Just what is strategy anyway?

I'm getting a bit frustrated: it seems that there's a misconception in the business community about what strategy really means. This week alone, I've heard three different people confuse strategy with initiative, project, or strategic plan. The most appalling misuse of strategy came in the form of a conversation with a friend: she shared how her company relegated the low-performing people in their division to a new "strategy" team. I got physically queasy at the thought of such idiocy.

Companies with solid strategies know better than to lump low-performing people into a "strategy" team just to keep an eye on them. They have more respect for their strategy's ability to strengthen or cripple growth. They treat their strategies like the foundational drivers they are designed to be. And they fire low-performing people who drain company resources.

With all the confusion with business terms and the bad rap that strategy has been getting lately, I think it's time to clarify just what strategy means. Contrary to traditional business terminology, I have broken apart the strategy and the strategic planning process to make it clear the role that strategy plays in a well-run organization.

• Strategy is the foundational soul of an organization. It usually starts as a gut feeling about markets, opportunities, and methodologies in the founding or leading executives. It gets translated into a strategic framework that drives the decisions and behaviors of the organization. The strategic framework captures the strategy into terms that the internal team can understand, and includes vision, mission, values, and position. When well crafted, the strategy of an organization should rarely, if ever, change.
• Strategic plans outline the goals and initiatives of an organization and/or teams over a set period of time. These goals and initiatives directly connect to the strategic framework, yet allows an organization to quickly and easily change their behavior to keep pace with changing market forces and stakeholder concerns. Strategic plans should be reviewed regularly -- in this economy, that means at least monthly -- to adjust to market course corrections.
• Goals capture the key near-term milestones along the road to growth and change, on which the organization hopes to move closer to fulfilling its vision, deliver on its mission, act according to its values, within the parameters of its position.
• Initiatives are the first actions needed to meet strategic goals. Each of these high-level actions ties directly to its goal with a set of processes, tools, and systems that include success measures to gauge everyday performance. Subsets of actions within initiatives are called projects.

 A well-defined strategy drives the day to day actions of an effective organization. CEOs and other leaders who get that communicate the strategy well and don't let their employees think that the strategic planning team is where bad employees go to die. If you're hearing such confusion happening in your organization, puh-leeeze get my new book, The Strategy String, for your leadership. No organization can afford to operate without a strategy in this fickle economy, and everyone on your team should be clear on the role it plays on your success -- or lack thereof.