This page is a work in progress, part of a multi-year effort to capture and share learnings, frameworks, tools, and processes to run organizations. See Running Organizations for more.

Strategy is a set of choices an organization commits to over the next 2-3 years to embody a mission, a vision, and a set of core values. Every strategy has tactics/activities planned against it, usually in one-year (or longer) increments, and also includes corresponding Annual or Quarterly Goals.

The strategy sets the direction for the organization’s growth. Strategy is also about survival. The fewer resources an organization has, the more unified and focused the strategy needs to be. The more resources an organization has, the looser and less coordinated a strategy needs to be.

The heart of strategy is making trade-offs. If a strategy doesn't involve making trade-offs and passing up opportunities, it's no strategy at all. A strategy that tries to accomplish everything is straddling. Straddelers don't grow.

"Peanut butter syndrome" is a visual metaphor that I see everywhere in organizational strategy. It's explained in Scaling Up Excellence: "A few speeches and workshops and wiping hands clean is the 'peanut butter syndrome' - a thin layer of investment spread across the whole company."

Business case studies often laud organizations for the strategic choices they made, but little coverage is given to the trade-offs they made along the way. Every successful strategy includes missed opportunities. Being clear about what opportunities you'll forgo is key to developing a real strategy.

A good litmus test for any kind of strategic choice is covered in the book The Road Less Stupid. If you can't articulate the many downsides of your strategic direction, you likely don't have a strategy at all:

A great mission and vision is a strategy half-completed. Without a clear mission, strategy is entirely up for debate. Without a clear vision, strategy is a set of endless possibilities, anchored by nothing more than vague worldly aspirations.

Strategy makes your vision not just clearer but feasible in the minds of everyone in the organization.

Purpose, mission, and vision can take you a long way, but strategy helps you win in a competitive business environment in which other organizations are trying to accomplish some of the same things.

Having a strategy is not about being "the best" in a market. The "best" is always subjective. A great strategy is a commitment to being different from the competition. That means offering unique value that can’t be matched by competitors.

"Hyper-growth," and "growth hacking" is not a strategy. Inorganic attempts to grow either fail to produce lasting results (i.e. "increase ad spend") or compromise a strategic position (i.e. "add more of our competitors' features") by trying to be all-things-to-all-people.

Low cost strategies are viable strategies, but generally, only one organization can be the "low cost provider," in a space. There are unlimited differentiation-based strategies, but only one low-cost strategy.

Similarly, trying to "out-Lean" organizations usually isn't the best strategy. Organizations should always look to cut costs in areas that don't lead to their excellence and differentiation, but basing a Strategy around superior operational efficiency is shallow.

Strategy combines your vision and purpose together with a specific playing field, the capabilities you'll build or strengthen, and the necessary management systems to implement those four elements. Creating that "fit" is critical to executing strategy.

When you have Fit between your Capabilities, you have a Strategy that a competitor would be hard-pressed to copy. Though competitors can match many of your capabilities, your positioning, and even your vision and mission, they can't easily or cheaply copy the entire Fit you're seeking to create.

How much about the future do you feel confident in? If your market and your competition are well-known and slow to change, you know significantly more than the average startup. The more you're confident in, the more strategic analysis you can do, the more strategic choices you can afford to make, and the more central planning you can use to confidently execute.

The less you know about the market, the competition, and the customer, the less that developing a strategy will be a good use of your resources. Startups, and any organization that is pre-product market fit, won't benefit from a lot of up-front strategy work.

Strategy and operations work together in a feedback loop. As you operate, you naturally gain more knowledge about the customer, the market, and the competition. Those new inputs should help you evolve your strategy over time.

In well-understood markets, landscapes shift, including how customers buy, the capabilities of competitors, and the technology at play. Strategy can't be stagnant as the landscape shifts.

Dialogue is an important tool in creating strategy. Strategy should be a team effort. If you're growing fast, each piece in your operating rhythm needs to be sped up, and you should revisit strategy more frequently.

