The foundations of the study of strategy were laid by Peter Drucker (1955: 311) who stated in his seminal work, The Practice of Management, that ‘the important decisions, the decisions that really matter, are strategic’. The first major contribution to the study of strategy was made by Alfred Chandler, whose most famous pronouncement was that structure follows strategy. But he also produced the following comprehensive definition of strategy (one of the first): ‘Strategy can be defined as the determination of the basic longterm
goals and objectives of an enterprise, and the adoption of courses of action and the allocation of resources necessary for carrying out these goals’ (Chandler, 1962: 13).
The concept of business strategy was developed by another of the pioneers, Igor Ansoff (1965: 6), who wrote that strategy is about ‘deciding what sort of business the firm is in and what kinds of business it will seek to enter’. He stated that the term strategic means ‘pertaining to the relation between the firm and its environment’ (ibid: 5) and described strategy as ‘a rule for making decisions’ (ibid: 119). In 1972 Kenneth Andrews explored in greater depth the concept of corporate strategy. He defined it comprehensively in a later edition as:
… the pattern of decisions in a company that determines and reveals its objectives, purposes or goals, produces the principal policies and plans for achieving these goals, and defines the range of business the company is to pursue, the kind of economic and human organization it is or intends to be, and the nature of the economic or non-economic contribution it intends to make to its shareholders, employees, customers and communities.
(Andrews, 1987: 13)
He suggested that ‘… the word strategy still retains a close connection to a conscious purpose and implies a time dimension reaching into the future. At its simplest, a strategy can be a very specific plan of action directed at a specified result within a specified period of time’ (ibid: xi).
The overall concept having been defined by the pioneers, subsequent writers explored more specific aspects of strategy. Porter (1985) was perhaps the most influential. He developed the notion of competitive advantage, although this term was introduced 20 years earlier by Ansoff (1965: 110), who noted that it arises when a firm ‘seeks to identify particular properties of individual product markets which will give [it] a strong competitive position’. Importantly, Porter also introduced the idea of the value chain. Mintzberg (1978, 1987, 1994) distinguished between deliberate or intended strategies and emergent strategies and analysed the process of strategy formulation. Wernerfelt (1984) and Barney (1991, 1995) built on the ideas of Penrose (1959) to develop the highly influential ‘resource-based view’. Prahalad and Hamel (1990) argued that competitive advantage results in the long term when a firm builds ‘core competencies’ that are superior to those of its rivals, and when it learns faster and applies its learning more effectively than its competitors do. More recently, Johnson et al (2008) popularized business model innovation as a strategic approach to developing a business.