What is strategy: definition, defining business strategy, execution, examples & 10 key concepts

• Data Science Book
• A definition of strategy
• 5 steps to describe a strategy
• Visualizing the strategy
• to the knowledge base

The process of strategy formation: positioning, formulation, and execution

According to the theory, the process of strategy formation consists of 3 consecutive steps:

1. Position your organization clearly and unambiguously: know the competition, know who and what you are up against, and sharply delineate your product-market combinations. Explore your strategy options.
2. Formulate an organizational strategy: drawing up a growth strategy raises all sorts of crucial questions. For example, how much machinery, people, and capital do you need if you want to equip the whole of the Netherlands with charging stations for electric cars?
3. Start strategy execution: appoint a board member to manage the strategy implementation process.

There is nothing wrong with this sequence: it is logical and understandable. You can’t start implementing a strategy first if you haven’t even formulated one. But the process of strategy development is a dynamic strategy process, where a top-down strategy and a bottom-up strategy can successfully alternate in practice. Learning what works and what doesn’t, adjusting, and fine-tuning.

Figure 1: The strategy formation process: positioning, formulation, and execution

Mintzberg was not secretive about it: top managers who pat themselves on the back after they have been successful and proudly referred to the business strategy they had previously outlined, create a false reality. They grossly underestimate the essential contribution that people on the work floor usually make to the process of strategy definition and strategy development.

The usefulness of a SWOT analysis, strategy sessions, and agile strategy

Traditional entrepreneurs, such as KLM’s first president and aviation pioneer Albert Plesman, may have based their business strategies on gut feelings, but nowadays there is much more to entrepreneurship than that. Without clear strategic objectives, solid business plans, sharp market and competition analyses, and environmental impact assessments, you can’t get a foothold as an entrepreneur.

A sustainable strategy for companies that have existed for some time cannot really be done without a periodic SWOT analysis, not to be confused with a SWOT strategy. After all, drawing up a SWOT is not a goal in itself, but a tool for mapping the Strengths, Weaknesses, Opportunities, and Threats of the internal and external environment.

Managers develop the strategy

Don’t prioritize a fast strategy above all else

Organizations that want to appear hip are prioritizing agile strategies, although the shine is getting off it a bit. An agile strategy sometimes masks a lack of focus and can be costly with many iterations. Especially if you’re trying to blow with every wind. Consult our strategy consultants for the latest developments. In any case, Passionned Group believes in a strategy-driven approach and regularly organizes strategy sessions for clients.

The meaning of strategy in business

The real meaning of business strategy emerges when employees can contribute to it every day. A company’s strategy sets the course for the future. In-depth knowledge is needed from the board and managers on how to realize the strategy goals. They need to know exactly which knobs to turn: from marketing to HR, from innovation to IT, and from finance to quality management. And, of course, they must also be able to explain this in great detail and get employees enthusiastic about strategy change. That is exactly what givesmeaning to your business strategy.

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What is a corporate strategy? What is strategy?

Strategy is not only about goals but also about the conditions within which you can operate as an organization to achieve those goals. Think, for example, of laws and regulations regarding CO2 emissions or ethical frameworks for applying algorithms. This is how we arrive at a strategy definition:

Strategy begins where tactics fall short

This still doesn’t say anything about the “difference between strategy and tactics”, but it does make it clear that strategy overrules tactics. And what is a corporate strategy? A company’s strategy consists of a set of critical processes that drive its daily revenue model.

So, your business strategy is actually a reflection of your business model.

Social significance strategy: example of a strategy

An organizational strategy is not separate from reality but also has social significance and relevance. For example, what is a critical process in a hospital? That the OR has an optimal utilization. Not too high, because then patients are left lying in the hallway and you have to postpone operations. Not too low, because that costs money when patients evidently stay away. To figure out the perfect balance, you need to know exactly how to regulate the flow of patients in and out over time. Knowledge, knowledge, and more knowledge. We can’t stress it enough. Market and product knowledge, knowledge of your processes, your people, suppliers, and so on. Knowledge promotes strategy formation and is at the heart of the answer to the question “what is business strategy”. Don’t limit yourself, and start accelerating strategy by increasing knowledge about the critical processes using, for example, data analytics. And start measuring and visualizing organizational strategy with dashboards.

