How many books have you read twice? How did your understanding of the book change? When I wrote the report on the nature of strategy as part of the Business and Management Faculty’s CFO and Strategy resources, I debated whether to include much on defining what strategy is. Why discuss definitions when many of you will have come across such definitions in your ACA studies (although strategy was not part of the syllabus in my day) or other early management courses you attended. But the chances are that your direct involvement in strategy at the time would have been limited. Therefore, the ideas and concepts may have felt very abstract and meaningless.
Moreover, in the interviews I carried out with CFOs it became clear that people had very different ideas on what strategy is. Notions such as mission, vision and strategy were sometimes used interchangeably. Some placed more emphasis on prediction and planning whereas others thought more in terms of strategy as emerging from responses to the environment and opportunism – no doubt the latter view will have gained more traction given the events of the past few years.
So, I decided to discuss the textbook definitions of vision and mission and to highlight several definitions of strategy, including the one currently used in the ACA learning materials defined by Johnson, G., Scholes, K. & Whittington, R. (2011):
‘Strategy is the direction and scope of an organisation over the long term which achieves advantage in a changing environment through its configuration of resources and competences, with the aim of fulfilling stakeholder expectations.'
And one from Quinn, J. B. (1980):
‘A strategy is the pattern or plan that integrates an organization’s major goals, policies and action sequences into a cohesive whole.’
Each idea in those definitions could be debated in a useful way to deepen our understanding of strategy and apply that understanding in our businesses. How would our strategy look if we thought about it as a ‘pattern’ rather than a ‘plan’?
It is not that any particular definition is right or wrong. However, I do believe people within an organisation would have more productive strategic discussions if there was some consensus on how they define strategy; not least because this would enable organisations to ensure they cover all the necessary foundations for success. For example, if everyone is content that the organisation’s vision has been subsumed within the strategy work so be it, but if not, then the vision needs to be picked up somewhere else and used to frame the strategic approach.
ICAEW Insights hopes you find our work on the CFO and Strategy useful. The resources, which in addition to covering the nature of strategy, also include discussions of the multiple strategic roles of the CFO and how to overcome barriers to contributing more to strategy, are open to all. If you have any comments on them or would like to provide input to our next piece on strategy formulation, please email firstname.lastname@example.org.
Further resources on strategy and risk (including our new guide to risk management) are available to Business and Management Faculty members at https://www.icaew.com/technical/business-and-management/Strategy-risk-and-innovation.
Johnson, G., Scholes, K. & Whittington, R. (2011), Exploring Corporate Strategy, (9th edition), Harlow: Pearson.
Quinn, J. B. (1980), Strategies for Change: Logical Incrementalism, Homewood: Irwin.