Let’s unbuzz the buzzword Strategy

Porsche’s strategy consists of four key pillars: Excellent employer and business partner, Inspiring customers with a unique product and brand experience, Excellent profitability with RoS >15%, Innovation and sustainable business practices. The pillars are specific; the reader immediately understands their theme and direction. The pillars are interlinked: Porsche sets the pillars into a relation to each other; they require each other, no pillar is self-sustaining, and each pillar contributes to a central objective of value-generating growth. Also, the pillars actually make sense: anyone reading them can comprehend what Porsche is talking about and quickly develops an idea of what the pillars potentially contain.

Sure, one could argue that there might be some elements missing to call it a strategy. Others might even argue about the content as such. But let’s focus on the positive: This is a pretty solid explanation of Porsche’s strategy; probably more explicit than many other examples you can find out there.

Let’s briefly examine the Boeing strategy. Unlike Porsche, the strategy explanation does not consist of proper sentences and instead lists three very short bullet points: Operate as One Boeing, Build Strength on Strength, Sharpen and Accelerate to Win. Following these three points, Boeing lists eight goals for 2025, again in a short bullet-pointed list. Needless to say that this can barely qualify as a strategy. The three main bullet points couldn’t be more generic. They resemble internal corporate marketing lingo. The content and direction of the three strategic themes stay largely in the dark and leave maximum room for interpretation. In addition, it is unclear how themes and goals are connected and how the three themes support reaching the goals listed underneath.

I chose these two examples to illustrate how differently strategies can look and how differently companies communicate their strategies. I’m sure internally both Porsche and Boeing espouse a better defined and a more substantial version of their strategy. My point is that publicly this is what Boeing and Porsche are declaring as their strategy. While I’m not suggesting that it was only because of their strategy – culture and leadership surely played a substantial role – tragically, it was Boeing that was crisis-stricken over the past years. Especially in the aftermath of the 737 MAX disaster that killed 346 people in two plane crashes, Boeing suffered severely. The company lost trust of regulators and the public. The total direct costs of the 737 MAX groundings are an estimated US$20 billion and indirect costs over US$60 billion, not including the US$2.5 billion Boeing settled to pay after being charged with fraud. Over the same period, Porsche has been extremely successful, increasing vehicle sales year on year, strengthening its brand on a global scale, last but not least due to a solid strategy.

Other companies publish strategies which are more like vision statements, aspirations, mission or other statements, which rarely qualify as a strategy. Almost every organization I have ever worked with started their quest for a new strategy based on a fuzzy understanding of the term strategy. But all of them – despite the fuzziness – still used the term, in one way or another, or in multiple ways even. For example: ‘We need a new pricing strategy to compete with the other players in the market’, ‘Our hiring strategy is not delivering the talent pipeline we expected’, ‘We need a clear strategy for the purchasing discussion next week’, ‘Our digital product strategy should fit into the broader marketing strategy’. This omni-present use and blurry understanding of the term strategy turns out to cause issues even at the very top of organizations, within senior leadership teams.

Senior leadership teams typically consist of accomplished professionals with years of experience. In these years, they would have seen different strategies, some more successfully implemented than others. They would have had exciting and sometimes long and tiring discussions about strategy. They would have read classic books such as Competitive Strategy by business academic Michael E. Porter who defines strategy as “a competitive position, deliberately choosing a different set of activities to deliver a unique mix of value”. And now these very individuals embark on an adventure to define a new strategy based on the variety of experiences and preconceived notions about what a strategy actually is, and what it should contain, in their views. You see where this is going. As a result of this misalignment, discussions about strategy are difficult and every individual bases their thoughts on their individual understanding. Over time, my colleagues and I understood that before we could start strategizing with a client, we needed to help those involved form a common understanding of what the term strategy meant, and how they would use the term going forward. What we often achieved was a common understanding of the term ‘strategy’ that looks a bit like this: