What is Strategy? What does it mean for you and me in daily life?
Strategy is a plan of action or policy designed to achieve a major or overall aim.
In business, strategy is important because the resources available to achieve these goals are usually limited. Strategy generally involves setting goals, determining actions to achieve the goals, and mobilizing resources to execute the actions. A strategy describes how the ends (goals) will be achieved by the means (resources). The senior leadership of an organization is generally tasked with determining strategy. Strategy can be intended or can emerge as a pattern of activity as the organization adapts to its environment or competes. It involves activities such as strategic planning and strategic thinking.
In everyday life, we formulate strategies on a regular basis, whether it’s deciding which route to take home from work (or whether to take public transportation), what time to set our alarm clock in order to get up on time, or how much money we need to save in order to retire at a certain age. As with organizations, our strategies are formulated according to our desired objectives and are constrained by our resources (time, money, energy).
Strategy is the art of getting what you want.
Most people, when they hear the word strategy think of generals or large corporations. But strategy is equally relevant to you and me in our personal lives. The old saying is still true: if you don’t know where you’re going, any road will take you there. And that’s why we need an idea of strategy in our daily lives – so we can get to where we want to go.
The term comes from the Greek strategos, “a general”, who was responsible for planning a campaign in order to defeat an enemy army. It has been used ever since, both literally and figuratively. Napoleon said, “Strategy without tactics is the slowest route to victory; tactics without strategy is the noise before defeat.” Strategy has been defined as “the determination of the long-term goals and objectives of an enterprise, and the adoption of courses of action and the allocation of resources necessary for carrying out these goals”.
Notice that strategy involves two things: what we want (our goals and objectives) and how we are going to get it (by adopting specific courses of action). This simple framework can be applied in your own life as well: first decide where you want to go, then figure out how
Strategy is the craft of putting together a portfolio of choices that allows you to win.
Winning means different things in different contexts. In sports, winning means being first across the finish line or scoring more goals than your opponents. In business, it might mean increasing your market share, beating the competition to market with new products, or maintaining an edge over your rivals in terms of manufacturing efficiency. In war, it means overcoming your enemies and conquering their armies.
But whatever the context and whatever you’re trying to accomplish, strategy is about making choices and putting together a portfolio of choices in order to achieve your desired outcome.
Strategy is the art of fitting ends and means together: matching what you want to do with what you can do. The choice set available to you will depend upon four factors:
1 Your capabilities;
2 Your resources;
3 The nature of the problem you face;
4 The nature and abilities of your rivals (if any).
Strategy is about making choices, trade-offs; it’s about deliberately choosing to be different.
Strategy is not just about being different. It’s about being different in ways that are valued by customers and therefore make a real difference to the performance of the organization.
Strategy is not just about being different. It’s about being different in ways that are valuable and sustainable.
Strategy is not just about being different. It’s about being different in ways that are valuable, sustainable, and profitable.
The most effective way to understand and manage the world is to see how it can be divided into different games. The concept of a game is a powerful tool of the mind, and I will use it throughout this book to help you understand strategy.
Games are everywhere in life. They are present at every level of social organization, from the actions of individuals to those of nations. As an individual, you play games with your family and friends, at work and at play. Games are played on sports fields, in concert halls and art galleries, on battlefields and in boardrooms. Games are played in markets, between rival companies or even within a single firm. Many games last only minutes or hours; others endure for years or even centuries. Some games are simple and easy to understand; others are complex and defy analysis. But all games share certain characteristics that make them useful for understanding many aspects of life.
As I was writing this essay, I was constantly reminded of the futility of trying to understand the strategy of others. But I think this is also a good thing. It should help us to get used to uncertainty.
I am constantly surprised by the brazenness with which people try to impose their beliefs on others. They make arguments that seem sensible, but have no basis in reality. Here are some broad examples:
You can’t be a good person unless you are religious. You can’t be a happy person unless you are married. You can’t be successful unless you have an MBA. You can’t be a good parent unless your kids go to the right school and play the right sports and do the right activities. You can’t be thin unless you buy these products and do these exercises and eat this way etc etc etc.
In some cases it may be true that those things help, but does that mean everyone has to do them? Do we need to persuade people who don’t believe in religion or marriage or MBAs or private schools? In many cases, we already know what other people will say, so there is no need for us to listen at all. Yet we keep trying, hoping they will change their minds and listen to what we have to say
I would like to begin by telling a story about a young man who was very angry with his father. The young man’s name was Siddhartha, and he lived at a time when India was split into many small kingdoms, all fighting among themselves.
Siddhartha lived in one of the smaller kingdoms, the kingdom of Kapilavastu. His father, King Suddhodana, ruled that small kingdom. When Siddhartha was born, wise men came to his father’s court and said that Siddhartha would grow up to become either a great king or a holy man.
When Siddhartha reached the age of sixteen, his father built him three beautiful palaces—one for each season—and hoped in this way to keep him from ever leaving home. But young Siddhartha had a restless mind. He loved his wife, Yasodhara, and their son Rahul; but he also wanted to know more about the world than could be seen from a palace window. One day he got permission from his father to take a short ride through town with his driver Channa and his horse Kanthaka.
As they rode out of the city gate, Siddhartha saw four people whom he had never seen before: an
