Becoming a Strategist (Part 1)

A Series in Three Parts

Having written several books on strategy, I get a stream of email queries. One type asks, “How do I become a strategist?” These tend to come from people working in business or government who want to grapple with more significant issues than the trivia filling their workdays. Others are from business school students who discover that the economic theories and conceptual schemes being taught leave them empty-handed when faced with real-world situations. They ask about what to read, what to study, and how to begin a career in strategy. This short series of notes contains the advice I would like to have given to each person asking that question.

Learn to Ignore Many Ideas About Strategy

To learn strategy it is important to recognize that much of the available writing and advice on strategy is not helpful. If you browse the web, listen to various business “experts,” or peruse numerous popular business books, you’ll encounter misguided and even absurd notions about strategy. It’s essential to learn how to critique and disregard these ideas.

First, skip over the self-improvement literature preaching that success follows intense desire. The classic Think and Grow Rich¹ outlines this strategic framework: “A definite purpose backed by burning desire for its fulfillment. . . . .. A mind closed tightly against all negative and discouraging influences...” John Paul Carinci’s An All Consuming Desire to Succeed advocates overwhelming desire as essential to “acting strategically " toward one's goals. These ideas are religious preachments on the efficacy of faith displaced into the world of commerce.

Second, ignore “strategic planning.” It is almost always financial forecasting, not strategy. To make matters more confusing, many works incorrectly describe strategy as a plan to achieve a goal. For example, Google’s search AI defines a business strategy as "a plan that outlines how a company will achieve its goals." This definition of strategy ignores change, disruption, and competitive actions, which are usually the heart of any real strategy. It also takes goals as a given, overlooking that talented strategists define them. If the goal is “grow profit,” then it is banal. If it is more complex, such as “building a mobile banking app to take operational pressure off the branch system,” then it is the heart of the strategy, not just its motivator. A plan is a schedule of tasks to be performed together with the scheduling of logistical and financial supports. By contrast, the idea of a “strategy” connotes a struggle with nature, changes in conditions, an enemy, or a competitor.

The IMD business school Website says, “A business strategy . . . . . is a long-term sketch of the desired strategic destination for a company.” This definition lets the strategist move beyond immediate goals and problems to indulge in dreams of a glorious future.

Strangely, numerous authorities feel the need to compile a list of the fundamental strategies available. They typically start with Michael Porter’s three strategies, although they omit his in-depth examination of the concept of advantage. From Google AI, the basic business strategies are (1) cost leadership, (2) differentiation, (3) focus, (4) growth, and (5) innovation.

To test the concept of five basic strategies, look at Ford in the electric vehicle (EV) industry. Today, Ford faces significant competitive and technical challenges in EV, along with substantial losses from its EV investments. Additionally, it contends with rising input costs and supply chain issues for EV batteries. It lags Tesla and Chinese EV manufacturers in both cost and performance. Which of the above five “strategies” should it adopt?

Or consider Intel. It has recently struggled to match TSMC and Samsung in leading-edge chip manufacturing, experiencing delays and execution problems at 7nm and 10nm nodes. It has lost share in high-margin data-center processors to AMD, NVIDIA, and ARM-based solutions. Would you earn your pay as a strategist by recommending that it choose #5 “innovation” to regain leadership?

I would also advise you to ignore the many articles and guides that require you to expound on your mission, vision, core values, or to set “strategic” goals and objectives. Explaining your mission is a tool for rallying the troops, not a help in determining how to win the battle. The values are always to contribute to society or shareholders, and the goals are almost always more growth, profit, or market share. Like having personal goals to be healthier, wealthier, and happier, such statements are usually a waste of paper (or pixels).

So, What is a Strategy?

I taught strategy using the case method for years, first at Harvard Business School and then at the UCLA Anderson School. Successful companies like P&G in disposable diapers or Southwest in air travel exemplified strategy. If I had to lecture, I emulated colleagues everywhere and discussed the BCG experience curve, later including Porter’s Five Forces. I would also discuss my research on diversification, technological races, and the connection between market share and profitability.

As I began consulting with senior managers, I discovered that my business school frameworks were largely ineffective. Most leaders recognized terms from Porter, McKinsey, BCG, and others, but those frameworks provided little guidance on managing change or responding to competitive thrusts. I noticed that in most companies, the “strategic plans" collected dust on shelves; they were generally despised by those who had to create them and were used solely during board meetings or shown to investors.

