Why Strategy?

Date: 2015-10-07; view: 422.

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Text 1

Strategy and Business Environment

Unit 5

Every organization operates on a Theory of the Business* that is, a set of assumptions as to what its business is, what its objectives are, how it defines results, who its customers are, what the customers value and pay for.

Strategy converts this Theory of the Business into perfor­mance. Its purpose is to enable an organization to achieve its desired results in an unpredictable environment. For strategy allows an organization to be purposefully opportunistic.

Strategy is also the test of the Theory of the Business. Failure of the strategy to produce the expected results is usually the first serious indication that the Theory of the Business needs to be thought through again. And unexpected successes are often also the first indications that the Theory of the Business needs to be rethought. Indeed, what is an “opportunity” can only be decided if there is a strategy. Otherwise, there is no way to tell what gen­uinely advances the organization toward its desired results, and what is diversion and splintering of resources.

But what can strategy be based on in a period of rapid change and total uncertainty, such as the world is facing at the turn of the 21st century? Are there any assumptions on which to base the strategies of an organization and especially of a business? Are there any certainties?

There are indeed FIVE phenomena that can be considered cer­tainties. They are, however, different from anything present strate­gies consider. Above all, they are not, essentially, economic. They are primarily social and political.

Management Challengers for the 21st Century

By P.F, Drucker, p. 43