STRATEGY SESSIONS  #3                       

A FEW BASIC CONCEPTS IN STRATEGIC ANALYSIS

by Dr. Steve Payne              

Introduced in my last blog was a four-step strategic process for making major career or life decisions.  I’ll add in this blog some of the common language or concepts associated with this
strategic process.

A strategy can be simply defined as a possible path or plan to get a person or group from a particular state of being to a more desired, future state of being, or a goal. Often strategies are distinguished from tactics. Tactics are specific ways to undertake and accomplish strategies.

A football coach might develop a few new strategies for a team to try to win more games and get into the playoffs as one possible team goal. Among those strategies might be to run the ball more in certain game situations, relative to the option of passing it, this season.  This strategy might have been selected due to the particular strengths and weaknesses of a given starting quarterback and an offensive line. That running strategy is supported by tactics or more detailed plans for carrying out this running strategy against other teams that they’ll be playing which have particular strengths and weaknesses in their defensive lines and backfields.

Certain football, baseball, and other professional coaches are legends, and part of their reputation or fame is often their strategic ability.  These coaches are even occasionally invited to business and professional seminars as outside experts on competition, and they earn additional income by sharing some of their strategic thinking. Of course, coaches who have gained sustained competitive advantage through their strategic competencies are not likely to be completely forthcoming or specific in sharing their winning strategies – if these could be simply copied by their direct competitors.

At the core of strategic thinking is concern about resources, capabilities, and core competencies of a individual, group, or organization relative to the social, economic, technological, and other environments in which this individual, group, or organization desires to find an favorable competitive niche. Individuals have or can obtain a number of tangible and intangible resources in order to compete for various opportunities. Resources include personal abilities or characteristics, skills, talents, etc., as well as financial, information, and many other types of assets that can be helpful in competing for personal or business goals. Some resources are already held and cost little or nothing to possess and use. Other resources can be costly and/or require time and practice to develop as a competitive asset. Resources can be scattered attributes that one just possesses or could possess. A set of resources that is recognized and then meaningfully integrated for competitive purposes to gain desired ends is known as a capability in the jargon of strategic management. Resources and even capabilities alone are not enough though to have sustained competitive advantage. The term core competencies is used to describe a set of capabilities that are a source of sustained competitive advantage over rivals.

There are criteria to determine if certain capabilities exist that qualify as core competencies for sustained competitive advantage in a field or endeavor. The key question to ask is whether the resources that you have or could develop into capabilities can lead to a sustained competitive advantage in a particular competitive field or opportunity. Key criteria to evaluate capabilities as core competencies and for sustained competitive advantage are 1) Are these capabilities valuable ones for this competition? 2) Are these capabilities rare ones for competitors to possess? 3) Would these capabilities be costly for other competitors to obtain or imitate? 4) Are these capabilities difficult for others to find substitute capabilities that could be used in this competition?

We can hardly discuss capabilities and core competencies in isolation from the external environments in which these qualities are needed and judged. Many textbooks in strategic management devote early pages to Step 1 in the strategic process or identifying resources, capabilities, and core competencies. Then such textbooks devote a chapter or two to Step 2 in this process concerning how to analyze key factors in external environments that influence strategy selection. Later chapters cover Step 3, or how various types of strategies might be considered and chosen, and Step 4, on implementing chosen strategies, evaluating the success of these strategies upon implementation, and fine-tuning strategies based on results.  In future blogs, I’ll discuss in more detail each of these four steps for strategic decision making.