Many of my current views on strategy have been learned over time from a few remarkable individuals. From them, I learned that you don’t start with goals; Goals are what you give to subordinates to guide their work. From them, I learned that you start with a deep understanding of the forces at work and identify the nature of the challenge or opportunity. From them, I learned that a strategy is not a plan but a hypothesis about actions that may overcome an obstacle, defeat a competitor, or catch a wave of change at its crest. From them, I gained an appreciation for General George Doriot’s maxim: “Without action, the world would still be an idea.”

I call my perspective challenge-based strategy. The central proposition is that a strategy is a set of policies and actions carefully designed to overcome a high-stakes challenge. In other words, strategy is problem-solving that defines a plan of action. And the challenges are typically competitive moves, disruptive change, or internal inefficiencies. A strategy is not a set of performance goals or a literary form demanding the explication of visions, missions, values, etc. There is no “cookbook” of strategy recipes.

A strategy is not necessarily a long-term commitment. As one set of challenges is met, new ones arise, and new actions must be taken to address them.

Since strategy is a form of problem solving and because you cannot solve a problem you have not defined or analyzed, strategic work begins with identifying barriers and difficulties. Many executives and leaders dislike discussing challenges and impediments, which hinders strategic thinking. In such cases, the strategist's role is to speak truth to power, helping the executive or leader confront the competitive, technological, or managerial challenge.

Determining the forces and issues at work is called diagnosis and is a necessary step in developing a strategy. An able strategist works the problem until the crux is clear—the central paradox that makes the challenge difficult. Clarifying the crux makes inventing a way around or through it easier.²

You cannot create a helpful strategy if you do not analyze the challenge's nature and honestly face its difficulties. For example, take education in Detroit. Nearly 90% of public elementary and middle school students in Detroit struggle with English language proficiency, being either not proficient or only partially proficient. There is even poorer performance in math. Detroit has consistently recorded the lowest proficiency scores among major cities in the last four NAEP testing cycles.

Now, look at the Detroit Public Schools Community District (DPSCD) strategic plan: Blueprint 2027. The plan offers no diagnosis on the reasons for this dismal record. It calls for “a performance-driven culture,” fixing leaky roofs, “Anti-Racist Pedagogy,” and the development of “A competency framework for teachers and staff.” The lack of an honest look at the reasons for this system’s radical underperformance dooms it to more of the same.

After diagnosis, the second critical element in strategy-making is action. Importantly, visions, values, slogans, and goals are not actions; they are wished-for outcomes. An action is a specific task or activity to be performed. Too many attempts at strategy start and stop with goals or sets of KPIs. Strategy is about the tasks that will be undertaken to address the challenge.

The true strategist chooses which challenge among many to accept. Some challenges seem insurmountable with current knowledge and resources. The strategist is not a fool and puts them aside in favor of battles that can be won.

The Best Real-World Strategists Start as Managers

The most effective strategists are usually leaders: CEOs, presidents, four-star generals. That is because they combine analysis, decision, and action in a single person. Unfortunately, the converse is not true. Many leaders are not good strategists. If they are fortunate, they have talented strategic advisors.

The best leader-strategists have usually built their skills on top of ground-level experience in managing something, whether a small business or a platoon.

For example, suppose you inherit a small business like a restaurant or a local machine shop. You want to improve operations and expand sales and profits. To achieve this, you look at what successful competitors do and also experiment with your own ideas. By closely monitoring efficiency, costs, and sales, you discover what works and what does not. Step by step, sales and profits grow. Timely feedback from measures of success is an essential part of this learning process.

This kind of hands-on incremental learning is how Sam Walton learned discount retailing in a small shop. In his first small five-and-dime in Newport, Arkansas, he put a free popcorn machine on the sidewalk and watched floor traffic jump almost immediately.³ It is how Ray Kroc (McDonald’s) learned about efficiencies as a traveling salesman for paper cups. Part of his pitch was convincing soda fountain operators to put drinks in a paper cup for take-out so they could sell to people other than those seated at the counter.⁴ It is how Steve Jobs (Apple) learned about user-focused design, assembling computers by hand in his garage, and personally selling them.

This mindset—the desire and ability to see ways to improve processes—is known in larger companies by many technical names: Kaizen, systems thinking, continuous improvement, Lean, Six Sigma, and more. It is not generally seen as “strategy” because most people equate strategy with a grand design. Nevertheless, companies and armies that have been built by this process may come to be seen as examples of successful strategy. Years of continually adjusting, testing, imagining, and implementing clever improvements in how things are done can produce an extraordinarily effective, tough competitor.

