Booz define Strategy

A shockingly simplistic ‘Executive Definition of Strategy’ in the Booz journal Strategy+Business. The summary is partly OK “… the result of choices executives make on where to play and how to win, to maximise long-term value“, but it follows up with trivial, age-old points about choosing “position” and required capabilities – illustrated with that ancient case Southwest Airlines.

This cannot be an adequate definition of strategy. First, the answer today is no different than it would have been 30 years ago when S-W started – so what has S-W “strategic management” been doing over all that time? Secondly, 60-odd airlines have tried that strategy in Europe, over 40 have failed, and only a handful are successful, so these choices cannot possibly¬†explain what constitutes a successful strategy. The same is true of just about every other well-known success-story- a one-time clever choice, never significantly changed, copied by many, but most failing.

The discipline is called “strategic management”, so surely any answer must encompass what management does on a continuing basis – not just one-off choices. So Strategy (whether successful or not) is something like “The stream of quantitative decisions made across all functions of the organisation, continually over time, against changing external conditions, that causes performance to change over time“. Whether the strategy is successful for business cases shows up (as Booz explain) in creation of business value, as given by the net present value of free cash flows. The alternative basic definition, though, has the merit of being equally applicable to non-commercial cases (and many business cases too), where performance aims are not primarily financial.

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