War, wrote the famed nineteenth-century military strategist Carl von Clausewitz, should not be compared to art, but rather to commerce, “which is also a conflict of human interests and activities.”
Yet for much of modern history the word “strategy” seldom appeared in the business vernacular. The concept, derived from the Greek strategia — a compound of stratos, meaning “army,” and agein, meaning “to lead” — was instead born in the military.
The common term in business before the 1970s was “long-term planning” — the practice of forecasting numbers to map the future. Then business gurus began borrowing “strategy” — a much sexier term — from the military. But for most organizations, this was just a rebranding exercise for existing routines, not a change in behavior. And in many companies these sterile forecasting methods have remained essentially unchanged.
In today’s turbulent marketplace this kind of ritualistic planning is no longer enough. Organizations must also have a winning strategy to achieve competitive advantage and the ability to renew that strategy as the environment shifts. That is precisely the challenge the military has faced through the ages as it contended with the changing terrain, chaotic elements, and unexpected opportunities of warfare. From this crucible the great military thinkers honed the fundamental principles of strategy, and few among those thinkers are quite so revered as von Clausewitz.
Clausewitz, a Prussian general who fought against Napoleon, quite literally wrote the book on war. Published in 1832, a year after his death, On War is regarded by military experts even today as the definitive study of warfare. His ideas remain widely taught in military schools, and are, more than ever, essential to the modern strategist.
Strategy is frequently misunderstood and therefore misapplied. More than any other business discipline, it suffers from crippling confusion and over-complication. In fact, the essence of strategy is stunningly simple, and therein lies its power.
Let’s start with the threshold question. Why do we need a strategy in the first place? Clausewitz gives us the answer. Strategy is the necessary response to the inescapable reality of limited resources. No entity, regardless of size, has unlimited resources. Strategy, therefore, is about making choices on how we will concentrate our limited resources to achieve competitive advantage. All else follows from there.
To excel at strategy, we must first understand what it is
The talent of the strategist is to identify the decisive point and to concentrate everything on it, removing forces from secondary fronts and ignoring lesser objectives.
Carl von Clausewitz
Clausewitz lays out here a powerful definition of strategy. Let’s unpack Clausewitz’s definition by examining its key words:
Identify: Good strategy always starts with a situation analysis to create a deep understanding of the competitive environment and our own realities. The military mantra is, “intelligence precedes operations.”
The decisive point: Here he refers to what I call the winning proposition — the central animating idea around which we must organize all our decisions and activities in order to outperform our competitors. Once we have identified this, it’s all about focus and determination.
Concentrate: Note here the words “concentrate everything” — not only our physical resources, but also the hearts and minds of our people. To quote Basil Hart, the military historian: “All the lessons of war can be reduced to a single word: concentration.”
Remove: Every new thing we choose to do subtracts effort from everything else we do. Making choices therefore means deciding what we will not do. These subtractions are the toughest decisions of all, but ducking them can be fatal. The most dangerous choice of all is not choosing.
Ignore: A winning strategy requires a disciplined mind and a steadfast character. No distractions; no sideshows. We must always keep the main thing the main thing.
Clausewitz’s definition gives us the theoretical superstructure for thinking and acting strategically. All elaborations are subplots of this central theme.
Strategy and planning are not the same thing.
Tactics are the use of armed forces in a particular battle, while strategy is the doctrine of the use of individual battles for the purposes of war.
Carl von Clausewitz
Strategy is about picking the right battles. Tactics are about successfully executing those battles.
Strategy is concerned with defining an overall purpose and priorities. It is holistic. It clarifies how the individual battles fit together and why they are being fought. Strategy’s key role is to define a winning proposition, a rallying call from which all decisions and activities will cascade.
To be clear, planning is also important. But it is not a substitute for strategy. We don’t create a strategy with a plan. We execute it with a plan. For example, your budget should be the financial expression of your strategy, not the reverse. The right sequence is essential: strategy first, planning afterwards.
