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Know – And Use – Your Organization’s Business Strategy

One of the hallmarks of a successful organization is having a well thought out and clearly articulated business strategy that informs the day-to-day work of the entire organization. This doesn’t mean that everyone spends every waking hour thinking about strategy. Most of us have too many “got to get it done” tasks for that to happen. But throughout an organization, up and down the ranks, employees should understand what their company’s forward-looking focus is. And when they’re making decisions at the tactical level, they should be holding those decisions up to the light of strategy, and asking themselves how their decisions are forwarding it. When employees know – and use – your organization’s strategy, as well as understand why it was chosen and how it’s going to be achieved, they’ll feel more engaged and responsible – and the likelihood that the company’s strategy will succeed will increase.

So just what is a business strategy?

Before we go any further, let’s make sure we’re all on the same page when it comes to just what we mean when we’re talking about strategy: A business strategy defines what an organization does differently from or better than rivals to create unique value.

Another way to think about strategy comes from London Business School’s Freek Vermeulen. In a digital Harvard Business Review article that appeared in November 2017 , Professor Vermeulen wrote:

A real strategy involves a clear set of choices that define what the firm is going to do and what it’s not going to do. Many strategies fail to get implemented, despite the ample efforts of hard-working people, because they do not represent a set of clear choices. Many so-called strategies are in fact goals. “We want to be the number one or number two in all the markets in which we operate” is one of those. It does not tell you what you are going to do; all it does is tell you what you hope the outcome will be. But you’ll still need a strategy to achieve it.

A strategy, then, tells us how we’re going to achieve our goals. There are many different ways in which an organization can pursue their goals and achieve the results they’re after. That’s where choices come into play. Three companies may each be vying to be that “number one or number two in all [their] markets.” One might choose to pursue this goal by providing superior products they can charge a premium for. Another could focus on offering the world’s best customer service and the third company’s strategy might be to acquire their way into dominant market share.

This is, of course, a simplification of a complex concept, but I agree with Freek Vermeulen: strategy is all about the choices you make to reach your goals. Your organization’s strategy will be composed of a number of different components, such as your go-to-market strategy, your product strategy, your people strategy, your digital strategy. And these components will all involve explicit decisions about what you’re going to do and – implicitly if not explicitly – about what you’re not going to do.

Strategy: Not just for the corporate world

I’m sometimes asked whether strategic thinking applies to those who work for a government agency or a not-for-profit organization, where there’s no profit motive driving things. The answer, of course, is yes . A government agency may not need to show a profit, but they do need to demonstrate that they can achieve results. And just like in the business world, if a government agency fails to demonstrate value, eventually the taxpayers will demand that their funding gets cut. A non-profit may not think of itself as being in a competitive environment, but they’re competing for funding with other groups, and need to be able to differentiate their offerings to donors. And just like in the business world, if a non-profit’s expenses exceed its revenue, eventually they’ll be closing their doors. So, yes, if you’re working in the government or non-profit sector, you need to understand your organization’s strategy and how you can contribute to it.

And knowing the business strategy is not just for the C-Suite, either

It can be tempting to cede knowing your organization’s strategy to the leadership team. But the reality is that all employees play a role in their organization’s success, especially given how rapidly and dramatically the world continues to change . Employees at all levels must know what the company’s strategy is, and consistently be asking themselves how they can further it. A product manager should be looking for ways to add product features that build competitive advantage. A salesperson should consider which prospects, given their organization’s strategy, they should be pursuing. If a company is targeting a specific demographic, an HR professional might want to devise a plan to attract and retain employees who are members of that demographic.

Certainly, being well-versed in the organization’s strategy is a requisite for those in senior leadership But it’s an essential element of the business acumen portfolio for employees throughout the organization. Your organization’s success depends on having a sound strategy, and on having employees who know and use that strategy, whatever their role.

If you asked your employees what your organization’s business strategy is, could they answer you?

