In strategy creation, there are two schools that bring benefits to strategy approach: planning and position school. The planning school is more traditional, providing a clear framework, tools and process for the strategy creation. The planning view includes a deliberate long term plan, carried out by top management. According to Kimmo Suominen from Perfecto, the position school for strategy creation is focusing on the analytics – how an organization positions itself to its environment with a most profitable way and thus finds a competitive advantage.
If you compare the two schools of planning and position, the planning school, through its formalization of the strategy, has traditionally a more visible role whereas position, through the analysis part, has not yet evolved to a systematic part of the strategy creation process.
Companies through their strategy creation approaches typically have defined vision, mission and values, but as Collis and Rukstad (HBR, 2008) point out, there are typically so many elements that people get confused to what is essential and what drives the implementation really forward.
In addition to the typical definitions, what would help companies is a clear definition of the competitive advantage. According to Collis and Rukstad, “your competitive advantage is the essence of your strategy: what your business will do differently from or better than others defines the all-important means by which you will achieve your stated objective. That advantage has complementary external and internal components: a value proposition that explains why the targeted customers should buy your product and a description of how internal activities must be aligned that only your firm can deliver that value proposition.” Therefore, clarifying the strategy in described form, in addition to the value and vision statements, would clarify the direction better for the employees and help set correct shorter term objectives.
What companies could do is use eg The Strategic Sweet Spot model in Collis and Rukstad (2008) ie finding the sweet spot that aligns the firm´s capabilities with customer needs in a way that competitors cannot match given the changing external context – factors such as technology, industry demographics and regulation.
Summarizing the competitive advantage would bring a welcome addition to the strategy elements, including a) objectives, ie ends of the strategy, b) scope, the domain of it and c) advantage, the means of achieving the end.
