The Essence of Business Strategy: Changing Times and Changing Approaches
Effective business strategy is, in its own way, a living, breathing entity. It evolves to suit the times, with conventional wisdom giving way to disruptive innovation and new strategies forged from repeated success.
Two topical articles, featuring insight by ExecOnline’s Leading Strategic Growth faculty and top Columbia professors Rita McGrath and Willie Pietersen, showed that the evolving approach to business strategy has both a rich history and an enduring legacy that leaders must contend with. Both articles explore different, yet interconnected, aspects of strategy in ways that today’s leaders would be well-advised to consider.
The Roots of Modern Strategy: Von Clausewitz’s ‘On War’
In Willie Pietersen’s article Von Clausewitz on War: Six Lessons for the Modern Strategist, Pietersen traces how modern business leaders adopted the very concept of business planning from the military conception of strategy. This, Pietersen says, was born out of businesses facing many of the same challenges related to “changing terrain, chaotic elements, and unexpected opportunities” that were traditionally confined to the battlefield.
“Strategy is the necessary response to the inescapable reality of limited resources,” Pietersen wrote. “No entity, regardless of size, has unlimited resources. Strategy, therefore, is about making choices on how we will concentrate our limited resources to achieve competitive advantage. All else follows from there.”
In his article, Pietersen looks to the classic tome On War, written nearly two centuries ago by famed nineteenth-century Prussian military strategist Carl von Clausewitz, pointing out that von Clausewitz found war more similar to modern commerce than art or science. In von Clausewitz’s estimation, planning – or, as he referred to it, “tactics” – was of limited use in an individual, particular battle, while strategy was the “doctrine of the use of individual battles for the purposes of war.”
‘War’ All the Time: The End of the Sustained Competitive Advantage
This focus on the macro lessons of military strategy points to some common lessons that business leaders can apply to this day, such as that a single battle rarely wins the war and that strategy requires, in von Clausewitz’s words, “constant rejuvenation - a way to chart strategy in an unstable environment.”
“Strategy requires… constant rejuvenation.”
This sentiment of the “unstable environment” is echoed in a strategy+business interview with Rita McGrath. McGrath’s 2013 book The End of Competitive Advantage: How to Keep Your Strategy Moving as Fast as Your Business argues that – in what one could call an evolution of von Clausewitz’s theories – the current business marketplace is more tumultuous than ever, requiring an even more aggressive implementation of strategy in everyday operations.
“Innovation used to be over there, and strategy was over here, but now they are inseparable,” McGrath told strategy+business. “The idea of learning from failure, the notion of studying business portfolios and the concept of building new capabilities are all linked when you consider the new competitive environment and how companies need to change in order to succeed within it.”
McGrath makes a case that companies can no longer coast on “exploiting temporary competitive advantages” rather than embracing “sustainable ones.” As the barriers that used to protect established, successful companies fall – driven by globalization and technology – the marketplace many leaders are facing today resembles the uncertainty and resource scarcity of von Clausewitz’s description of war, only now with no end in sight. To stay competitive, developing a winning strategy has never been more vital.