For example, our Westlaw business had a business strategy of having a staff of 1500 lawyers write summary headnotes for every case that came out of the US legal system (and have done that for 100 years) and use our proprietary numbering system to code the cases in order to provide the most sophisticated legal search service to lawyers. That was our businesss strategy, including our Must-Have Capabilities and Enabling Management Systems — not our content or data or digital strategy. And we certainly never feared competitors who developed a content or data or digital strategy to complement their business strategy to take us on.
Partnership is not a strategy in and of itself, though it is often used as a substitute for business strategy. I can’t tell you how many start-ups come to me for advice and brag about all the ‘partners’ they have signed up to be part of their effort. When I ask, what is the Where-to-Play/How-to-Win, it is something generic like — ‘our partnerships.’ They all fail, unless partnerships are an integral part of their business strategy, like SAP having an explicit strategy that entailed supporting an array of partners, like Deloitte and Accenture, to work with clients on installing its ERP software.
Companies who have a business strategy that doesn’t produce growth think that the way they will grow is to develop a growth strategy. The trendy thing to do is to appoint a Global Growth Officer (GGO) to lead the growth strategy. It is possible that this works — though I have never seen it do so. I have seen it fail miserably and would never recommend it. I would recommend fixing your business strategy to be a winning strategy and that will produce growth.
If you have one, it is likely to be a bolt on to your business strategy rather than an integrated part of it. I doubt that Patagonia has a sustainability strategy (though because the ESG rating agencies tell you that you must have one, they probably write one up and publish it for that purpose). I suspect that Patagonia operates as if sustainability is a core part of its business strategy not something separate and distinct. I understand that every modern company must say that it has a sustainability strategy, but I think the ones that will make a real contribution to global sustainability will integrate the principles of sustainability into their core business strategy.
I am deeply suspicious of go-to-market Strategy, but it is such an important modern business term, especially in the technology sector, that I will dedicate a separate piece to the subject soon.
Miscellaneous Silly Uses of the Term ‘Strategy’
Some uses on the list in the chart, in my view, are just plain silly. Don’t be sucked into using these terms.
Ok, so then what then is non-commercial strategy? I don’t like it at all when companies consider sales and marketing ‘commercial’ and R&D and manufacturing something else. It is all for commercial purposes.
As I have always and will always argue, the strategy versus execution distinction is unhelpful. And calling something ‘execution strategy’ is certainly not going to help. It is a sign of deep, deep confusion about how business works.
It is hard to discern to what this is really referring. Most strategy is in fact planning, so it is probably an accurate reflection of their view — unhelpful but accurate. I assume it is an attempt to make planning cooler by calling it ‘planning strategy.’
I know I am biased because I have always been a strategist, but my practitioner advice is to use the strategy word with care. Strategy is the act of making choices under uncertainty, constraints, and competition.
Its most crucial form is business strategy. If you have a bad business strategy, nothing will save you — not even ‘brilliant execution,’ whatever that is. In most companies, business strategy needs to occur at multiple levels. That requires that you spend time and attention on properly nesting the levels so that they fit with and reinforce each other.
Functional and geographic strategy are also important in serving business strategy by making great supporting choices in those domains.
If you think you need content, data, digital, partner, growth, or sustainability strategy, go back to your business strategy and build the features of these ‘strategy’ categories into your fundamental business strategy choice. If you attempt to bolt them onto your previously determined business strategy, a competitor that has integrated them will likely outperform you.