What is strategy? And is it useful?

By Yaakov Goldfein

Foreword by Carel Nolte

Yaakov Goldfein is one of the smartest people I know. He has a superbly analytical brain and, whenever we meet, I always learn something from him (whether it is about life, whiskey, investing, strategy or a range of other topics). I also thoroughly enjoy the way Yaakov treats his family and friends, and I look up to him.

I read this essay on strategy with absolute delight. It helps to define the concept in a way that makes sense to me. Those who know me well know I prefer action and people over strategy sessions. But strategy is still important. It’s how you define it that makes all the difference.

Here’s Yaakov’s essay:

I found myself debating business strategy with a close friend and mentor of mine recently. He runs a company that I am deeply passionate about and in which I have significant investments, personally and professionally. I have followed the company for several years, been a user of its services, and watched it grow into something well run, innovative, and in many respects world-leading. Over those years I have developed my own theories and intuitions about what it could do to maximise its impact and growth, and I increasingly wanted to be involved in shaping how it invests and develops. In my mind, and in my conversation with him that day, I called this work “Strategy.”

My starting point was to get inside the executives’ heads and understand how they thought about the company’s strategy. Why does the company exist? How does it intend to achieve its long-term ambitions? How does it define those ambitions in the first place?

I sat across from my friend asking these questions over breakfast. He answered them with mild frustration that grew as I pressed for a deeper understanding. “What is the point of strategy?” he eventually asked. “Everyone wants to ‘do strategy’ with us. Why should we care what you have to say about it?” And then, before we closed our conversation which had already run into our next meetings, he posed what should have been the simplest question of all: “What is strategy?”

I tried to answer. It’s obvious, right? Strategy is like planning… it’s thinking about your business… it’s… it’s…

The question sat with me for hours and then days. I really wanted to work on strategy. I believed it was something I enjoyed and that I am good at. I had so many ideas. And yet I could not give a clear account of what it actually was, or whether it mattered at all, or whether it was just intellectual masturbation dressed up in serious language.

This essay is my answer to both of his questions. First, what strategy is. Then, the question he really cared about whether it is useful at all.

Why the question is harder than it looks

Before offering a definition, I had to understand why a word I had always treated as obvious turned out to be so slippery.

Strategy is an art, not a science. As I’ll argue below, strategy has infinite variations, and the more a strategy breaks accepted thinking, the more potential it has to be great. As with any art, it is judged by its outcome, not its process, which makes it resistant to the kind of clean definition we give to ordinary business activities.

The word is overused. Anyone in the corporate world has heard “strategy” and “strategic” deployed in endless meetings, slide decks, emails, and worst of all, consulting proposals. The power of the word is borrowed and misused to prop up unrelated work, or to give shallow thinking the aura of depth. That endless borrowing has stretched the word until it means almost nothing. My friend’s frustration, “everyone wants to do strategy with us”, is the frustration of a man who has heard the word emptied of content a hundred times.

So, the definition I offer below attempts to achieve three things: strip away the vagueness, preserve the genuine and infinite potential of the word, and yet, leave us with something concrete enough to actually work with.

A definition

Strategy is the art of developing and articulating a plan and a set of principles for achieving a well-defined objective.

The work of strategy, then, is the act of thinking, exploring, debating, and writing, to define an objective and to create and maintain a plan and a set of principles aimed at achieving it.

The earliest writing on strategy comes from books on war, such as Sun Tzu’s The Art of War. As much as I despise war, it is the clearest lens, because its elements are so well defined. I’ll later extrapolate to business, where the elements are far more numerous and the fog far thicker.

The objective

Most strategists argue that strategy begins after you have an objective, in war, “defeat the enemy and capture this ground.” I want to include defining the objective as part of the work itself. In my experience, far too many people and executives begin strategising before they have a clear account of what they are actually trying to achieve, or of the problem they are trying to overcome. A great strategy will achieve its objective even if that objective is stupid, harmful, or ultimately not what you really wanted. Many wars might have been avoided if generals had begun their strategy work by questioning the objective itself. In Stephen Covey’s words: it doesn’t matter how quickly you climb the ladder if it’s leaning against the wrong wall.

Choosing and defining an objective is itself an art. There are no verifiable right answers, and it means taking a vague feeling or desire and forging it into an articulated form that will never fully capture its human source. Done well, the objective takes the shape of a stated ambition or a well-defined problem to be overcome.

