Read time: 4 mins
The Four Ps of Strategy
Transcript
Now when addressing the question, what is strategy? I’m not going to give you one answer. I’m going to give you four.
Traditionally, and probably what you’ve been most exposed to in your career thus far, is the idea of strategy as the four Ps. What do we mean by the four Ps? Strategy is first and foremost a plan. It’s, “what are we trying to accomplish? What is our strategic goal?” Number two, strategy as a pattern, it’s a pattern of behavior. In many ways it’s the roadmap. We have a plan which comes with a strategic goal. Now the pattern of strategy is, “how are we going to get there?” But that’s not it for strategy. Strategy also has a third P which is strategy as a position. Position means, where am I going to operate? Where am I going to compete? What does that mean? What markets am I going to operate in? What segments? What geographies? What customers am I going to serve? And importantly, what customers am I not going to serve?
So, there’s three right there: strategy as a plan, a goal; strategy as a pattern, a set of behaviors or our roadmap to get to that goal; and strategy as a position, where are we going to play? Now the fourth P, in many ways, is the most exciting, but it’s also the most abstract: strategy as a perspective. What do we mean by perspective? A perspective is a way of understanding the world around us, the world around us, when we’re organizational leaders and managers is in at least two forms, there’s the organizational world around us and there’s the market or competitive world around us.
We have theories and assumptions about both of those. We have assumptions about the way our competitive environments are going to operate. And we have assumptions about what are the resources and capabilities we have within our organizational context. We have a theory about what it will take to create competitive advantage using what we have in the context in which we’re operating.
Now, I know that’s abstract, but it’s important to realize that. What is your theory of competitive advantage within your organization and within your competitive environment?
Thinking about strategy
Now that’s the most traditional, but also in many ways, one of the most useful ways to think about strategy. It articulates exactly what are the elements, what are the parameters, by which I should be thinking about strategy, a goal, a system of behavior, a position and then undergirding all of that is a theory, a perspective about what I have and what is available to me.
Creating a competitive advantage in business requires strategy, which can be broken down into four Ps: Plan, Pattern, Position, and Perspective. Once you have those parameters down, you also have a road map to accomplishing your business goals.
Learn more about the four Ps of strategy with the late Edward Smith who, before his sad passing, was the Faculty Director in the Strategic Change Management online program from Kellogg Executive Education at Northwestern University.