Business Strategy
According to Michael Porter, "Almost no consensus exists about what corporate strategy is, much less about how a company should formulate it"[1]. This is due to a combination of factors that relate to strategy terms, concepts and principles and their practical application.
This article is designed to provide executives with a better understanding of the nature and purpose of strategy and draws on Jack Welch 's record at GE, as well as examples from other companies, to show how these strategy-related terms, concepts, and principles apply in practice.
The terms, concepts and principles of strategy
From my work as a strategy consultant, executive, and professor of strategy in graduate and executive programs, I have found that strategy can be best understood if it is viewed as an element of a troika that includes policy, strategy, and resources (the PSR Troika). I have also found that it helps to focus on two aspects of strategy: the causal relationship between strategy and the other elements of the PSR Troika; and the plurality of inputs, options, and outcomes that characterize strategy.
The elements of the PSR Troika
Policy is from the word for the Greek city-state, polis. In government, policy is the product of a legislature that delineates the goals, objectives and priorities of the state. In business, the term "policy" is used to define a company 's principal goals and objectives and to prescribe the company 's operational domain. Corporate policies define a company 's reason for existing (to maximize shareholder wealth and/or fulfill one or more social or economic function), what the company does (design, develop, manufacture and/or market products and/or services), and where the company does it (by industry and/or geographical area). The responsibility for determining corporate policy rests with a company 's legislative branch its board of directors under the leadership of the chairman of the board. Policy defines a company 's raison d 'être
This article is designed to provide executives with a better understanding of the nature and purpose of strategy and draws on Jack Welch 's record at GE, as well as examples from other companies, to show how these strategy-related terms, concepts, and principles apply in practice.
The terms, concepts and principles of strategy
From my work as a strategy consultant, executive, and professor of strategy in graduate and executive programs, I have found that strategy can be best understood if it is viewed as an element of a troika that includes policy, strategy, and resources (the PSR Troika). I have also found that it helps to focus on two aspects of strategy: the causal relationship between strategy and the other elements of the PSR Troika; and the plurality of inputs, options, and outcomes that characterize strategy.
The elements of the PSR Troika
Policy is from the word for the Greek city-state, polis. In government, policy is the product of a legislature that delineates the goals, objectives and priorities of the state. In business, the term "policy" is used to define a company 's principal goals and objectives and to prescribe the company 's operational domain. Corporate policies define a company 's reason for existing (to maximize shareholder wealth and/or fulfill one or more social or economic function), what the company does (design, develop, manufacture and/or market products and/or services), and where the company does it (by industry and/or geographical area). The responsibility for determining corporate policy rests with a company 's legislative branch its board of directors under the leadership of the chairman of the board. Policy defines a company 's raison d 'être