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Six Common Takes on Strategy

Strategy is one of the most overused words in business — and one of the least agreed on. Here are six lenses we keep coming back to in Module 2 of the Pareto MBA.

Strategy is one of the most overused words in business, and one of the least agreed on. Ask 10 people what strategy is, you'll get 10 answers.

In Module 2 of the Pareto MBA we run through a few common takes. Each one looks at the same thing from a different angle, and which angle helps depends on what you're actually trying to figure out.

Here are the ones we keep coming back to.

1. Strategy as a level

The simplest take: strategic equals long-term and high-level, as opposed to tactics. This is the version your CEO uses when she says "let's skip the tactics, what's our strategy here?"

It's useful enough as a label for sorting which conversations belong in the boardroom and which belong with the team running the deal pipeline. It tells you almost nothing about what good actually looks like, though. A bad strategy can also be high-level and long-term. So this take is mostly vocabulary.

Most people who use the word this way are really asking for the next take.

2. Strategy as a principle

This take asks: what makes us different? What's our edge? Why would anyone pick us over the alternative they're currently using?

Peter Thiel puts it bluntly in Zero to One:

"All happy companies are different. Each one earns a monopoly by solving a unique problem. All failed companies are the same: they failed to escape competition." — Peter Thiel

Charlie Munger said the same thing in fewer words:

"It's better to find your own lake than to try to become the best fisherman." — Charlie Munger

The Blue Ocean framing of this take: stop fighting in red waters. Find a market with little or no competition, where you can grow without trading every deal punch-for-punch with someone else. You can win in a Blue Ocean without being big. You just need to be alone there long enough to build something durable.

The Red Ocean version is the opposite play. You're scrapping for share in an existing market, and scale is usually the only thing that lets you survive. Both can work. The principle take just says: pick which game you're playing, and commit.

3. Strategy as a plan

This take treats strategy as a document. The artifact. The deck, the roadmap, the OKRs, the budget allocation, the three-year plan. The thing you can hand to a new hire on their first day so they know what the company is trying to do and how.

Most companies actually produce this version, and for good reason. A strategy that isn't written down somewhere doesn't exist in any practical sense. Decisions don't propagate. People can't tell what to prioritize. The act of writing the strategy down forces clarity that pure conversation never quite reaches.

The canonical example is Tesla's 2006 Master Plan. Elon Musk published a short blog post called "The Secret Tesla Motors Master Plan (just between you and me)" that laid out the sequence: build a low-volume luxury sports car, use the proceeds to build a mid-priced sedan, use those proceeds to build a high-volume affordable car, and keep pushing toward zero-emission energy along the way. The plan was four bullets. Tesla executed against it for the next 15 years. Roadster in 2008, Model S in 2012, Model 3 in 2017.

The risk with this take is that the plan becomes the strategy in name only. You spend three months on a beautiful 80-slide deck full of frameworks and Gantt charts, and the underlying insight is thin or missing entirely. A polished plan can hide a weak diagnosis. Rumelt would call this template strategy, and it's the most common failure mode in big companies.

A useful test: if most of your plan is about how to communicate the strategy, you've built packaging.

4. Strategy as inversion

Charlie Munger built half his career on a trick: instead of asking "how do I succeed?", flip the question and ask "how would I fail?" Avoid the failure modes, and what's left is at least defensible.

The same move applies to strategy. Richard Rumelt's Good Strategy / Bad Strategy offers a positive three-part recipe (diagnosis, guiding policy, coherent actions). The inverted version is more useful in practice. His list of failure modes:

• Fluff. Gibberish dressed up as insight.
• Failure to face the challenge. Pretending the hard part isn't there.
• Mistaking goals for strategy. "We will be the market leader" is a goal.
• Refusing to choose. Doing a bit of everything.
• Template strategy. Filling in a vision/mission/values form and calling it done.

The most common one is the goals mistake. "We will grow revenue by 50%" is a goal. The strategy is how you plan to get there, what you're going to stop doing to free up the resources, and which specific levers you're pulling. If a 22-year-old in your sales team can't read your strategy and figure out what to do differently on Monday morning, it isn't a strategy yet.

Run anything that calls itself a strategy through Rumelt's failure list first. Whatever survives is worth defending.

5. Strategy as a portfolio

Once your company gets big enough, strategy means managing several bets at different stages of maturity at the same time. The same logic applies whether you're allocating capital across business units or attention across a project list.

