Study after study reflects that boards, executives, management, and employees have difficulty understanding their company's strategy telling us that a better way to talk about and understand strategy is required.
Our model, The Alpha Strategies, offers a way to see strategy as a system. The model is based on the definition of strategy as a choice of action. 8 strategies and 3 types of strategy characterize the strategy system common to every organization.
Concept One: Strategy as a choice of action
Our model is based on a definition of strategy as a choice of action. This is consistent with Dr. Alfred Chandler's characterization of strategy, in his 1962 book Strategy and Structure, as being "an adoption of courses of action". It is also consistent with Fayol's observation at the turn of the 20th century that there are activities common to all enterprises.
The current definition of strategy as being about competitive advantage or value creation doesn't allow strategy to be seen as a system because it is too vague while at the same time too rigid.
The current notion of strategy as competitive advantage was made popular with Bruce Henderson's founding of Boston Consulting Group in 1963. The way he chose to differentiate his new management consulting firm from competitors was to hold it out as being the first "strategy" consulting firm, by which he meant marketing and business positioning.
BCG flourished (and continues to do so) using the powerful tools Henderson developed in the 1960's to study markets and their potential.
The definition; however, has a major drawback. It cannot explain why organizations are dynamic or how activities relate to each other. This is something we think can only be done by showing strategy as a dynamic system. Our model does this.
Concept Two: 8 strategies are in every organization
Henri Fayol identified six in arguably the first book written on strategy, General and Industrial Management.
Peter Drucker identified two more, growth and business definition, in The Practice of Management, 1954.
These 8 strategies represent the basis of the strategic plan and the basis of all organization design.
These 8 strategies are the starting point for all strategy planning because within each of the 8 are mutiple additional generic strategies common to all organizations.
Concept Three: 3 types of strategy
It has been known for some time that strategy organizes around a lead or dominant strategy. One of Dr. Mintzberg's earliest research findings was on strategic direction and how it doesn't change over long periods of time. Drs. Tregoe and Zimmerman based their concept of Driving Forces on the intuitive notion that strategy is a system.
Choice of dominant strategy is why you can tell a marketing firm from a bank or a manufacturer from a technology firm. A marketing firm will have marketing/sales as dominant strategy. A bank will have financial management as dominant strategy. The personalities and culture associated with each are very different.
We took the concept of dominant strategy one step further. We have identified 3 types of strategy common to all organizations.
We call the 3 types Alpha, Influencers, and Enablers.
One of the eight strategies is the dominant strategy and leads the other seven. We call the lead strategy the Alpha. We think it sets the dominant culture of the organization.
Influencers are the three strategies that most guide and constrain the implementation of the Alpha and the third category of strategies, the Enablers, being the remaining four strategies.
The Result: A dynamic strategy system model
You can build a map of your strategy system and load the eight strategies into the 3 types that reflect your company’s present strategy system.
Our maps represent a powerful way to study strategy and understand it better. It's also a great way to communicate strategy decisions. It is certainly the starting point for any strategic planning process.
Our models are now online. Try modeling your own strategy system at: http://www.thealphastrategies.com/drag-n-drop-strategy/
For more on our thinking on strategy, read The Alpha Strategies: Understanding Strategy, Risk, and Values in Any Organization. Kirkus Reviews awarded the book a Kirkus Star for being "a work of exceptional merit". It was also listed as a Kirkus Best Books of 2013. It's available online everywhere in paper or Kindle.