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• 12 Dec 2023
• Cold Call Podcast

Can Sustainability Drive Innovation at Ferrari?

When Ferrari, the Italian luxury sports car manufacturer, committed to achieving carbon neutrality and to electrifying a large part of its car fleet, investors and employees applauded the new strategy. But among the company’s suppliers, the reaction was mixed. Many were nervous about how this shift would affect their bottom lines. Professor Raffaella Sadun and Ferrari CEO Benedetto Vigna discuss how Ferrari collaborated with suppliers to work toward achieving the company’s goal. They also explore how sustainability can be a catalyst for innovation in the case, “Ferrari: Shifting to Carbon Neutrality.” This episode was recorded live December 4, 2023 in front of a remote studio audience in the Live Online Classroom at Harvard Business School.

• 12 Sep 2023

Can Remote Surgeries Digitally Transform Operating Rooms?

Launched in 2016, Proximie was a platform that enabled clinicians, proctors, and medical device company personnel to be virtually present in operating rooms, where they would use mixed reality and digital audio and visual tools to communicate with, mentor, assist, and observe those performing medical procedures. The goal was to improve patient outcomes. The company had grown quickly, and its technology had been used in tens of thousands of procedures in more than 50 countries and 500 hospitals. It had raised close to $50 million in equity financing and was now entering strategic partnerships to broaden its reach. Nadine Hachach-Haram, founder and CEO of Proximie, aspired for Proximie to become a platform that powered every operating room in the world, but she had to carefully consider the company’s partnership and data strategies in order to scale. What approach would position the company best for the next stage of growth? Harvard Business School associate professor Ariel Stern discusses creating value in health care through a digital transformation of operating rooms in her case, “Proximie: Using XR Technology to Create Borderless Operating Rooms.”

• 07 Jan 2019
• Research & Ideas

The Better Way to Forecast the Future

We can forecast hurricane paths with great certainty, yet many businesses can't predict a supply chain snafu just around the corner. Yael Grushka-Cockayne says crowdsourcing can help. Open for comment; 0 Comments.

• 30 Nov 2018
• What Do You Think?

What’s the Best Administrative Approach to Climate Change?

SUMMING UP: James Heskett's readers point to examples of complex environmental problems conquered through multinational cooperation. Can those serve as roadmaps for overcoming global warming? Open for comment; 0 Comments.

• 04 May 2017

Leading a Team to the Top of Mount Everest

In a podcast, Amy Edmondson describes how students learn about team communication and decision making by making a simulated climb up Mount Everest. Open for comment; 0 Comments.

• 15 Mar 2017
• Lessons from the Classroom

More Than 900 Examples of How Climate Change Affects Business

MBA students participating in Harvard Business School’s Climate Change Challenge offer ideas on how companies can negate impacts from a changing environment. Open for comment; 0 Comments.

• 07 Apr 2014

Negotiation and All That Jazz

In his new book The Art of Negotiation, Michael Wheeler throws away the script to examine how master negotiators really get what they want. Open for comment; 0 Comments.

• 04 Sep 2013

How Relevant is Long-Range Strategic Planning?

Summing Up: Jim Heskett's readers argue that long-range planning, while necessary for organizational success, must be adaptable to the competitive environment. What do YOU think? Open for comment; 0 Comments.

• 16 Jul 2012

Are You a Strategist?

Corporate strategy has become the bailiwick of consultants and business analysts, so much so that it is no longer a top-of-mind responsibility for many senior executives. Professor Cynthia A. Montgomery says it's time for CEOs to again become strategists. Closed for comment; 0 Comments.

• 21 Dec 2011

The Most Common Strategy Mistakes

In the book, Understanding Michael Porter: The Essential Guide to Competition and Strategy, Joan Magretta distills Porter's core concepts and frameworks into a concise guide for business practitioners. In this excerpt, Porter discusses common strategy mistakes. Closed for comment; 0 Comments.

