Three Types of Strategy
by Jeff Scott, on Aug 19, 2013 4:00:00 AM
Within the domain of well-defined strategy there are uniquely different strategy types, here are three:
- Business strategy
- Operational strategy
- Transformational strategy
It is worth noting, that a common consideration across different types of strategy are people, process, and technology. Without this, strategy is a set of lofty ideas, ungrounded in reality.
Let's look further into each of the three that come to mind. What strategy types do you see?
1. Business Strategy
The first of the three types of strategy is Business. It is primarily concerned with how a company will approach the marketplace - where to play and how to win.
Where to play answers questions like, which customer segments will we target, which geographies will we cover, and what products and services will we bring to market.
How to win answers questions like, how will we position ourselves against our competitors, what capabilities will we employ to differentiate us from the competition, and what unique approaches will we apply to create new markets.
Senior managers typically create business strategy. After it is created, business architects play an important role in clarifying the strategy, creating tighter alignment among different strategies, and communicating the business strategy across and down the organization in a clear and consistent fashion.
Executives are just beginning to bring advanced, highly credible business architecture practices into the strategy discussions early to provide tools, models, and facilitation that enable better strategy development.
2. Operational Strategy
The second of the three types of strategy is Operational. It is primarily concerned with accurately translating the business strategy into a cohesive and actionable implementation plan. Operational Strategy answers the questions:
- Which capabilities need to be created or enhanced?
- What technologies do we need?
- Which processes need improvement?
- Do we have the people we need?
The vast majority of business architects are currently working in the operational strategy domain reaching up into the business strategy domain for direction.
They work from the middle out to bring clarity and cohesiveness to the organization’s operating model typically working vertically within a single business unit while resolving issues at the business unit boundaries.
More mature business architecture practices work in multiple verticals or move from one vertical to another creating common business architecture patterns.
3. Transformational Strategy
The third of the three types of strategy is Transformational. It is seen less often as it represents the wholesale transformation of an entire business or organization.
This type of strategy goes beyond typical business strategy in that it requires radical and highly disruptive changes in people, process, and technology.
Few organizations go down this path willingly.
Transformational strategy is generally the domain of Human Resources, organizational development, and consultants.
These efforts are incredibly complex and can experience significant benefit from applying business architecture discipline though it is rare to see business architects playing a significant role here.
Not all strategy work is the same. Each strategy type creates a unique role for the business architect requiring a different approach and skill set. Business architects who are successfully delivering in one role should be actively developing the skills they need to move into other strategy domains.