Access the essential membership for Modern Managers
What's your approach to developing strategy?
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 can be difficult 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. [1]
About the 5 Ps
Mintzberg first wrote about the concept in 1987. Each of the 5 Ps represents a different approach to strategy. They are:
- Plan.
- Ploy.
- Pattern.
- Position.
- Perspective. [2]
Terms reproduced from “The Strategy Concept 1: Five Ps For Strategy” by Henry Mintzberg 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 the tools that you can use in each area.
1. Strategy as a Plan
Planning comes naturally to many managers and as such, has become the default first step.
Planning is an essential part of the strategy formulation process, so take time to Brainstorm new opportunities. Tools like PEST Analysis, SWOT Analysis and practical business planning can help you to formulate an effective strategy.
The problem with planning, however, is that it's not enough on its own. This is where the other four Ps come into play.
2. Strategy as Ploy
Mintzberg 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.
Here, techniques and tools such as the Futures Wheel, Impact Analysis and Scenario Analysis can help you explore the possible future scenarios in which competition will occur. Our article on Game Theory then gives you powerful tools for mapping out how the competitive "game" is likely to unfold, so that you can set yourself up to win.
3. 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 enhance an already highly responsive customer support process. Despite not deliberately choosing to build a strategic advantage, their 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.
4. 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.
For example, your strategy might include developing a niche product to avoid competition, or choosing to position yourself amongst a variety of competitors, while looking for ways to differentiate your services.
When you think about your strategic position, it helps to understand your organization's "bigger picture" in relation to external factors. To do this, use Porter's Diamond and Porter's Five Forces to analyze your environment – these tools will show where you have a strong position, and where you may have issues.
Note:
There can be a lot of overlap between "Strategy as Position" and other elements of the 5 Ps. For instance, you can also achieve a desired position through planning, and by using a ploy. Don't worry about these overlaps – just get as much value as you can from the different approaches.
5. 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.
To get an insight into your organization's perspective, use cultural analysis tools like the Cultural Web, Deal and Kennedy's Cultural Model, and the Congruence Model.
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 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 large amounts of money – implementing a plan that was flawed from the start.
Key Points
The 5 Ps of Strategy were created by Henry Mintzberg in 1987. Each of the 5 Ps stands for a different approach to strategy:
- Plan.
- Ploy.
- Pattern.
- Position.
- Perspective.
As a Plan, strategy needs to be developed in advance and with purpose. As a Ploy, strategy is a means of outsmarting the competition.
With strategy as a Pattern, we learn to appreciate that what was successful in the past can lead to success in the future.
As for Position, strategy is about how the organization relates to its competitive environment, and what it can do to make its products unique in the marketplace.
Perspective emphasizes the substantial influence that organizational culture and collective thinking can have on strategic decision making within a company.
Understanding and using each element helps you to develop a robust, practical and achievable business strategy.
References[2] Mintzberg, H. (1987) 'The Strategy Concept 1: Five Ps For Strategy,' California Management Review, Vol 30, No 1.