• 09 May 2011

Moving From Bean Counter to Game Changer

New research by HBS professor Anette Mikes and colleagues looks into how accountants, finance professionals, internal auditors, and risk managers gain influence in their organizations to become strategic decision makers. Key concepts include: Many organizations have functional experts who have deep knowledge but lack influence. They can influence high-level strategic thinking in their organizations by going through a process that transforms them from "box-checkers" to "frame-makers." Frame-makers understand how important it is to attach the tools they create to C-level business goals, such as linking them to the quarterly business review. Frame-makers stay relevant by becoming personally involved in the analysis and interpretation of the tools they create. Open for comment; 0 Comments.

• 22 Nov 2010

Seven Strategy Questions: A Simple Approach for Better Execution

Successful business strategy lies not in having all the right answers, but rather in asking the right questions, says Harvard Business School professor Robert Simons. In an excerpt from his book Seven Strategy Questions, Simons explains how managers can make smarter choices. Closed for comment; 0 Comments.

• 02 Jun 2010

How Do You Weigh Strategy, Execution, and Culture in an Organization’s Success?

Summing up: Respondents who ventured to place weights on the determinants of success gave the nod to culture by a wide margin, says HBS professor Jim Heskett. (Online forum now closed. Next forum opens July 2.) Closed for comment; 0 Comments.

• 22 Mar 2010

One Strategy: Aligning Planning and Execution

Strategy as it is written up in the corporate playbook often becomes lost or muddled when the team takes the field to execute. In their new book, Professor Marco Iansiti and Microsoft's Steven Sinofsky discuss a "One Strategy" approach to aligning plan and action. Key concepts include: The book combines practical experience at Microsoft with conceptual frameworks on how to develop strategies that are aligned with execution in a rapidly changing competitive environment. "Strategic integrity" occurs when the strategy executes with the full, aligned backing of the organization for maximum impact. The chief impediment to strategy execution is inertia. The One Strategy approach is less about formal reviews and more about one-on-one conversation. Blogs can be a powerful asset in managing an organization. Closed for comment; 0 Comments.

• 11 Aug 2008

Strategy Execution and the Balanced Scorecard

Companies often manage strategy in fits and starts, with strategy execution lost along the way. A new book by Balanced Scorecard creators Robert S. Kaplan and David P. Norton aims to make strategy a continual process. Key concepts include: An excellent strategy often fades from memory as the organization tackles day-to-day operations issues. The operational plan and budget should be driven from the revenue targets in the strategic plan. The senior management team needs to have regular, probably monthly, meetings that focus only on strategy. The Office of Strategy Management is a small cadre of professionals that orchestrate strategy management processes for the executive team. Closed for comment; 0 Comments.

• 11 Apr 2007

Adding Time to Activity-Based Costing

Determining a company's true costs and profitability has always been difficult, although advancements such as activity-based costing (ABC) have helped. In a new book, Professor Robert Kaplan and Acorn Systems' Steven Anderson offer a simplified system based on time-driven ABC that leverages existing enterprise resource planning systems. Key concepts include: The activity-based costing system developed in the 1980s fell out of favor for a number of reasons, including the need for lengthy employee interviews and surveys to collect data. The arrival of enterprise resource planning systems allows crucial data to be pumped automatically into a TDABC system. Managers must answer two questions to build an effective TDABC system: How much does it cost to supply resource capacity for each business process in our organization? How much resource capacity (time) is required to perform work for each of our company's transactions, products, and customers? Profit improvements of up to 2 percent of sales generally come in less than a year. Closed for comment; 0 Comments.

• 24 Apr 2006

Managing Alignment as a Process

"Most organizations attempt to create synergy, but in a fragmented, uncoordinated way," say HBS professor Robert S. Kaplan and colleague David P. Norton. Their new book excerpted here, Alignment, tells how to see alignment as a management process. Closed for comment; 0 Comments.