The plan

The primary work of strategy is thinking about, questioning, and researching the various paths to the objective, and choosing one. The plan is the deliberate route: the sequence of moves you intend to make, the resources you commit, and the order you commit them in. It is what you can write down in advance.

The principles

The principles are the decision rules that govern how you and your people make decisions when the plan runs out – for the seemingly minor choices that a plan can’t cater for – or in the heat of the moment – when no plan survives contact and the next move was never on the page. They are not the route but the logic for navigating off it: the handful of guiding commitments that let people act coherently without a leader in the room.

Strategy as art

There are infinite possible strategies for any objective. You can only ever test the one you choose to deploy, and reality is the only judge. There is no formula for a good strategy, for two reasons: a strategy is entirely contingent on the objective you choose (of which there are an infinite number), and a great strategy is often surprising; it breaks the existing conventions about what strategy in a domain looks like. So, strategy is better understood as an art: it requires human intuition and the uniquely human act of bringing a feeling or idea into tangible form. The artist’s challenge is never in feeling the feeling; it is in bringing it into the world through a chosen medium. The strategist’s challenge is the same, bringing a desire into articulated form, and designing a plan for realising it.

The key parts I left implied

To keep the definition tight, three crucial elements are implied rather than stated:

• The terrain. Strategy is pointless if it ignores the ground the war is fought on. The terrain, and how it shifts over time, usually decides who wins. In business it is most often a changing terrain, not a competitor, that swallows a company whole.
• Limited time and resources. In war and in business we always operate under scarcity. If a general had unlimited resource, there would be no need for strategy. Just keep hitting until you win. Strategy matters because resources are finite, time is scarce, and we need to focus and execute on the few things that count.
• Leverage. Leverage is the key that brings all these elements together and that truly makes strategy a worthy discipline. It begins with an honest assessment of your relative strengths and vulnerabilities, on a given terrain, against a defined enemy or objective, with the limited resources you have.

With a clear-eyed view of these elements and a well-defined objective, you can begin to see where you have an asymmetric advantage and the openings that you can exploit. You will be in a position to form a Great Strategy – a plan and a set of principles that maximises the impact of your limited resources, exploits your enemies’ vulnerabilities, uses the terrain to your advantage, and gives you the greatest chance of achieving victory over your enemy, problem or objective. It’s seeing the rival’s exposed flank, or the part of the problem that, once cracked, makes the rest give way. It’s how a tiny upstart with limited resources can outmanoeuvre an entire industry of fully resourced veterans.

Pulling it together:

A more comprehensive but wordy definition:

The work of strategy is the art of developing and articulating a plan and a set of principles for achieving a well-defined objective. It includes understanding and defining the objective, understanding the terrain, an honest assessment of your strengths and vulnerabilities and maximising the chances of success by focusing limited resources on the gaps and opportunities where you hold an asymmetric advantage.

So, is strategy important?

This was my friend’s real question. Why not simply run into battle, trust the leader’s intuition, and fight with everything we have? His company had, after all, been built without anyone formally “doing strategy” with him – and built rather well.

Here is the answer I wish I’d had over that breakfast: You have already been doing strategy. Your success is the proof.

The reason a company becomes innovative and world-leading is almost never luck alone. Somewhere near its origin there was an insight, a particular reading of the terrain, a bet on where the world was going, a decision to concentrate scarce resources on one asymmetric advantage rather than spreading them thin. That insight was a strategy, even if no one called it that. So, the question is not whether to start doing strategy. It is whether the strategy that got you here, often implicit, carried in the founders’ heads, can stay coherent as you scale, as the terrain shifts, and as success hands you the resources to chase a hundred new directions at once.

That reframing matters, because the danger is specific: serious strategy work in an already successful organisation often doesn’t happen until the wolf is at the door. Good strategy is hard, uncomfortable work, and success is precisely the condition under which it feels least necessary. A favourable cycle, a market tailwind, a first-mover advantage, a friendly regulatory moment, or cheap capital, can all ambush a company into mistaking a temporary advantage as an ongoing strategic advantage. The terrain changes, the problems evolve, challenges appear from within, our enemies learn.

The job of strategy is to know which is which before the wind changes.

