What is strategy?

To help us understand the ins and outs of great strategy, we invited Kurt Verweire, professor of management practice at Vlerick Business School. He immediately addressed the elephant in the room: what is strategy?

“Of all management concepts, strategy is the one that attracts the most attention and generates the most controversy. Almost everyone agrees that it is important. Almost no one agrees what it is.”
– Joan Magretta

Interestingly, the professor started out by pointing to what strategy is not:

• It’s not your mission or vision.
• It’s not your goals or objectives.
• It’s not strategic analysis about your industry or competitors.
• It’s not your strategic plan with actions and priorities.

Especially the last part, having a strategic program, leads companies to believe that they have a strategy, whereas ‘80% of companies don’t have one’, according to Kurt. The difference between a plan and a strategy?

“A plan tells you what you’re going to do, a strategy tells you what you’re not going to do.”
– Roger L. Martin

Without a clear strategy, companies lack boundaries. And without boundaries, they end up with too many projects and too few resources. Sounds recognizable?

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Strategy is making choices

So that is why you need a strategy. It’s the missing link between your vision and goals, and the plan. It helps companies make choices.

This is easier said than done. How do you come up with a winning strategy?

It depends, according to professor Verweire, on your context and goals.

• Are you looking to win in the core? You need a competitive (or business) strategy.
• Looking to grow beyond the core? You need a growth (or corporate) strategy.
• Or do you want to deal with disruption? You need a turbulence strategy.

If we zoom into business strategy, here too, it is all about making choices.

“Being ‘all things to all people’ is a recipe for strategy mediocrity and below-average performance.”
– Michael E. Porter

Let us look for a better recipe. For the ingredients, Kurt Verweire refers to a decade old model that is still relevant today:

• Whom do we serve?
• What do we provide?
• What is our value proposition?
• What is our operating model?

But he overlays it with a more recent framework: Playing to Win.

• Where to Play = Whom do we serve + What do we provide.
• How to Win = What is our value proposition + What is our operating model.

So how do you answer these questions? By now, you should see the pattern emerge: you make choices.

• Define what are good customers. ‘Dare to say goodbye to bad customers.’
• Define whether your products are specialist or generalist in nature. And whether they are best in quality or simply good enough. ‘Successful companies are always in a corner of this quadrant.’
• Define how you will differentiate your offering. Through product, price, service, access or connectivity? ‘Great companies score the Olympic minimum on all, but differentiate on 1 or 2 dimensions.’
  (Crawford & Mathews's Consumer Relevancy Framework)
• Define your operating model. Operational excellence, product leadership, or customer intimacy? ‘Even at Vlerick, we cannot win from Harvard in terms of product leadership, so we chose customer intimacy.
  (Treacy & Wiersema's Value Disciplines)

Be warned: each of these questions will cause spicy discussions in the management kitchen. But you will have all the key ingredients to win. More precisely, all but one. We’ll get into that later.

Strategy in practice: North Sea Port

First, let’s listen to how Daan Schalk, CEO of North Sea Port, put that theory into practice. For context: in 2018, the ports of Ghent, Terneuzen and Vlissingen fused into North Sea Port. The ambition is to become one of the leading ports in Europe. ‘But that’s not easy when the biggest ports are your neighbours, Antwerp and Rotterdam. Then you’re living in a very small house.’

So how can you differentiatie? Once more: you make choices. Those who were present got the opportunity to get a direct view on the business strategy for North Sea Port. Here, we’ll share just a few of the bold choices Daan and his management team made:

• Not to do business with China, although it’s a huge market.
• Not to focus on containers, although they are synonymous with ports if you ask most people.

North Sea Port instead focuses on a handful of verticals, like circular raw materials or the construction of wind turbines at sea. 

Those specialties came from having open conversations with the players in the port. Because here’s another bold choice that Daan made: they were going to focus on customer intimacy, whereas all ports focus on operational efficiency. How’s that for differentiation?

The missing link: Strategic Execution

A new, post-merger organisation and a new strategy that makes ambitious choices? How do you pull that off? Here, we felt honoured to hear such an experienced CEO praise his collaboration with the strategy team at In The Pocket.

We promised you one more key ingredient. And those who know Playing to Win know what follows ‘Where to Play’ and ‘How to Win’: what are the required capabilities and systems to get us there? This is what we helped North Sea Port with.

It is what Kurt Verweire called having ‘a good implementation engine’. Because, he said, there’s a lot of talk about strategy definition. ‘But your winning strategy is worth nothing if you cannot execute’. And again we were flattered: ‘This new approach and toolkit by In The Pocket is among the best I’ve seen to make strategic execution more tangible.’

Curious? Our colleague Lana told our guests more about what we call Business Design.

Through over a decade of helping companies win in digital, we experienced first hand that Offering and Organisation are not always going hand in hand when it comes to innovation:

• Either you’re too narrowly focused on innovating your products or services, that you fail to see how your people, processes or systems will struggle to launch or scale those innovations.
• Or you approach it too much from those internal perspectives, causing you to fail to excite customers (because there’s no value for them) and employees (because it’s too operationally focused).

Business Design is all about making sure the business strategy and the organisation are in sync. It’s all about Strategic Execution.

The magic to making sure companies are truly ready to implement their strategy?

1. Create the right focus:
   How do you create value?
2. Create the right overview:
   How do all the building blocks fit together?
3. Create the right autonomy:
   How do we give teams a mandate to innovate and improve?

If we work our way upwards through that list, here’s how your organisation will thrive after our 6-9 month Business Design collaboration:

• Teams have clear roles and responsibilities, and they feel empowered to innovate.
• Because they know how their mission, processes and systems fit into the bigger picture.
• And that big picture has one clear focal point: value creation.

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