We decided to use one of the greatest success stories in the history of business: Apple's startup, for our example.
We have relied heavily on urban legend for our Apple facts. But that's the secret of all great stories, isn't it? But our message isn't a secret.
We define strategy as a choice of action. 8 strategies are common to every organization, be they for-profit or nonprofit. Those strategies may change over time but the 8 are being implemented from the day the company is started. They are the source of all subsequent strategy and the basis of all organization design.
But let's get on with the story. Steven Jobs and Steven Wozniak, and a third person whose name, like that of the fifth Beatle, has disappeared over time, got together in 1976 to start Apple.
Breathing life into Apple started with these young men. They were, in effect, the first strategy; the organization management strategy, being the sourcing, allocation, and management of the human resources of a firm. All the tasks in the new company would be divided among the two Steves and the third co-founder.
Next came the marketing/sales strategy, being the strategy to identify and capture customers. The marketing/sales strategy was that Apple was going to market and sell personal computers to individuals.
Unfortunately, none of the young entrepreneurs had any money or even a place to build their revolutionary product. So, armed with their organization management and marketing/sales strategies, they approached Mr. Jobs Sr. to ask for a loan and the use of the Jobs' family garage as a production facility.
In other words, the financial management strategy; being the sourcing, allocation, and management of capital and revenues of the firm, was to borrow from Mr. Jobs, Senior.
Remember, this was all happening shortly after Ken Olson, president and founder of Digital Equipment Corporation, had famously declared: “There is no reason anyone would want a computer in their home.”
It is very likely that Mr. Jobs Sr. was aware of this pronouncement. Before making any loans or handing over the keys to the garage, he probably wanted to hear his son explain how this new venture, called Apple, would be positioned to succeed in the computer industry.
In other words, the Dad wanted to know their business definition strategy, being how the business is positioned in the competitive environment.
The young Steves no doubt impressed Mr. Jobs Sr. with their detailed knowledge of the emerging market for personal computers and its potential for spectacular growth. Dad was clearly sold on the idea. They got the loan and the keys to the garage.
Now the young men were ready to implement a production strategy, being the way they were going to fulfill the marketing/sales promise of delivery of value. The strategy was simple. Wozniak would assemble the pc kits one at a time. However, it quickly became apparent that they could not produce products quickly enough to meet the demand!
The young entrepreneurs were having their first encounter with the need for a risk strategy; being the focus on threats and opportunities the company’s strategies faced. The risk they identified was that demand for the product required a high-volume production strategy.
So they turned to the seventh of the eight strategies, the R&D/technology strategy, being the creation and/or use of intellectual property, to manage the production risk. They moved production from the garage into a proper manufacturing setting complete with the technology of assembly lines, conveyors, and the associated, usual practices to enable volume production.
The rest of the Apple story becomes a history of incredible global success. Apple took off. In other words, the eighth strategy, the growth strategy, was classic Drucker; the consequence of product success.
The point of the story?
For owners, managers, and boards, there are 8 strategies in every company. Do you know what yours are today? Do you know the history of their evolution to today's choices of action?
Unless you understand and can describe current strategy and where it came from, you can't communicate it to others. And how can you change a strategy you don't understand? How can you tell a compelling story?
For all entrepreneurs and startups, what are your answers to the 8 questions of strategy? What are your business definition, risk, growth, financial management, R&D/technology, organization management, production (a.k.a manufacturing or service delivery depending on the nature of your business) and marketing/sales strategies going to be?
The answers to the eight questions are, of course, the strategic plan!
That's what a strategic plan is: a review of the 8 strategies to determine whether change is required given changing stakeholder expectations or changing factors in the external environment.
For more on these ideas, see The Alpha Strategies, Understanding Strategy Risk and Values in Any Organization. Available at online retailers everywhere or for free in pdf format at www.thealphastrategies.com