• 02 Feb 2004

Mapping Your Corporate Strategy

From the originators of the Balanced Scorecard system, Strategy Maps is a new book that explores how companies can best their competition. A Q&A with Robert S. Kaplan. Closed for comment; 0 Comments.

• 12 Oct 1999

A Perfect Fit: Aligning Organization & Strategy

Is your company organizationally fit? HBS Professor Michael Beer believes business success is a function of the fit between key organizational variables such as strategy, values, culture, employees, systems, organizational design, and the behavior of the senior management team. Beer and colleague Russell A. Eisenstat have developed a process,termed Organizational Fitness Profiling, by which corporations can cultivate organizational capabilities that enhance their competitiveness. Closed for comment; 0 Comments.

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Competing with Network Effects

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How to Formulate a Successful Business Strategy

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Participants in Business Strategy are eligible for a Certificate of Completion from Harvard Business School Online.

Participants are expected to fully complete all coursework in a thoughtful and timely manner. This will mean meeting each week’s course module deadlines and fully answering questions posed therein. This helps ensure your cohort proceeds through the course at a similar pace and can take full advantage of social learning opportunities. In addition to module and assignment completion, we expect participation in the social learning elements of the course by offering feedback on others’ reflections and contributing to conversations on the platform. Participants who fail to complete the course requirements will not receive a certificate and will not be eligible to retake the course.

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Description: Business Strategy is a 6-week, 30-35 hour online certificate program from Harvard Business School. Business Strategy equips professionals with a simplified framework they can immediately apply to create value for customers, employees, and suppliers while maximizing returns and an organization’s competitive edge. Participants learn to evaluate trade-offs and align, prioritize, and formulate strategic initiatives for the greatest business impact.

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How to Write a Great Business Plan (Harvard Business Review Classics) Paperback – March 1, 2008

• The people—the individuals launching and leading the venture and outside parties providing key services or important resources
• The opportunity—what the business will sell and to whom, and whether the venture can grow and how fast
• The context—the regulatory environment, interest rates, demographic trends, and other forces shaping the venture's fate
• Risk and reward—what can go wrong and right, and how the entrepreneurial team will respond
• Print length 72 pages
• Language English
• Publisher Harvard Business Review Press
• Publication date March 1, 2008
• Dimensions 4.32 x 0.22 x 6.53 inches
• ISBN-10 1422121429
• ISBN-13 978-1422121429
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• Publisher ‏ : ‎ Harvard Business Review Press (March 1, 2008)
• Language ‏ : ‎ English
• Paperback ‏ : ‎ 72 pages
• ISBN-10 ‏ : ‎ 1422121429
• ISBN-13 ‏ : ‎ 978-1422121429
• Item Weight ‏ : ‎ 2.26 ounces
• Dimensions ‏ : ‎ 4.32 x 0.22 x 6.53 inches
• #201 in Business Writing Skills (Books)
• #712 in Systems & Planning
• #2,154 in Entrepreneurship (Books)

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Harvard Business Review: 3 steps towards finance-led integrated business planning

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In 1963 when the economy was booming, Stanley Harding, the financial director of Shell, said that one of the three hats that finance managers should wear was to be “an active member of the management team” (the other two were to be a financial expert and people manager). Fifty years later, markets are increasingly volatile, competition is much fiercer, and businesses are anxious for any kind of revenue growth—and many finance teams still have a ways to go to becoming strategic business partners.

What is integrated business planning ?

Growth today means more than introducing new products or extending into new markets. Companies frequently need to refresh their strategies and reinvent business models to keep up with changing consumer preferences and stay ahead of competition. To be successful, companies need to move away from the traditional approaches to planning and budgeting, and adopt a more holistic approach that provides the agility needed to create and sustain a competitive advantage. This new way of doing things— integrated business planning (IBP)—is the focus of a new Harvard Business Review Analytical Services Report, “Driving Business Growth With Finance-Led, Integrated Business Planning.”