The strength of any strategy lies in its simplicity
Simplicity in planning fosters energy in execution. Strong determination in carrying through a simple idea is the surest route to success. The winning simplicity we seek, the simplicity of genius, is the result of intense mental engagement.
Carl von Clausewitz
A strategy must be distilled into the simplest language possible so that everyone in an organization can follow it. Complexity paralyzes. Simplicity empowers. Simplicity is not a short cut; it’s hard work — requiring the kind of intense mental engagement Clausewitz emphasizes.
No strategy document should ever be longer than 10 pages. But the document alone is not the final deliverable of a strategy. Leaders must be able to clarify the strategy in a compelling message, using examples, pictures, and metaphors that provide a spur to action. As Peter Drucker said, “The first task of a leader is to be the trumpet that sounds the clear sound.”
Competition is interactive, not static
Some generals consider only unilateral action, whereas war consists of a continuous interaction of opposites … no strategy ever survives the first engagement with the enemy.
Carl von Clausewitz
One of the most common pitfalls amongst strategists is competitive neglect. We are susceptible to a false mental image that our competitors are standing still — that we are the only ones moving. This happens in particular when we have to play catch-up and close a gap in, say, customer service. In fact, competitors are running as fast as they can, so closing a gap means that we have to run even faster.
Making choices means seeing the world through the eyes of our competitors. What would their most likely counter-moves be? How will we contend with these? Role-playing is a useful way to plot this out. Observe the chess master: no move is ad hoc. Success comes only from thinking several steps ahead.
Morale makes all the difference
War is a trial of moral and physical forces by means of the latter. . . In the last analysis it is at moral, not physical strength that all military action is directed … Moral factors, then, are the ultimate determinants in war.
Carl von Clausewitz
War of course involves a contest of physical force. It is a blood sport. Clausewitz, however, emphasizes the definitive importance of “moral factors,” or what we think of as morale.
He makes the blunt claim that once you have destroyed your enemy’s spirit — his will to fight — you have won the war. He notes that the armies that prevail most often are those that have the full-hearted support of their citizens back home. When that encouragement is lacking, self-doubt sets in and motivation is undermined.
This lesson applies equally in the business world, and here we have great cause for concern. Only 30 percent of employees in the U.S., and 13 percent globally, feel engaged at work, according to a 2013 Gallup Survey. This morale deficit bears a dramatic cost. Companies in the top quartile for employee engagement saw 22 percent greater profitability, 10 percent higher customer ratings, 28 percent lower rates of theft, and 48 percent fewer safety incidents when compared with those in the bottom.
Henri Amiel stated it well: “Without passion man is a latent force, like the flint, which awaits the shock of the iron before it can give forth its spark.”
Strategy requires a dynamic process
We need a philosophy of strategy that contains the seeds of its constant rejuvenation — a way to chart strategy in an unstable environment.
Carl von Clausewitz
Organizations create their future through the strategies they pursue. In such high-stakes choice making, an ad hoc approach will not cut it. We must have a shared process inspired by the right thinking. In fast-changing conditions, static methods don’t work. An organization’s survival depends on the mastery of a dynamic process for generating ongoing renewal. Strategy, like any other discipline in the modern world, as Alvin Toffler reminds us, requires constant learning, unlearning, and relearning. This requires a shift of gears from strategy as planning to strategy as learning. Embedding this adaptive capability is, in the final analysis, the only route to a sustainable competitive advantage.
Note: In composing this article I have drawn on the translations from von Clausewitz’s German text by both Michael Howard, the military historian, and the Boston Consulting Group.
Willie Pietersen was raised in South Africa, and received a Rhodes Scholarship to Oxford University. After practicing law, he embarked on an international business career. Over a period of twenty years he served as the CEO of multibillion-dollar businesses such as Lever Foods, Seagram USA, Tropicana and Sterling Winthrop's Consumer Health Group. In 1998, Pietersen was named Professor of the Practice of Management at...