May 10, 2012
To help my clients understand the different “levels” or “perspectives” of strategy, I created the “strategy cascade.” It consists of 5 levels. From “top” to “bottom,” the levels are:
Level 1: Being “Strategic”
Being strategic means “consistently making those core directional choices that will best move you toward your desired future. This implies you know where you’re starting from, you’re clear on where you want to go (i.e. the Vision) and you have the means and the will to make consistently good and powerful choices on how to get there (i.e., the Roadmap).”
Level 2: “Corporate” Strategy
Corporate strategy efines the scope of the firm in terms of the industries & markets in which it competes. Typical, corporate strategy decisions include: investment in diversification, vertical integration, acquisitions, allocation of resources between different business units and divestments.
Level 3: “Business” Strategy
Business strategy defines how the firm competes within a particular industry or market. If the firm is to earn excess industry profit, then it must establish a competitive advantage over its rivals. Hence, this area is also referred to as competitive strategy and is what many business executives consider to be “strategy.” Michael Porter helped to establish this particular perspective and his books are highly recommended.
Level 4: “Functional” Strategy
A functional strategy defines the core directional choices of each individual functional area – e.g., marketing strategy, human resources strategy, information technology strategy, etc… Each functional department attempts to do its part in meeting overall corporate objectives, and hence their strategies should be derived from broader business strategies.
Level 5+: “Sub-Functional” Strategy
A “sub-functional” strategy defines the core directional choices of each individual sub-functional area with the context of the strategies outlined above. For example, within an IT strategy, typically there are 3 primary strategy categories: application, data and infrastructure strategies. Often, contemporary IT trends that span these categories are detailed (e.g., cloud computing strategy, big data strategy, mobile strategy, social strategy, etc…) as part of an overall IT strategy. Supplemental IT strategies might include vendor strategies (e.g., Microsoft licensing strategy) as well as other important and relevant company specific situations (e.g., legacy modernization strategy) might also be required.
An organization that is able to weave these strategies together in a coherent manner increases its chance of meetings its goals.
Source(s):
Being Strategic: Plan for Success; Out-think Your Competitors; Stay Ahead of Change, Anderson, 2009
Contemporary Strategy Analysis, Grant, 2010