Every organization operates on what Peter Drucker calls a Theory of the Business. That is, a set of assumptions as to what its business is, what its objectives are, how it defines results, who its customers are, what the customers value and pay for.*

I use the strategic framework described below to help clients gain specific understanding of the key elements of the Theory of the Business, and how the various elements interrelate.

Identity

Provides an organization with a relatively changeless core ideology that gives guidance and stability to the business. A strong sense of identity provides a thread of continuity that holds the organization together in the face of uncertainty, challenge, and change.

The sub-elements of Identity are:

Purpose: The essence of the business. Why it exists.
Core Values: Essential and enduring beliefs.
Core Competencies: The basket of "know-how" that provides a sustainable competitive advantage in the marketplace.

Vision

The vision is a unique and compelling positive image of the future. The vision addresses the critical focus of an organization. It is a description of the future. A vision typically looks out three to five years. The planning horizon however should be dependent on the nature of the business.

To be useful, a vision needs to translatable into action. An "umbrella statement" supported by vision elements (strategic imperatives) that summarize the strategic intent allow for an actionable vision.

The real power of a vision is not what it is, but what it does. When the vision is clearly articulated and shared, and a genuine desire to bring it into reality exists, it can be a powerful force for action. The vision enhances effectiveness and creativity by the "creative tension" developed between the vision and current reality.

Strategic Path

Strategy is the approach the organization uses to achieve its Vision in a way that is consistent with its Identity. The Strategic Path is the sum of strategies and actions taken throughout the organization to achieve the desired direction.

Strategy converts the Theory of the Business into performance. Its purpose is to enable an organization to achieve its desired results in an unpredictable environment. An organization's strategy should allow it to be what Drucker calls purposefully opportunistic.

"The Genius of the And"

James Collins and Jerry Porras** have done significant research on visionary companies that have been extremely successful over time.

The key finding is for organizations to successfully sustain themselves and grow over time they must both "preserve the core" and "stimulate progress". That is, organizations have to be passionate about constantly nurturing their identity and culture while at the same time diligently attending to their strategic direction (vision and strategic path).

Collins and Porass call this simultaneous dual focus the "Genius of the And". The Genius of the And is contrasted with what they call "The Tyranny of the Or". That is, concentrating on one component of the strategic framework (e.g., Identity) while neglecting or not paying sufficient attention to the other (e.g., Vision and Strategic Path.)

The core (Identity) stays relatively constant over time; while the strategic direction should constantly be adjusted to respond to the realities of the marketplace and to create future possibilities.

*Peter Drucker, Management Challenges for the 21st Century, HarperBusiness, New York

**James Collins and Jerry Porras, Built to Last: Successful Habits of Visionary Companies, HarperBusiness, New York