The Three Levels of Strategy

In our second post on unwrapping what strategy really is, we take a look into the different levels of strategy. Time and time again, organizations we work with get hung up on what the essence of what strategy really is.

To lay the ground work on creating a good strategy, it is important to understand what it is first and foremost. As a leader, one must first ask the question, “how will we succeed?” in order to lay the ground work for creating a great strategy. Your strategies are the general methods you intend to use to reach your vision. No matter what the level, a strategy answers the question “how.” Your intended outcome is to have the general, umbrella methods you intend to use to reach your vision established.  There are six total “strategy” questions all good leaders must answer.

1. Why do we exist?
2. How will we behave?
3. Where are we going?
4. How will we succeed?
5. What is most important right “now”

For now, we will focus on “how we will succeed.” With that in mind, nothing “strategy” would be complete without starting with the basis from Michael Porter. He writes, “Competitive strategy is about being different. It means deliberately choosing a different set of activities to deliver a unique mix of value.” It’s a good litmus test to ask, “Have we done a good job answering the question how we will succeed?” Competitive strategy is about being different. It means deliberately choosing a different set of activities to deliver a unique mix of value. We certainly can’t answer the question of how we will succeed if we don’t think we are being different and unique and delivering value, and then of course being specific and clear and making hard choices. That is the kernel of good strategy and our basis from the guru of strategy.

It’s always smart to start with an example of what good looks like. This organization-wide strategy statement from Edward Jones is a great example. It reads, “To grow to 17,000 financial advisors by 2012 by offering trusted and convenient face-to-face financial advice to conservative individual investors who delegate their financial decisions through a national network of one-on-one financial advisor offices.”

In our next post we will get into the details on the levels, but for now here is a top level view. The three levels of strategy are:

1. Corporate level strategy: This level answers the foundational question of what you want to achieve. Is it growth, stability, or retrenchment?
2. Business unit level strategy: This level focuses on how you’re going to compete. Will it be through customer intimacy, product or service leadership, or lowest total cost? What’s the differentiation based on?
3. Market level strategy: This strategy level focuses on how you’re going to grow. Will it be through market penetration, market development, product or service development, or diversification?

In our next post we will be going into detail on the three levels of strategy, so stay tuned!