The positioning strategy: company strategy starts with delineation

Choosing the first step of a business strategy is always a tricky business. For many specialized strategy companies, it is right up their alley: they often advise mainly to stick to what you are good at and get better and better at it. The old adage of “cobbler stick to your last” applies. But there are other options. You can also reserve space to experiment and make excursions: look for a gap in the market. Occasionally look into a new market with new demand (more on this and the blue ocean strategy below). Management must find a balance in the positioning of the company and particularly in the process of strategy formation. The following are the points you want to address when creating your company’s growth strategy:

Figure 2: An example of a mission vision strategy model from Passionned Group. Of course, we don’t give away all our strategy secrets, hence the model doesn’t contain all the details.

• Indicate the added value: what value do you add for your customers? For example, your products and/or services enable your customers to get from A to B by plane or electric car faster than before (or than the competition). Define the added value from the very beginning, so you don’t get tangled up in a maze of administrative or controlling (unnecessary) processes later on. It is also important to realize that the added value of your company increasingly often lies in the service and ease of use and not necessarily in the product itself.
• Determine the product-market combinations: which (new) markets will you focus on with which existing or new products and services? Here, too, you will need to address the question of added value where necessary, as this can vary considerably per product-market combination.
• Define the required strategic competencies: given the previous answers, what strategic competencies will you need to have or acquire as a company? Ahold’s growth strategy, for example, has developed over the years into the strategic competency “being able to open a new store quickly”.
• Prepare for multiple futures: your positioning strategy must also take into account the future. With scenario analysis, you explore the possible futures that could unfold and then make a choice based on probability and which scenarios best fit the strategic competencies belonging to your organization’s strategy.
• Develop a mission vision strategy model: in this document, also called vision mission strategy model, you lay down your mission and vision, and describe in an outline your positioning strategies. Do that briefly and concisely and preferably on one sheet of A4 paper because you need to be able to explain it quickly. TIP: Also, briefly mention in this strategy document the unique selling points (USPs) of your organization, its products and services. You can also use a business model canvas instead of a mission vision strategy model.

Now that you’ve done all this, the foundation of your strategy and associated organization is slowly taking shape, but as we hinted at earlier, the devil of an organization’s growth strategy is in the tail. The next section goes into the crucial step where you start to “define strategy” in detail.

How do you go about defining and formulating your strategy?

Defining a business strategy, developing a strategy, or defining a growth strategy is much more far-reaching than you might initially think. You will have to formulate things sequentially. The correct order is mission, vision, and only then strategy determination.

This exercise forces you to first ask a number of fundamental questions. Penetrating, sometimes even very personal questions that at first glance seem to have nothing to do with determining your organizational strategy.

• What are we on earth for?
• What are your personal motives?
• What do you want to achieve in life?
• What standards and values are important to you?
• But also: how do we as a company think about business and ethics?
• What is our commitment to sustainability?
• Do we consider prosperity more important than well-being?

The answers to all these questions determine to a substantial extent your mission and what your organizational strategy (company growth strategy) will ultimately look like. Even if you work for a large company where the business strategy has been more or less fixed for years, it certainly can’t hurt to regularly reflect on these “fundamentals”. The zeitgeist, technology, markets, business models, and consumers change – sometimes very suddenly – and of course, you don’t want to miss the boat.

How do you describe a strategy?

After answering the above personal questions, you’re going to develop a business strategy, create a strategy, write a strategy, or improve your existing business strategy. It doesn’t matter how you name it, as long as you answer a few key questions. In which markets do you want to dominate and what product-market combinations fit with that? What are you going to do and actually even more important is the question: what are you not going to do? Concerns such as Vendex and Philips used to have a wide range of activities and were forced to divest more and more parts or focus on only one branch, as Philips Healthcare still does today. And even that (developing a strategy for one product line) is difficult enough.

Describing a strategy in five steps

A solid business strategy contains five essential steps that can be summarized as follows:

1. Determine the ambition level. What concrete objectives and results do you want to achieve with your business strategy? What is the social impact of your products and services? What “footprint” does your company leave behind? For example, to what extent are you willing to compensate for CO2 emissions?
2. Determine the core values that you want to propagate to the market. These are sacred principles or golden rules of conduct that are essential to your company and business strategy. For example, the core value of “integrity” for a construction company or financial services provider means that you declare bribes, illegal work, and money laundering taboo.
3. Describe the organizational strategy in operational terms. The organizational strategy must be in the minds of all employees – from the top to the shop floor. Strategy formation and strategic themes must be embedded in the daily workflow of employees. Make strategy an ongoing process.
4. Determine how you will monitor the progress of organizational strategy. Define a set of SMART goals, critical success factors, and KPIs and then plan the strategy according to a set of milestones to be achieved. Determine and monitor a growth strategy based in part on continuous improvement cycles (PDCA).
5. Test your business strategy. Banks and insurers have now gained experience, through trial and error, with so-called stress tests. Especially in these times, testing your organizational strategy is no superfluous luxury. “Recalibrating strategy” should regularly be an agenda item at meetings of directors and supervisory directors.

