Most companies calling something "strategy" are describing a business model
One of the most common issues we encounter in corporate comms is the tendency for companies to use the terms "business model" and "strategy" interchangeably.
Granted, the two concepts are closely related, but importantly, they perform different functions and should be communicated differently.
A business model explains how a company creates, delivers and captures value. It describes how the organisation operates by setting out its customers, products and services, revenue streams, resources and capabilities. In essence, it provides stakeholders with an understanding of how the business works and how it creates value.
A strategy serves a different purpose. It explains how an organisation intends to achieve its long-term objectives. A well-articulated strategy should provide more than a statement of ambition. It provides a framework through which progress can be assessed over time.
The distinction here really matters because stakeholders need to understand both.
A clear explanation of a business model helps stakeholders understand how value is currently being created. A clearly articulated strategy helps them understand how leadership intends to build on that foundation and how future value will be generated, protected or transformed.
In practice, many organisations describe the mechanics of the business and present them as strategy. Annual Reports often contain detailed explanations of products, services, markets and capabilities, but provide much less clarity on the choices that leadership is making to achieve future objectives.
As a result, stakeholders often gain a strong understanding of the organisation, but a weaker understanding of where it is heading and how success will be achieved.
If an organisation's objective is to become a market leader, expand into new geographies, accelerate growth or improve sustainability performance, stakeholders need to understand how these objectives will be achieved and how success will be measured. Without that framework, it becomes difficult for investors, employees and other stakeholders to evaluate progress or hold leadership accountable for delivery.
This is particularly important because different stakeholder groups seek different insights from the same strategy.
Investors are typically interested in growth opportunities, competitive positioning, capital allocation and risk.
Employees want to understand organisational priorities, future direction and how their contribution supports the delivery of strategic objectives.
Customers, regulators and wider stakeholders increasingly expect to see evidence that commitments are supported by credible plans and measurable outcomes.
The strategy should remain consistent across these audiences, but the way it is articulated should reflect the needs and interests of each stakeholder group. This is where communication becomes critical.
@Hailhurst we are not management consultants and we do not develop corporate strategies. But we do help organisations communicate strategies effectively by bringing clarity, structure and consistency to complex messages. Because understanding how a business works is important: where it is going, why it is heading there and how progress will be measured will give stakeholders confidence and build trust.