The ideas in this post are a follow-on to Where to Play and How to Win and are taken from an article written by Ken Favaro of Booz & Company . . .
The critical takeaway about strategy is that it is not a fancy term for vision, mission, purpose, plan, and goals (aka the "corporate five"). Those concepts and activities are critical for driving execution, but should not be mistaken for a strategy.
Favaro defines the "strategic five" as
1. What business or businesses should you be in?
2. How do you add value to your business?
3. Who are the target customers for your business?
4. What are your value propositions to those customers?
5. What capabilities are essential to adding value to your business and differentiating their value propositions?
The purpose of clearly understanding and articulating a strategy is so that the organization has a foundation for decision making and resource allocation. Without this clear direction, decisions are made without context and your business will go adrift.
The aforementioned "corporate five" are not unimportant.
A vision paints a picture of the future around which your company can rally.
A mission articulates an objective that describes what the company is seeking to achieve.
A purpose describes why your company exists and gives meaning to what it does and the people who do its work.
A plan lays out a set of actions to be undertaken within a certain time frame.
And goals define how your success and progress will be measured and evaluated.
All of this together motivates a company to perform at its best in the context of the strategy. This is execution. We all tend to spend more time on execution because it's more easily measured and it feels like we are accomplishing something. But having a strategy is what separates the businesses that achieve long-term success and survival.