What is good Corporate Strategy?

While still a relatively young discipline, corporate strategy has made incredible strides in the business world over the past 40 years. Concerned with the overall purpose and scope of the business to meet stakeholder expectations, corporate strategy is heavily influenced by investors in the business and acts to guide strategic decision-making throughout the enterprise at all levels.

Strategy is often seen as the sexy part of running a large company, where boring Word documents and endless Excel spreadsheets give way to beautiful PowerPoint decks. However, strategy doesn’t play out in PowerPoint, it plays out in the real world.  To succeed, good strategy needs both a solid foundation and the ability to evolve and change in real time. Business is not static, corporate strategy shouldn’t be either.

What is good Corporate Strategy?  Businesses face several challenges when designing and putting into practice corporate strategies. So what exactly is the foundation of a solid corporate strategy? A good corporate strategy consists of six elements that together promote a corporate advantage. These elements can be represented in a Corporate Strategy Triangle, where the sides of the triangles are the foundations of a solid strategy: Resources, Businesses, Organization.

Professor Richard Rumelt of UCLA argues that where companies go wrong is when they make their strategy too complicated. Owing to our natural tendency to try and satisfy all possible constituencies (the CEO, the Board, key investors, etc.), it is here that strategies often become convoluted and lose focus.

To achieve competitive advantage, each arm of the triangle has to be strong enough to support the triangle uniformly, yet flexible enough to evolve with the business. The business must be in a position to leverage this triangle of strengths to bring about competitive advantage. The point is, when these three arms of the triangle do not match up, any advantage that a business has eventually falls away.

 


What is good Corporate Strategy?