Mintzberg (2007) considers strategy as an evolving pattern that results from a stream of corporate business decisions which may be more short-term in nature. In this way, Mintzberg allows for the gradual emergence of a coherent strategy on a more ad-hoc basis, where the values and beliefs of a company shape the incremental decisions made and ultimately set the corporate direction required (Johnson et al, 2014).
The range of theories that exist around strategy and its supporting concepts can be encapsulated into key 'schools of thought' that highlight the inherent tensions in this three perspectives (Chandler, 1963; Porter, 2004; Mintzberg, 2007). These perspectives are essentially:
l The Boundary School. Strategy seeks to identify the operating parameters of a business and how success can be shaped by either working within them or consciously choosing to compete in a new market.
l The Dynamic Capabilities School. Using strategy to create a collective learning process within an organisation in order to develop and maintain distinctive competences that deliver a competitive advantage. With the evolution of the knowledge based economy, this focus on internal talent is proving particularly critical for modern businesses (Nonaka & Takeuchi, 1995).
l The Configuration School. Setting strategies that move a business from one operating paradigm to another, often in an effort to respond to evolving market demands and expectations.
(Volberda & Elfring, 2001).
STRATEGY PERSPECTIVES AND THE TIME DYNAMIC
Each school of thought seeks to outline a different perspective on strategy, but when considered from the viewpoint of corporate success (i.e. examining strategies that have delivered a distinct competitive advantage) a number of common factors can be identified (Grant & Jordan, 2012). Successful strategies appear to possess the ability to articulate a clearly recognised goal which endures over time and the corporate commitment to remain focussed on achieving that goal (Henry, 2011). That success is predicated on a comprehensive and accurate understanding of the competitive environment being faced, so that the strategy adopted reflected and exploited the operating context (Rumelt, 2012). Effective strategies are built upon an objective appraisal of the corporate resources base, ensuring that the business is able to exploit the internal (resource) strengths it possess whilst also protecting areas vulnerable to competitive pressures (Grant & Jordan, 2012). Ultimately, these three factors are brought together (through effective leadership) so that the strategy articulated is actually implemented and a business environment is created that responds well to change requirements (Stacey & Mowles, 2016).
Johnson, Whittington, Scholes, Angwin & Regnér (2015) seek to capture the time dynamic associated with the delivery of an effective business strategy by arguing that a business needs to take a multi-faceted view looking at their operations over distinct periods or horizons. There is the need to consider current activities (horizon one) and the actions and activities needed to extend and defend the core business. Looking further out (horizon 2) requires the ability to consider emerging activities and markets that could provide new sources of profit and expansion. There is also a requirement to maintain an overview of how the operating environment may change in the future and to create viable options to exploit these changes even if no immediate profit is generated (horizon 3) (Johnson et al, 2015).
Chaffee (1985) sought to capture these overlapping perspectives when attempting to articulate the main areas of academic agreement in the debate over strategy. These core tenets were outlined as being:
l Strategy relates the business concerned to its operating environment and proposes a methodology or tactics to meet changes to that environment.
l Successful strategy is inevitably complex because it is focussed on change and therefore introduces novel (and sometimes contentious) thinking into the business. As a result it is non-routine, non-repetitive and (echoing Mintzberg's thinking (2007)) can be unstructured. Not all strategy is deliberate in nature.
l Strategy involves both action and process i.e. considering how a business implements strategy. The evolution of strategy requires the concepts outlined by the leadership to be underpinned by robust analysis that supports the strategic direction set.
l Strategy, by its very nature, affects the whole business and can therefore be seen from a range of perspectives.
(Chaffee, 1985)
Mintzberg, Ahlstrand and Lampel (2009) further refined this thinking around the nature of strategy when they argued that it sets direction, focusses effort, defines the organisation and reduces ambiguity by providing consistency. It is this latter point which seems to reinforce the more simplistic definitions of strategy (i.e. setting corporate direction) as it seeks to resolve the 'big picture' issues so that the majority of personnel can focus on doing what is needed to ensure that the business remains profitable within that strategy framework (Grint, 2005). Ultimately, corporate strategy is about winning and competitive strategy is concerned with the basis upon which a company chooses to compete in the markets it has decided to operate within (Henry, 2011; Lynch, 2009). Whilst core academic texts focus on the analytical tools required to support the decision making processes required to develop and implement such strategies, it is also about framing conscious corporate actions around what not to do e.g. ending product lines and service offerings (Rumelt, 2012).