A.G. Lafley and Roger L Martin offer a simple strategy breakdown in their book Playing to Win. The approach includes five areas:

In this section, we'll dive into Where to Play, How to Win, and Capabilities.

Where to Play is about making choices around Product Types, Geographies, Customer Segments, and Distribution Channels.

A great tool for mapping your many possible choices is an Adjacency Map, which I'll cover in the next section.

There are two general ways to win in a market - through differentiation or through low costs (internal cost structure or low pricing). Most organizations will need to win through differentiation.

The key to differentiation is not analyzing yourself against competitors and seeing what competitors aren't doing, but by focusing on the dimensions that customers care about, first.

To be able to differentiate effectively, organizations need:

A capability is a combination of the "people, processes, technologies, and organization that allows you to deliver your intended outcome" (Source: Strategy That Works).

Capabilities are not products or services, they're the "how" behind your products and services. The "intended outcome" is your vision & mission.

To win, you need 3-6 core differentiating capabilities that fit together coherently. "Core" means they're critical to delivering on your vision and mission. You may have many capabilities, but defining the Core Capabilities is key to generating strategy.

Here are a few more Capabilities "system" examples from the book Strategy That Works.

There are a number of strategy frameworks and analysis tools you can use to build a strategy. Strategy is an act of creation and these tools are for analysis, but they can be helpful inputs to thinking about strategy.

I've left off strategy classics like the Ansoff Growth Matrix, Porter's Five Forces, the BCG Matrix, and PESTLE/PEST/STEER/STEEP/STEEPLE, as I haven't found any of them to be particularly helpful for small-to-medium sized organizations.

Before solidifying your Core Capabilities and overall Strategy, let's explore the keys to good organizational strategy.

A model by Gerald Adolph and Kim David Greenwood shows three ways to grow, starting from the Core of your business, and moving outward to developing new capabilities. This is a great exercise to follow a Definition of The Core and an Adjacency Map.

If you start by leveraging your existing Capabilities rather than defaulting to building or acquiring new ones, you’ll have a higher probability of success.

A strategy that leverages an organization's existing Core Capabilities is often called an "Edge Strategy," or "Adjacency Strategy." Edge Strategies are covered at length in the book Edge Strategy: A New Mindset for Profitable Growth and Adjacencies are covered in the book Profit From The Core.

Most organizations have multiple products or services and customer segments they're going after. Some have multiple geographies they're targeting. Understanding what the core of your business is is the first step in exploring adjacencies to grow from. The "Core" here, are the Capabilities you have that define the essence of your mission.

Edge/Adjacency strategies are less risky because they do not require that you build something entirely from scratch and step into a new space that you're unfamiliar with.

According to Alan Lewis & Dan McKone, there are three key Edges in any organization.

Upselling options, Product Bundling, Customization (and consulting), and Self-Service strategies (i.e. Unbundling) are other areas you can probe to find Capabilities that you didn't have before.

This is a process for mapping Capabilities that I've adapted from Shannon Susko's The 3HAG Way:

The Activity System Map is a Michael Porter tool that maps your Core Capabilities and the key activities that support those Capabilities. This is a tool you can continue to update and refine over time to visualize your strategy, but for this exercise, creating an initial map is what we're going for. This will help make your strategy real and bring execution into the minds of your team members.

The Strategy must be communicated to all levels of an organization. A long-form document that explains the strategy and specifically, the thinking and rationale that went into the key decisions, is helpful. The goal is to help people understand the strategy and see how it can be put into action.

There are lots of ways to communicate strategy, including Scaling Up's "7 Strata of Strategy," but I feel that the most critical component of communicating strategy is coverage of your 3-5 Differentiating Capabilities. A well-written Strategy Statement can do just that.

A Strategy Statement is a one or two-paragraph statement that reiterates the organization’s purpose, the market context, and how you'll compete in that market.

Here are the components of a good Strategy Statement from the book The Strategist:

Read your Strategy Statement aloud and make sure it meets these three criteria: (Source: Playing to Win)

Here are three examples from the book The Strategist: