Most business leaders can tell you what their strategy is but according to an article in The Harvard Business Review many confuse it with a list of actions.
Author Graham Kenny notes that “the most basic mix-up is between objective, strategy, and action”. He believes that sorting out this confusion will help to produce a corporate strategy that delivers value to the organisation’s key stakeholders and meet the objectives of the organisation.
The objective of a business is its overall goal, something it is trying to achieve. The goal might be to be the largest manufacturer of cars or to deliver a banking service. The strategy is designed to deliver this objective.
Kenny highlights the example of Dan Murphy’s, Australia’s largest liquor retailer with a national footprint.
It has stated its position as: “Lowest liquor price guaranteed. In the unlikely event that a customer finds a lower price, we’ll beat it on the spot”. This is that company’s position on price and its key strategy to ensure its objective of being Australia’s most successful retailer of liquor.
Actions are the means to implement the strategy. Examples might include introducing new menu items in a fast food restaurant to meet the desire of customers for more healthy options or adjusting prices to match a new competitor.
Kenny believes that divisional level executives often confuse strategy with action because they approach the task from their own functional-management view, such as finance, HR or marketing. Consequently, they think action when they mean to think strategy.
To ensure a business is successful in meeting its objectives and delivers value for all stakeholders, it is essential to have a systemic approach that delivers a strategy to meet the objectives. This can then be filtered down into action plans to implement the strategy.
Business Insider Emails & Alerts
Site highlights each day to your inbox.