The IBP approach depends on Finance partnering with the business since implementation involves taking three steps to unify the planning process across the company:

• 1. Focus on metrics that drive growth , such as revenue per unit, expense per headcount, customer retention, and customer satisfaction that give a deeper understanding of current performance and better visibility into the future. 2. Increase business-user collaboration for continuous forecasting , with everyone contributing to the planning process using a technology that enables collaboration and connects plans in real time—i.e., not standalone spreadsheets. 3. Treat IBP as an enterprise-wide initiative with a planning platform that brings people and data together into a streamlined process in one central place. This does not mean implementing IBP necessitates an all-in, expensive, big-bang, IT-driven investment. Companies can work at it incrementally by first integrating aspects of sales that directly impact revenue, along with operational departments with highly variable costs, and then extending the process to back-office functions where costs are largely fixed.

With a flexible and adaptable planning platform , implementing IBP can be turned into a series of agile sprints that focuses first on specific business functions where there are quick wins that improve the accuracy of financial forecasts, allowing business managers to more successfully pursue growth.

One suspects that the forward-thinking Stanley Harding would recognize the need to evolve planning and budgeting software for today’s topsy-turvy world and be wowed by the business planning software available to achieve the transformation.

Read the report to learn more about how you can prepare your business for growth by making the planning process a collaborative enterprise-wide initiative.

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'I fully plan on winning the industry'

Everyone hates Friend, the creepy new AI necklace. Its 21-year-old creator is undeterred.

Earlier this week, another product contending for the future of AI companionship made its debut: an eavesdropping necklace called Friend. The device was introduced in a glossy, A24-style promotional video in which fresh-faced Zoomers speak to an AI pendant that provides emotional support, commentary, and playful jabs in the form of canned text messages. "This show is completely underrated," it texts a woman while she's watching a show and eating falafel on her lunch break. Then it texts, "How's the falafel?" The woman is seemingly heartened by this. "It's dank," she tells her necklace, "I could eat one of these every day."

The internet, however, has found Friend to be less than dank.

Unlike Siri, Alexa , and their brethren, Friend is not an ask-and-tell robot assistant. Instead, the $99 device aspires to take the place of human companionship, capitalizing on a culture in which nearly 10% of Americans say they have no close friends. With Friend, you're never alone — which, depending on how much you value solitude and privacy, is either extremely comforting or extremely creepy.

If any of this sounds bleak or dystopian, then you'll understand the vitriolic reactions to the product across the internet. A sampling from X: "Friend strikes me as a product for losers, which is a totally valid market," and "One of the more depressing things I've ever seen…Do whatever the opposite of this is." Many compared Friend to a "Black Mirror" episode.

The online commentary grew only more heated when Friend's founder, a 21-year-old Harvard dropout named Avi Schiffmann, revealed that he spent $1.8 million of Friend's $2.5 million funding to buy the website domain "Friend.com."

"People think it's outrageous that I would buy a domain like that, but this is the point of VC money," Schiffmann told me in an interview. (He is not the first entrepreneur to purchase an expensive domain — Elon Musk, Schiffmann was quick to point out, spent some $11 million to acquire Tesla.com.) Friend's investors include Caffeinated Capital's Raymond Tonsing, Perplexity AI CEO Aravind Srinivas, and Morning Brew cofounder Austin Rief. "People think my investors hate me, but they could not love me any more," he said.

Still, Schiffmann admitted that the online reaction to Friend is not what he expected. "I honestly think it's because the video was too good," he said."That, maybe, was my biggest mistake. There hasn't been a video this high quality about AI companionship since 'Her,'" — the Oscar-winning 2013 film in which Scarlett Johansson plays an AI voice assistant so transfixing Joaquin Phoenix's human character falls in love with her.