Improve the company’s strategy? Describing a strategy sometimes requires a fresh pair of eyes. If you need help defining a strategy, drawing up a corporate strategy, or sharpening it, contact one of our strategy consultants.

Defining strategy model

The management literature is full of strategy models, templates for strategy and business innovation, templates for visualizing your business strategy, and so on. Strategy models come in all shapes and sizes.

Perhaps the most imaginative model for a clear management strategy is the Blue Ocean strategy as described by Kim and Mauborgne. Hyper-competition only leads to a blood-red ocean of rivals fighting over an ever-shrinking profit margin. Based on a study of 150 companies, they advise organizations to discover or create a new, untapped market: the blue ocean. In their book, the authors explain how to achieve strategic value innovation. Stop competing in the red ocean and focus on the unexplored profitable territory of the blue ocean.

Figure 3: Choose a business strategy based on the principles of the Blue Ocean Strategy

The popular Business Model Canvas by Osterwalder and Pigneur also offers a number of handles for a reinterpretation of your business strategy. According to them, this allows you to constructively challenge established business models and strategically examine the environment in which your own business model functions.

Figure 4: SFA Matrix for strategy development and assessment strategic choices (Johnson and Scholes)

In addition to these two models, there are numerous other strategy models that all critically examine a company’s strategy from a different perspective (internal environment, external environment, growth, and development). In no particular order, these include Porter’s five forces model (see below), Ansoff’s growth matrix, Treacy and Wiersema’s value strategies, McKinsey’s 7 S model, the Abell model, Johnson and Scholes’ SFA Matrix, and so on. The SFA Matrix, for example, tests your business strategy (options strategy) on three aspects: the appropriateness, the feasibility, and the acceptance of your organizational strategy. Do you want to know how you can best use data to make smart choices? Read our blog “Build a dazzling decision box and not a paltry peep box“.

Personalized Strategy Assessment

Are you looking for a model strategy assessment? Passionned Group’s strategy consultants have several decades of experience with strategy modeling, strategy formulation, strategy map creation, and strategy execution. Join us in our search for the essence of your business strategy. Feel free to contact us for references.

Visualizing the strategy

Ideally, you want to visualize your business strategy at a glance on a canvas, a template, or a map. During a strategy session, you can then easily start the discussion with your stakeholders. Graphic design agencies and creative designers respond to this with all kinds of templates on which you can draw to your heart’s content. But the most proven and most consistent and clear way to visualize your business strategy is still the strategy map by Kaplan & Norton.

Figure 5: Strategy map of a low-cost airline.

A good strategy map captures the strategic themes and cause-effect relationships. It shows the steps you need to take to realize the strategy. This makes it clear what value proposition the organization should offer to its customers. Engage one of our experienced strategy consultants and we promise you an inspiring strategy session in which your company strategy also becomes clear at a glance.

Strategy examples

After you have completed the phases of strategy definition and strategy formulation, a new challenge follows: how to translate your organizational strategy to the workplace. A company’s strategy is often a far cry from even the most dedicated employee. It therefore helps if you can summarize your strategy and strategy organization internally, but certainly also for the outside world, in one sentence or a few words.

Mission, vision, and strategy

A mission vision strategy model is basically set up for the long term. Mission, vision, and strategy is also conceptually the right order to tackle the strategy issue structurally. In practice, you sometimes hear managers talk about the vision mission strategy, but everything really starts with a mission statement as it is officially called.

A mission vision strategy example: Unilever. This company uses its brands worldwide to carry out its mission: “to make sustainable living commonplace”. It also describes its vision in clear terms: “helping people look good, feel good, and get more out of life”. The corporate strategy of the group is described in detail in The Unilever Compass. For example, the company is aiming for zero CO2 emissions by 2030 and global sales of €1 billion in plant-based meat and dairy alternatives by 2025-2027. The strategic compass is the successor to the Unilever Sustainable Living Plan (USLP) introduced a decade earlier. It illustrates that a business strategy should normally last at least ten to fifteen years.

Pay-off of a brand: practical examples of strategy

The mission of an organization should also be translated into the pay-off of the brand. Think for example of Coolblue’s “Everything for a smile”. Another business strategy example comes from the automotive world: “BMW makes driving great”. The strategy business example of Pon Holdings, the glorious winner of the Dutch BI & Data Science Award 2021, also captures the imagination. “We move you to a better world.” Nothing more and nothing less. It is an ambitious strategic vision without embellishment.