With that said, here is why I believe strategy is useful:

1.  Clarity of thought and execution. A great deal of strategy is simply the work of figuring out what is actually going on: defining your objective clearly and comprehending your situation honestly. Richard Rumelt calls the heart of a good strategy its diagnosis: naming the one or two critical factors in a confusing reality. Most failed strategies fail here, by never facing the real challenge. The most common error is mistaking goals for strategy. “Grow 20% a year,” “be the market leader,” “improve performance”, these are aspirations, not strategies. As Rumelt puts it: if you fail to identify and analyse the obstacles, you don’t have a strategy at all; you have a stretch goal, a budget, or a list of things you wish would happen. Worse still is the leader who diagnoses the challenge as “underperformance.” Underperformance is a result. The true challenge is whatever is causing it, and strategy is the work of dragging that cause into the light.

2.  Communication and coordination. An organisation is thousands of decisions made by people who cannot all be in the room with the leader. Strategy is how those decisions stay aligned without each one being dictated. A crucial duty of any leader is to absorb a large part of the complexity and ambiguity and hand the organisation a simpler problem and a clear objective. That is what a good strategy – a diagnosis, a guiding policy, and a set of coherent actions – actually transmits. It is the difference between a thousand people rowing in roughly the same direction and a thousand people each doing what seems locally sensible. The principles in our definition do the quiet work here: they let your people make good calls on the battlefield.

3.  Focus and prioritisation. This is the one that matters most, and the one most resisted. Strategy is a lever that magnifies force, but a lever only works if you choose a single point to apply it. Because resources are finite, strategy is ultimately a series of hard choices about what not to do. And here is the uncomfortable truth: channelling resources away from competing objectives is emotionally painful. There are always good ideas being starved, and always people made worse off, who will resist. This is exactly why successful, resource-rich companies struggle most with focus, success removes the discipline of scarcity and replaces it with the temptation of optionality. The richer the menu of things you have earned the right to do, the harder, and the more important, it becomes to say no to most of them. A coherent strategy that concentrates force on the pivotal point is itself a source of strength, and one a competitor cannot easily copy, because they would have to adopt the whole coherent design, not just lift an element or two.

4.  Feedback and iteration. Strategy is not about predicting the future, no one can. It is about building a strong position and creating options, so that you are well placed across many futures rather than betting everything on one. A strategy that has been articulated, written down, made explicit, is a strategy that can be tested against reality and updated when reality disagrees. An implicit strategy carried in someone’s head cannot be examined, debated, or improved; it can only be defended. Writing it down is what turns a hunch into something that can compound.

Good strategy, bad strategy, and why the word feels empty

My friend’s exasperation, “everyone wants to do strategy with us”, is not really an argument against strategy. It is an allergic reaction to bad strategy, and he is right to be allergic. Bad strategy is fluff: abstract language that sounds profound and says nothing. It is the failure to face the real challenge. It is goals masquerading as plans, templates filled in without thought, and the belief that a positive attitude and enough drive are all you need. The corporate world is so saturated with this that the word itself has been hollowed out, which is exactly why he couldn’t see the point of it.

But the cure for bad strategy is not no strategy. It is good strategy, which is rarer and quieter than its imitations. Good strategy is usually simple. It is the act of seeing a situation clearly, defining a clear objective, discovering the few critical factors in a situation and designing a coordinated, focused response to them. It is coherent execution backed by an honest argument. Ambition supplies the drive, determination supplies the grit, innovation supplies the new methods, and strategy is what selects the path, deciding how, why, and where all that energy is to be applied. A subtle shift in how you see the situation can create entirely new patterns of strength and weakness; the most powerful strategies tend to come from exactly such a shift in viewpoint.

There is a test I keep coming back to, from Andy Grove and Gordon Moore at Intel, at the moment they had to decide whether to abandon the memory business that had defined the company. Grove asked: “If we got kicked out and the board brought in a new CEO, what do you think he would do?” The honesty of that question, the willingness to look at your own situation as a clear-eyed outsider would, unattached to the choices that got you here, is the whole discipline in a sentence. That is the work I wanted to do with my friend. Not to add another voice clamouring to “do strategy,” but to sit on the same side of the table and ask the questions a new CEO would ask.

So, is strategy useful?

Strategy is not intellectual masturbation – though plenty of what passes for it is. Real strategy is the discipline that turns ambition, determination, and innovation into durable results by forcing clarity about the objective, honesty about the terrain, and focused execution in the face of scarcity. It is most needed precisely when it feels least necessary: at the height of success, with the most options on the table and the most ways to quietly lose coherence.

I never did give my friend a clean answer over breakfast. But if he asks again, this is it:

Strategy is the art of developing and articulating a plan and a set of principles for achieving a well-defined objective.

And I would add, you have always had a strategy, it’s why you’re here. The question now is whether we are doing the hard and necessary work of keeping it good.