For instance, the After-Action Review (AAR), created by the U.S. Army, serves as a structured debrief following missions or exercises. During an AAR, the team reviews what was intended to occur, what actually transpired, the reasons for any discrepancies, and identifies ways to improve for the future. This straightforward practice fosters a continuous feedback loop, fostering a culture that scrutinizes even successful missions to find areas for enhancement, preventing the repetition of mistakes, and promoting the sharing of innovations.

Another example is Toyota’s original Kaizen system. On its assembly lines, any worker could pull an “andon” cord to halt production if they noticed a problem or had a suggestion for improvement. Toyota employees submitted over one million improvement ideas each year, with an impressive ~90% implemented in the plants. The accumulation of these small changes enabled Toyota to achieve world-class efficiency and quality.

For the military, there comes a time when the development of skills, routines, and capacities is actually put to the test in combat. At that point, continuous learning is not enough. Generals and officers with official “strategy” and “intelligence” designations must craft a fully realized strategy for movement, fire, logistics, and more. Similarly, in business, there may come a time when the leader transcends incremental improvements and envisions a more radical change in operating and competing.

For example, by 1964, Sam Walton ran a chain of successful five-and-dime stores in rural towns. But Gibson Discount Centers was expanding, bringing the big-city discount idea to small towns. Walton became a great strategist when, unlike J.C. Penney, he embraced discounting with the radical new idea of building huge stores in small towns. The low prices, he wagered, would draw shoppers from surrounding areas and away from travel to cities.

For another illustration, consider Ray Kroc. He became fascinated with the McDonald brothers’ hamburger fast food shops in California and convinced them to allow him to franchise their brand and practices. After opening his pilot store in Des Plaines, Illinois, he dedicated a year to mastering its management, perfecting his French fry recipe, and improving hamburger preparation. He then demonstrated his strategic prowess by tackling the challenges of consistency and scalability that arose from rapid growth. Kroc implemented a stringent franchise system, standardizing the supply chain, quality, and food preparation procedures through comprehensive operational manuals. Although companies like White Castle and Howard Johnson's had already explored franchises and large-scale expansion, Kroc’s innovation transformed franchising into a highly controlled, replicable, and efficient business model. He set unprecedented benchmarks for uniformity, operational discipline, centralized supply chains, and real estate management.

For Steve Jobs, the crucial shift that transformed him from a talented product development manager to a strategist came in two steps. First, in 1996 he saved Apple from bankruptcy or asset sale by dramatic cuts in the product line and development engineering. His second strategic feat was creating a cohesive business ecosystem centered on Apple’s core technologies. This pivotal change was the digital hub strategy, which began with the launch of the iPod and iTunes ecosystem in the early 2000s. Jobs had realized that Apple's future depended not merely on standalone products but on creating value through a tightly integrated user experience, linking hardware (Mac, iPod), software (iTunes, Mac OS), and content (music, media). This ecosystem approach turned Apple products into a reinforcing network that increased customer lock-in, drove adoption, and enhanced profitability.

Well-managed companies may struggle with effective strategic leadership during changing times. Take J.C. Penney as an example. Founder James Cash Penney began his journey as a clerk in a dry goods store before launching his own business, where he honed skills in inventory management, customer relations, and pricing. Over time, he built a thriving national retail chain focused on small towns. He resigned from the board in 1958. However, as discount retailers like Walmart emerged, J.C. Penney needed more than solid management; it required a new strategy. Unfortunately, after years of poor decisions and misguided changes, the company filed for bankruptcy in 2020.

Another example is Digital Equipment Corporation (DEC). Co-founder Ken Olsen initially trained as an electrical engineer, then gained electronics, computing, and management expertise at MIT’s Lincoln Laboratory. In 1957, he helped establish DEC with the goal of creating smaller, simpler computers, known as minicomputers. Olsen gained business insights through hands-on experiences. His practical approach to product development and sales significantly strengthened DEC’s minicomputer division, enabling it to become a prominent player in the industry during the 1960s and 1970s. However, despite its initial success, DEC struggled to adapt to the personal computer revolution and the emergence of open, standardized platforms. While Olsen excelled in management, the company lacked an adept strategist, leading to a rapid decline in market share, culminating in its acquisition by Compaq in 1998.

1. Hill, Napoleon, Joel Fotinos, and August Gold. Think and Grow Rich: The Master Mind Volume. Penguin, 2011.

2. See Rumelt, Richard. The Crux: How Leaders Become Strategists. Profile Books, 2022.

3. Walton, Sam. Sam Walton: Made in America. Bantam, 1993, p. 52.

4. Kroc, Ray, and Robert Anderson. Grinding it out: The making of McDonald's. Macmillan, 1992, p. 37.