Discuss a company’s strategy example in a group

During our strategy training courses, trainees can bring in their own organizational strategy example which is then discussed in class by the instructor and fellow trainees. Because the course participants come from different sectors, depending on the size of the group there are suddenly eight to ten different business strategy examples on the table that are discussed in complete confidentiality. As a student, you learn a lot from this. These positive experiences are also reflected in the reviews of our strategy courses.

What business strategy example would you like to contribute? What is a strategy example that inspires you? What association does the trite “company strategy example ” evoke in you? The strategy consultants and faculty at Passionned Group are curious. Let us know.

Bottom-up strategy versus top-down strategy, or just a combo after all?

The choice of the right global business strategy is quite tricky. From the ivory tower, the board of directors can come up with all kinds of ideas, but if there is no support on the work floor, your organizational strategy is still doomed to fail. Bottom-up strategy, top-down strategy, top-down bottom-up strategy, top-down strategy, bottom-up strategy, just thinking about the correct spelling can give you the necessary headaches. And then you still have to weigh up the content and coordinate the strategy with all those involved. We can take the worry out of it and help you with that.

Both strategies have their advantages and disadvantages. And as so often, the truth lies in the middle. A top-down strategy often gets bogged down in power politics: the people on the work floor soon feel passed over. A bottom-up strategy works exactly the other way. All sorts of wild ideas can also emerge on the shop floor that are at odds with the organizational strategy and policy. The management then says no and blocks the decision-making. With a combined top-down bottom-up strategy, you might achieve the most effect. Consult our strategy consultants for an objective opinion.

In addition to an overall long-term strategy, we can distinguish a number of specific strategies that we briefly explain below:

These days, it is not enough to choose one of the four specific strategies above. You have to be of “all trades” up to a certain level. Want to know exactly how that works? Then contact us here.

Mission vision strategy examples

A mission vision strategy model is basically set up for the long term. But research by McKinsey shows that the average life cycle of companies themselves is getting shorter. For example, in 1958 the average life cycle of companies listed in the Standard & Poor’s 500 was still 61 years. Today, that figure is less than 18 years. The researchers predict that by 2027, 75% of the companies currently listed on the U.S. S&P 500 will have disappeared by then through acquisitions, mergers, or bankruptcy. The turnover rate of companies listed on the Dutch AEX is also steadily declining.

TIP: Regularly adjust vision, mission, strategy, and your slogans in response to the spirit of the times and market sentiment, but don’t let yourself be led by the fads of the day. Volkswagen, for example, has used various slogans over the years to emphasize their business strategy such as “Das Auto,” “It’s not a car, it’s a Volkswagen,” and “Volkswagen, who else?” Ikea summarized its mission vision strategy model with slogans such as “Design your own life”, and “Room for ideas”.

Michael Porter: strategy in 10 key terms

The ideas of strategy guru Michael E. Porter, who is a professor at Harvard Business School, are applied worldwide in organizations and taught at universities, colleges, and, of course, at Passionned Academy. Below we present Porter’s basic views on strategy and competition for ten key strategic concepts.

Figure 7: Michael Porter’s five forces model.

1. Strategy. Porter: ‘The key question in any strategy is: how do I fight the competition?’ The essence of strategy, he says, is for management to choose a financially interesting position that it can rightfully claim.
2. Business strategy model. Porter: ‘Business strategy is the model that ensures that the whole of the company is more than the sum of the parts of the business units.’ He is referring here to the synergy principle.
3. Competitive strategies. Porter: ‘An organization can gain competitive advantage in three ways: produce products or services cheaper than the competition (cost leadership), provide unique products or services (differentiation), or concentrate on niches in the market (focus).’
4. Experience and learning. Porter also pays attention in his work to the so-called learning curve and the “broader” experience curve that he affectionately calls “two cousins.” Some companies do enjoy certain cost advantages because of unique technology, access to superior raw materials, crucial distribution channels, competitively sourced inventory, or patents.
5. Generic strategies. Porter: “Organizations must choose one of three generic competitive strategies. According to Porter, a combination of competitive strategies is out of the question. It leads to a so-called “stuck in the middle” scenario that offers little prospect of a profitable market position.
6. Porter on strategic innovation. Porter argues that innovation is the central pivot of economic prosperity. New entrants to an industry can gain a sustainable competitive advantage by innovating, depending on the existing barriers to entry. Porter: ‘If all you’re trying to do is essentially the same thing as your rivals, then it’s unlikely that you’ll be very successful.’ In other words, copycat or copycat behavior in strategy formation is not helpful. New entrants will have to disrupt an industry with a unique proposition.
7. Porter’s growth strategy. Porter: “The secret to growth and survival is a position that is less vulnerable to a frontal assault by opponents, established or otherwise, and less vulnerable to erosion by buyers, suppliers, and substitutes. Such a position, he says, can rely on many tactics: close relationships with favored customers, product differentiation (effective or psychological) through marketing, forward or backward integration, or technological leadership.
8. Porter’s Organizational Strategy. One of Michael Porter’s most famous quotes on organizational strategy is about making choices: ‘You can’t be all things to all people. Strategy is about making choices, trade-offs; it’s about deliberately choosing to be different.’ In other words: with your organizational strategy you define an area in which you as a company want to be unique and distinctive.
9. Positioning strategy. Porter: ‘Knowledge of strategy development and the underlying causes of competitive pressures provides the basis for a strategic action plan.’ They, he says, show the company’s critical strengths and weaknesses, guide the company’s positioning in the industry, make clear which strategic changes are most beneficial, and show industry developments that may be of interest, either as opportunities, or threats.
10. Profitability. Porter: “The profitability of an industry is determined by its strongest competitive force or forces. In his so-called five forces model, new entrants, current competitors, suppliers and customers with bargaining power, and substitute providers compete for profit margins.

