Many of us brainstorm opportunities, and then plan how we’ll take advantage of them.
Unfortunately, while this type of approach is important, we need to think about much more than this if we want to be successful. After all, there’s no point in developing a strategy that ignores competitors’ reactions, or doesn’t consider the culture and capabilities of your organization. And it would be wasteful not to make full use of your company’s strengths – whether these are obvious or not.
Management expert, Henry Mintzberg, argued that it’s really hard to get strategy right. To help us think about it in more depth, he developed his 5 Ps of Strategy – five different definitions of (or approaches to) developing strategy.
About the 5 Ps
Mintzberg first wrote about the 5 Ps of Strategy in 1987. Each of the 5 Ps is a different approach to strategy. They are:
Terms reproduced from “The Strategy Concept 1: Five Ps For Strategy” by Henry Mintzberg’s in California Management Review, Vol. 30, 1, Fall 1987, pp. 11-24 © 1987 by the Regents of the University of California. Reprinted by permission of the University of California Press.
By understanding each P, you can develop a robust business strategy that takes full advantage of your organization’s strengths and capabilities.
In this article, we’ll explore the 5 Ps in more detail, and we’ll look at tools that you can use in each area.
- Strategy as a Plan
Planning is something that many managers are happy with, and it’s something that comes naturally to us. As such, this is the default, automatic approach that we adopt – brainstorming options and planning how to deliver them.
This is fine, and planning is an essential part of the strategy formulation process.
The problem with planning, however, is that it’s not enough on its own. This is where the other four Ps come into play.
- Strategy as Ploy
Mintzberg’s says that getting the better of competitors, by plotting to disrupt, dissuade, discourage, or otherwise influence them, can be part of a strategy. This is where strategy can be a ploy, as well as a plan.
For example, a grocery chain might threaten to expand a store, so that a competitor doesn’t move into the same area; or a telecommunications company might buy up patents that a competitor could potentially use to launch a rival product.
- Strategy as Pattern
Strategic plans and ploys are both deliberate exercises. Sometimes, however, strategy emerges from past organizational behavior. Rather than being an intentional choice, a consistent and successful way of doing business can develop into a strategy.
For instance, imagine a manager who makes decisions that further enhance an already highly responsive customer support process. Despite not deliberately choosing to build a strategic advantage, his pattern of actions nevertheless creates one.
To use this element of the 5 Ps, take note of the patterns you see in your team and organization. Then, ask yourself whether these patterns have become an implicit part of your strategy; and think about the impact these patterns should have on how you approach strategic planning.
Tools such as USP Analysis and Core Competence Analysis can help you with this. A related tool, VRIO Analysis, can help you explore resources and assets (rather than patterns) that you should focus on when thinking about strategy.
- Strategy as Position
“Position” is another way to define strategy – that is, how you decide to position yourself in the marketplace. In this way, strategy helps you explore the fit between your organization and your environment, and it helps you develop a sustainable competitive advantage
- Strategy as Perspective
The choices an organization makes about its strategy rely heavily on its culture – just as patterns of behavior can emerge as strategy, patterns of thinking will shape an organization’s perspective, and the things that it is able to do well.
For instance, an organization that encourages risk-taking and innovation from employees might focus on coming up with innovative products as the main thrust behind its strategy. By contrast, an organization that emphasizes the reliable processing of data may follow a strategy of offering these services to other organizations under outsourcing arrangements.
Using the 5 Ps
Instead of trying to use the 5 Ps as a process to follow while developing strategy, think of them as a variety of viewpoints that you should consider while developing a robust and successful strategy.
As such, there are three points in the strategic planning process where it’s particularly helpful to use the 5 Ps:
When you’re gathering information and conducting the analysis needed for strategy development, as a way of ensuring that you’ve considered everything relevant.
When you’ve come up with initial ideas, as a way of testing that that they’re realistic, practical and robust.
As a final check on the strategy that you’ve developed, to flush out inconsistencies and things that may not have been fully considered.
Using Mintzberg’s 5 Ps at these points will highlight problems that would otherwise undermine the implementation of your strategy.
After all, it’s much better to identify these problems at the planning stage than it is to find out about them after you’ve spent several years – and millions of dollars – implementing a plan that was flawed from the Start.