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Executive Overview
After more than 30 years of hard thinking about strategy, consultants and scholars have provided an abundance of frameworks for analyzing strategic situations. Missing, however, has been any guidance as to what the product of these tools should be-or what actually constitutes a strategy. Strategy has become a catchall term used to mean whatever one wants it to mean. Executives now talk about their "service strategy," their "branding strategy," their "acquisition strategy," or whatever kind of strategy that is on their mind at a particular moment. But strategists-whether they are CEOs of established firms, division presidents, or entrepreneurs-must have a strategy, an integrated, overarching concept of how the business will achieve its objectives. If a business must have a single, unified strategy, then it must necessarily have parts. What are those parts? We present a framework for strategy design, arguing that a strategy has five elements, providing answers to five questions-arenas: where will we be active? vehicles: how will we get there? differentiators: how will we win in the marketplace? staging: what will be our speed and sequence of moves? economic logic: how will we obtain our returns? Our article develops and illustrates these domains of choice, particularly emphasizing how essential it is that they form a unified whole.
Consider these statements of strategy drawn from actual documents and announcements of several companies:
"Our strategy is to be the low-cost provider."
"We're pursuing a global strategy.
"The company's strategy is to integrate a set of regional acquisitions."
"Our strategy is to provide unrivaled customer service."
"Our strategic intent is to always be the firstmover."
"Our strategy is to move from defense to industrial applications."
What do these grand declarations have in common? Only that none of them is a strategy. They are strategic threads, mere elements of strategies. But they are no more strategies than Dell Computer's strategy can be summed up as selling direct to customers, or than Hannibal's strategy was to use elephants to cross the Alps. And their use reflects an increasingly common syndrome-the catchall fragmentation of strategy.
After more than 30 years of hard thinking about strategy, consultants and scholars have provided executives with an abundance of frameworks for analyzing strategic situations. We now have fiveforces analysis,...