The Fundamental Dimensions of Strategy

A truly strategic decision occurs only at the nexus of three organizational considerations -- where it adds value, how it handles and employs imitation and how it defines its perimeter.

Napoleon Bonaparte once wrote: “Always ask your generals about your strategy, but never assemble them in the same war room.” That statement sheds light on a paradox: Whereas most strategists are assertive people, corporate strategy is a fuzzy discipline. Almost half a century after seminal works in the field, corporate strategy literature boasts at least 10 separate schools of thought1 and more than a dozen definitions that focus on rather divergent perspectives: planning resource allocation or satisfying stakeholders, stretching unique competencies or adapting to the environment, programming sophisticated management systems or muddling through emerging ideas — even sticking to simple rules. Strategy is often confused with microeconomics (“Strategy is building rent”), with finance (“Strategy is creating shareholder value”), with marketing (“Strategy is finding optimal positioning on the marketplace”) or with organizational design “Strategy is enabling emergent processes”). There are even some bizarre hybrids, such as “strategic finance” or “strategic marketing,” as if strategy were only defined vis-à-vis other disciplines. Strategic innovation often consists of importing concepts and methods from other disciplines, sometimes as distant as physics (chaos theory) or biology (organizational ecology). Scholars, executives and consultants alike know that it is problematic to explain to their students, employees or clients which decisions are strategic choices and which are just operational options.

To clarify and deepen our understanding of corporate strategy, we need general guidelines that set the boundaries of the discipline, highlight its specifics and facilitate executive decisions. (See “About the Research.”) On a general level, strategy comprises three objectives: creating value, handling imitation and shaping a perimeter. (See “The Dynamics of Strategy.”)

About the Research »