The most famous framework for the business-unit version is the BCG matrix. It sorts every business unit or product line onto two axes (market share and market growth) and produces four archetypes:

• Stars. High share in a high-growth market. You're winning a market that's still expanding. Reinvest and double down.
• Question Marks. Low share in a high-growth market. The market is good, you just aren't winning it. Either invest hard and try to flip them into Stars, or cut your losses.
• Cash Cows. High share in a low-growth market. The market is mature, but your dominance throws off cash. Milk it. Use the cash to fund Stars and promising Question Marks.
• Dogs. Low share in a low-growth market. Usually the right move is to divest, sell, or shut down.

The matrix is a memorable shorthand. You can swap in other axes (gross margin, strategic fit, cash generation) and get to the same kind of answer. What matters is the discipline behind it: forcing yourself to look at every business unit you have, classifying them honestly, and being willing to make explicit allocation calls.

Most companies that fail at the portfolio level have perfectly decent products. They fail because they can't make the calls. They keep funding Dogs because someone internally champions them. They starve Stars because the immediate cash needs sit elsewhere. They spread money across too many Question Marks instead of picking one or two to actually back.

The same dynamic plays out one level down, on the project list. A typical company has dozens of teams running hundreds of initiatives, often in parallel, often in conflict. Resources are spread so thin that nothing finishes. The standard symptom is a leadership team that can list 40 priorities and a workforce that doesn't believe any of them are real.

The strategic move in those situations is a brutal pruning of the project list. You shut down everything you can. You restart only what passes the bar. Often the right number of survivors is closer to 10 than 100. The capacity that gets released is enormous, and the survivors actually finish.

Steve Jobs's 1997 turnaround at Apple is the textbook example. When he came back, Apple was selling dozens of overlapping products and bleeding cash. He killed about 70% of the line, then drew a 2x2 grid on a whiteboard with two axes (consumer vs pro, desktop vs laptop) and told the company to build exactly four products to fill those four cells. Within 18 months Apple had the iMac, Power Mac G3, iBook, and PowerBook G3. That focus is what made the iPod and iPhone possible a few years later.

Every product, every project, every business is on a curve. Every curve declines eventually. The companies that handle this well launch new curves while the old ones are still strong, so the company as a whole keeps growing even when individual products don't. Most companies have a portfolio problem dressed up as an idea problem.

6. Strategy as a play

Some strategies show up so often they've earned names. We cover a handful in the module:

• Your margin is my opportunity. Find a competitor's most profitable product and undercut it with speed and a leaner cost base. Often used by smaller challengers against bloated incumbents.
• Copy with pride. Wait for someone else to prove a market works, then go after it without their early mistakes. Microsoft Teams vs Slack, Facebook vs MySpace, Samsung vs Apple in many product categories.
• Razor and Blade. Sell a cheap platform, make your money on high-margin consumables. Printers and ink, video game consoles and games, capsule coffee machines and pods.
• Launch niche, go broad. Start in a small, defensible Blue Ocean. Become dominant there. Then expand outward into adjacent segments. (Facebook started at Harvard, then opened to Ivy League schools, then all college students, then everyone. Amazon started with books.)
• Buy and build. Acquire a platform company in a fragmented industry, then bolt on smaller acquisitions to build scale, brand, and process power. First Camp, Eurofins, and most private equity roll-ups follow this pattern.

These plays work as pattern-matches. Knowing the names and the canonical examples is faster than reinventing the wheel from scratch.

A lot of plays map onto one or several "moats" in Hamilton Helmer's Seven Powers framework. Razor and Blade is really about creating switching costs. Buy and build is about branding, process power, and scale economies. Launch niche, go broad starts as counter-positioning and ends as scale economies. Worth knowing which moat you're actually building before you start building it.

So which take is right?

All of them, depending on where you sit. If you're an early-stage founder, the principle and inversion takes will help you most: knowing what makes you different, and using Rumelt's failure list to filter out fluff before it hardens. If you're running a multi-business group or drowning in too many initiatives, the portfolio take is the one you can't skip. The plays give you a vocabulary of patterns when you're trying to figure out the right move. The plan take is how you turn any of the above into something that actually shapes day-to-day decisions.

The thread that runs through all six: strategy is about choices. What are we doing, what are we not doing, and why.