But think for a minute about the word strategy. What does it really mean? Strategy is how one intends to go about attaining a desired end. It is the means to an end. Thus, it is wholly impossible to have an effective strategy unless you are clear—absolutely crystal clear—about what the end point is. Strategy is a path to attaining your vision. Knowing how to get “there” is impossible if you can’t articulate what “there” is.

There are four key principles to keep in mind when setting company strategy.

1. The strategy must descend directly from your vision. Remember, it’s impossible to set strategy unless you have a crystal clear idea of what you’re trying to do in the first place. Vision first, then strategy!

1. The strategy must leverage off the strengths and unique capabilities of your company. Do what you’re good at.

1. The strategy must be realistic. It must therefore take into account internal constraints and external factors. Confront reality, even if reality is unpleasant.

1. Strategy should be set with the participation of those who are going to be on the line to make it happen.

The Process

Setting strategy involves the following basic steps:

First, review the vision of the company. If you haven’t clarified your vision, do so. In particular, ensure that the current mission is clear. As you recall from Chapter 4, your mission (which is the third component of vision, after core values and beliefs and purpose) is analogous to the specific mountain you are going to climb.

Next, do an internal assessment of the company’s capabilities. This is analogous to examining capabilities and resources of the expedition team.

Third, do an external assessment of the environment, markets, competitors, and trends. This is analogous to studying pictures of the mountain, examining weather reports, assessing new trends in technology that might help you in your ascent, and paying attention to competitors who seek to reach the summit ahead of you.

Finally, taking the internal and external assessments into account, make key decisions about how you intend to go about achieving your current mission. This is analogous to mapping out the route you are going to take up the side of the mountain.

A strategy is a way through a difficulty, an approach to overcoming an obstacle, a response to a challenge. If the challenge is not defined, it is difficult or impossible to assess the quality of the strategy. And if you cannot assess a strategy’s quality, you cannot reject a bad strategy or improve a good one.

People normally think of strategy in terms of action—a strategy is what an organization does. But strategy also embodies an approach to overcoming some difficulty. Identifying the difficulties and obstacles will give you a much clearer picture of the pattern of existing and possible strategies.