The Practice Of Strategy

By Carlos Rey Peña and Joan E. Ricart

What is strategy? In this article, the authors view strategy as a discipline that harmonizes business model innovation with company principles and simultaneously meets the requirements of market demands. Their aim is to narrow the gap that currently exists between the theory and the practice of strategy.


Einstein said that everything should be made as simple as possible, but not simpler. Company strategy is one of those subjects that is often explained in a manner that is either exceedingly simple or overly complex. Some scholars, such as Porter1, view strategy as “the creation of a unique value proposition.” Others, including Hamel2, argue that strategy is the expression of ambition in the mission statement. For Rumelt3, strategy is a question of knowing how to develop key resources and then use those resources to generate and capture value; for Teece4, strategy is a dynamic method of combining and developing capabilities. For our purposes, strategy is defined as “the choice of a desired future for a company and the manner in which this future will be achieved.”5  This definition – simple to explain but difficult to implement – identifies the distinctive elements of a strategy. First, strategy is a choice. It encompasses choosing objectives, setting priorities, defining what we want to be and what we do not want to be. Second, strategy refers to the future; this clearly implies uncertainty and often means changing or departing from an established strategy. Finally, strategy is not only a desire, a goal, or a purpose; it is a path, a platform, and a specific indication about how we will achieve our desired future – which means that a strategy must also be realistic in terms of feasibility.

Despite the numerous efforts to define strategy, we are currently faced with a significant gap between the theory of strategy and its practice. The underlying problem is that the science of strategy endeavors to explain why some companies succeed and others fail – which is why there are so many perspectives and levels of analysis – whereas the practice of strategy seeks to identify courses of action that will solve problems and take advantage of opportunities. Put another way, the practice of strategy requires specific solutions for real-life situations.

An approximation to strategy that helps to close the gap between theory and practice is a concept called the logical method, i.e., the logical manner by which people make strategic choices. Because strategy is based on choices, we can distinguish three methods or types of strategic logic: analytical logic, institutional logic and systemic logic.

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