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September 11, 1995

The Evolution of Strategy

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I see three major stages in the history of strategy.

Strategy 1.0—about 500 b.c. till about the 1950s

Historians cite the Chinese military classic The Art of War, written by Sun Tzu around 500 b.c., as the first known work on strategy. And in fact, for a long time it was believed that war was the primary application for strategy. (Our word strategy comes from the Greek term strategia, meaning “generalship.”) The goal was to conquer your enemy through deployment of resources in such a way that you won your prize intact and at acceptable cost to your own side.

Strategy 2.0—about the 1950s till today

After World War II, military planning migrated off the battlefield and into the offices of business and government as strategic planning. Experts such as Peter Drucker and Michael Porter developed theories to guide leaders in helping their organizations succeed. These theories, produced at a time when the rate of social change was slower than it is now, provided a methodical way of thinking about setting goals and mobilizing employees to go after them. And it worked. Until it stopped working.

Strategy 3.0—starting now

Around the end of the twentieth century or the beginning of the twenty-first, conditions in society changed to the point that Strategy 2.0 began to falter in its effectiveness. Another strategic framework began to form in its place—one that isn’t slow but fast, one that isn’t systematic but agile. It’s still possible to make smart decisions for our organizations that will pay off later. But now it calls for nimbleness, a tolerance for uncertainty, and the willingness to keep on trying until we get it right.

Leaders are desperate for a new kind of strategy that will work. The good news is that this strategic framework is already here. Strategy 3.0 will guide our thinking as we seek to make inspired choices for the good of our organizations and our customers.

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