Schiffmann's original vision for an AI hardware device was a pendant that would act as a more standard-fare AI assistant called Tab — he once described it as a " wearable mom ." But after spending a lonely night in Tokyo, he began considering a more intimate version, a "friend" that could offer camaraderie and emotional support. "A good friend that sends you a text like 'Good luck on the interview' is more productive than reminding you that you have a meeting in five minutes," he said.

A venture-funded AI-friendship necklace is something of a hard pivot for Schiffmann. In 2020, when he was 17, he built one of the first COVID-tracking websites. Anthony Fauci presented him with a Webby Person of the Year award. He went on to build a tool that tracked Black Lives Matter protesters and a website that helped refugees fleeing war-torn Ukraine find people offering spare rooms and couches around the world. But Schiffmann sees a throughline in all these projects: "These are all really just big art projects to me," he said. "I haven't been able to come up with a stronger intrinsic [reason] why it's worth doing anything like this at all. It's just something to do and I'm bored. But maybe I've just read too much Camus."

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"I'm building friends for myself, but I also have a ton of friends," he added. "I don't think it's a complete substitution. If one of your five close friends is an AI, it's a good thing, especially if you fear judgment from other people. It can fill in gaps when you're traveling and it's late at night and you want to talk to someone."

Of the many AI hardware devices that launched in recent months, such as Humane's AI pin, Meta's smart glasses, and Rabbit's AI-powered R1, Friend is the most personal contender. Not only does it aspire to be a close confidant, it's also privy to all its users' conversations. As in, it never stops listening. The incessant eavesdropping that people fear when it comes to devices like Siri and Alexa is a selling point to allay Friend users who fear being alone. Friend needs to have access to every aspect of your life in order to work, Schiffmann said. "You wouldn't put headphones over your dog," he said. "It makes it feel like it's actually there with you. It's nice to be with a sentient entity."

I'm just chilling at my house smoking cigarettes and continuing to work."

Schiffmann is not the only tech founder building an AI companion in the form of a pendant. In fact, on the day Friend launched, a competing AI hardware founder named Nik Shevchenko released a diss track — as any self-respecting 23-year-old AI hardware founder would — insinuating that Schiffmann stole his idea. Shevchenko is also building an open-source competitor AI pendant, which he wears in his rap video, that looks a lot like Friend's. It is, in what seems to be more than a coincidence, also named Friend. "For those who don't know / I built Friend / renamed your Tab/ jacked my style," Shevchenko raps.

When I asked Schiffmann about Shevchenko's claims, Schiffmann told me it was the opposite: Shevchenko had copied him . (It would not be the first time that Shevchenko built an open-source competitor that closely resembled another AI hardware device. In March, the AI pin company Humane sent Shevchenko a cease-and-desist letter after he launched a similar device called Whomane.) "There are a lot of people building open-source competitors," Schiffmann said. Shevchenko "is the most annoying one."

"Maybe I am annoying," Shevchenko said when I reached him for comment. But he disagreed with at least some of Schiffmann's claims. He actually had been copying another AI-companion pendant, he said. "The project that we built was indeed fascinated by another project but it was not Avi's Tab. It was an open-source wearable called Adeus." There are nearly as many upstart AI-companion pendant necklaces, it seems, as there are Taylor Swift friendship bracelets.

Based on the public's initial reaction to it, Friend appears to be a long way from product-market fit, in that people do not want this product. Schiffmann disagrees. "People underlyingly want this," he told me. As for Friend's online detractors, they are just "being Twitter tech people and, like, yappin'," he said.

Schiffmann is unbothered by the vitriol, he said. When it comes to creating Friend, "every decision I made was guided by personal vibes."

"I'm just chilling at my house smoking cigarettes and continuing to work," he continued. And Schiffmann has big plans for Friend. "I fully plan on winning the industry," he said. "If this is what I can do with $2.5 million, wait till you see what I can do with $100 million."

Zoë Bernard is a feature writer based in Los Angeles. She writes about technology, crime, and culture. Formerly, she covered technology for The Information and Business Insider.

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