LAYERING STRATEGY TO CREATE COMPETITIVE POSITIONING
In accepting the importance of strategy in the creation of an enduring competitive advantage (Porter, 1980; Mullins & Christy, 2016), most academic texts consider how it operates at three distinct levels within a business - corporate, business and operational (Johnson et al, 2014). Again, this reinforces the definition of strategy as the mechanism setting long-term direction given how these different perspective reinforce the importance of linking implementation and delivery to both the operating environment and the corporate values articulated i.e. why they company exists in the first place (Stacey & Mowles, 2016; Lynch, 2009).
Corporate strategy is focussed on identifying the scope of the business (e.g. markets, products, services) and the broad distribution of resources to each element of the organisation (Johnson et al, 2014). In essence, it seeks to determine two fundamental issues - what markets the business is going to compete within and how it will do so (Henry, 2011). In order to capture and share the core elements of corporate strategy across a business, many entities use mission, vision and values statements in an attempt to ensure that everyone understands the strategic direction set (McKeown, 2015). The mission should aim to articulate why a business exists (capturing both customer and corporate drivers), the vision focusses on the longer-term desired end state (such as growth ambitions) whilst corporate values outline the principles and operating ethos to be followed (Henry, 2011; Slack, Brandon-Jones & Johnston, 2016). For many businesses, it is an adherence to these values that are seen to provide a key point of competitive differentiation and are therefore seen to be vital components of any business strategy (Hooley, Piercy, Nicoulaud & Rudd, 2017). The rise in importance of the corporate social responsibility agenda and the consequent (perceived) value of ethical trading practices to consumers means that many academic strategists argue that such values must always come before corporate policies, practices and goals (Collins & Porras, 1994; Blowfield & Murray, 2014). However, others take a different perspective, emphasising the need to ensure that such values must also be continually reviewed to reflect the challenges presented within a continually evolving operating environment (Rumelt, 2012; Volberda & Elfring, 2001; Thompson, 2001). This debate highlights the challenges associated with attempting to set a clear and consistent long-term corporate strategy whilst also adapting to changes in the operating environment which are essential if any competitive advantage is to be secured and maintained (Lynch, 2009).
Business level strategy -traditionally referred to as competitive strategy in most academic texts - is more directly concerned with how a business should compete within a particular market (Johnson et al, 2015). Whilst it should reflect the overall corporate strategy set, it is more carefully tailored and structured to consider the immediate local/regional impact of markets, competitors, customers and other stakeholders (Jenkins et al, 2016). In simplistic terms, one company can be stated to possess a competitive advantage over its rivals when it is able to generate and sustain a higher rate of profit (Grant & Jordan, 2012). However, this perspective does not consider the complexities presented by the operating environment and that competitive advantage can also be generated from changes in the market, particularly if the company concerned is able to respond rapidly and effectively when faced with such changes (Wall, Minocha & Rees, 2010; Sitkin & Bowen, 2010).
Porter (2004) argued that there are essentially three generic strategies to explore when considering how best to create and sustain this essential competitive advantage. Either a position of cost leadership can be adopted (becoming the low cost provider in the market for the products or services concerned), a differentiation strategy taken forward (bringing products and services to the market that are perceived to be unique or adding distinct/particular value) or a defined focus strategy can be explored (i.e. servicing a distinct, narrow market segment and then seeking to achieve either cost leadership or differentiation within it) (Hooley et al, 2017). Porter also emphasises the perceived danger of being 'stuck in the middle' (i.e. following a business strategy that mixes these distinctive approaches) as this is seen to be exposing the company to the defined and distinct strategies of current and emerging competitors (Porter, 2004).
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