Source: Competitive Strategy, Michael Porter, 2011

Get advice on Porter’s theory and strategy

Want to learn more about Porter, market strategy, and other strategic or operational issues? Passionned Group’s consultants use Porter’s management strategies as part of their consulting. Inquire about the possibilities and availability.

Strategy execution and the strategy implementation process

The term strategy execution may sound a little strange to the ears because of unintended associations, but “execution” means “simply” carrying out your strategy, or implementing your strategy.

Between strategy formulation and strategy execution, there is usually a gap. In daily practice, it is not so easy to implement your strategy, your business innovation, your business plan, or you startup steadfastly and consistently. So, strategy execution should never be underestimated. There are even authors (such as Pijl, J. 2017) who argue that strategy completely coincides with execution: strategy = execution. According to him, strategy execution should then not be seen as a profession, discipline, or trick, but as a core competency.

Strategy execution

However, organizations tend to place that core competency with one person: the implementation manager. When it comes to implementing a new information system, such as ERP or ETL, that need not be a problem. But when implementing a completely new business strategy, it can be problematic.

Figure 8: John Boyd’s OODA loop supports and accelerates strategy execution

OODA loop supports strategy execution

John Boyd’s OODA loop, where you go through the strategy cycle by observing, orienting, deciding, and acting, can support your strategy execution and learning process. Your positioning strategy usually has a long duration. A new, interim orientation may very well lead to an adjustment of your strategy and positioning. In this way, you build up a new mental representation with which you update your strategy and accelerate strategy execution (strategy acceleration).

Management books on corporate strategy

Entire libraries have been written about strategy, corporate strategy, and strategy execution. Mintzberg, strategy, and Porter form a trinity that whole generations of managers have grown up with. We have selected four classics for you:

• Good Strategy Bad Strategy: This book guides you through the process of creating the right strategy for your company in order to achieve your goals. Check out the book here.
• Strategy Safari: a stimulating, unconventional book on strategy formation in which the authors evaluate ten important schools of thought in strategic management. View the Strategy Safari book here.
• Competitive Strategy: a classic with all the techniques managers need to analyze an industry or individual competitor and make important strategic decisions. Open the Competitive Strategy book.
• The Data Science Book: a unique handbook on Artificial Intelligence, BI, and Data Science. The author gives you a complete recipe and strategy to make your organization data-driven in 10 steps. Order ‘The Data Science Book’ here.

Business strategy and development support

Strategy management and strategy recalibration are regular topics during meetings with stakeholders such as shareholders, commissioners, analysts, customers, and the press. In this way, the board of directors or management collects valuable feedback on how the outside world views the strategic direction of the organization.

Passionned Group offers “business strategy support” as an approachable service. We regularly organize strategy sessions commissioned by clients for medium and large family businesses, government institutions such as larger municipalities but also corporates.

Advice & strategy: various strategy options

Would you like to organize an inspiring strategy session in-company or on-site with external support from our strategy specialists? Or do you want direct strategic advice or insight into all available strategy options? Please contact us and ask for some of our references.

About Passionned Group

Passionned Group is the leading specialist in formulating, visualizing, and implementing smart business strategies. Our experienced and passionate strategy consultants help smaller and larger organizations to transform into intelligent, data-driven organizations. Every other year we organize the Dutch BI & Data Science Award™.

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