Strategy Explained

Strategy is how organisations choose to position itself, in delivering its products and/or services in a unique manner; based on customer centricity.

Strategy relies on two major pillars:

• The customer experience: What makes an  organisation’s products and/or services different, so that customers prefer the overall experience that one business offers, in comparison to that of competitors.
• The delivery chain: The combination of resource (people, finance, information, infrastructure) application that delivers a unique customer experience.

For us to understand what strategy really is, we need to view an organisation as a system that has three dimensions, called environments.

The first is an internal environment which refers to the organisation’s strengths, weaknesses, resources, processes and basically what the organisation consists of.

The second environment that we need to understand is that of competition, also known as a competitive environment. This is very well described using Porter’s Five Forces. Later in the course, a full explanation of Porter’s 5 Forces is given.

The third environment is that of the external environment. This is best described through a framework known as PEST or PESTLE. This stands for Politics, Economy, Social trend changes, and Technology. All organisations deal with four generic resources: Finance, People, Infrastructure, and Information.

Strategy is how an organisation intends to apply these resources in a competitive environment. This is so that the organisation can compete, whilst it remains sustainable, successful and has dominance of a specific position in the market, relative to its competitors.

In simple terms, a strategy is a plan that gives direction to an organisation and helps to position itself in a competitive environment.

We need to understand strategy, not just know what it is and how to compile it. We need to understand it as the juncture between organisational ability and environmental dynamics, as it makes organisations part of the environment.

We need to understand resource allocation, environmental changes, market dynamics and many more things — not just know of them and know about them.

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Example:

Steve likes to pick-up a coffee and doughnut from his local coffee shop every morning on his way to work. Normally this would cost Steve USD3.00.

The coffee shop sees an opportunity to enhance their customer experience by offering a delivery service on regular orders. So they offer to have the coffee and doughnut delivered to Steve’s house every morning for an extra delivery fee of USD0.50. Steve signs-up for this delivery as he is willing to pay the extra fee for the convenience of having his coffee and doughnut delivered to him.

This is an example of how the delivery chain can create a customer experience that sets the organisation apart from competitors.

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The Expert Says:

Steyn Heckroodt: Strategy and the Strive for Uniqueness

Download This Framework: The Five Defining Decisions of Creating a Strategy

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The Expert Say:

Felix Oberholze-Gee

For many people, strategy is a total mystery. But it’s really not complicated, says Harvard Business School’s Felix Oberholzer-Gee, author of “Better, Simpler Strategy”. Companies should simplify and focus on two value drivers, he argues: customer satisfaction and employee satisfaction. By aligning strategic initiatives on these alone, leaders make their workers’ jobs less complicated and improve customer experiences.

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