Strategy

Strategy is probably the most overused and underused word in management. Overused because every decision gets labelled strategic when most decisions aren't. Underused because many small organisations, pressed for time and resources, defer the deep strategic thinking they need and replace it with a rolling to-do list instead. For an Irish SME or charity, the consequence is the same: you stay busy without being sure you are becoming better. The purpose of strategy is not to produce a document; it is to make a choice, about what you will and won't do, who you will and won't serve, and why anyone should choose you over the alternatives.

Why it matters

Michael Porter, whose 1980 book Competitive Strategy is the foundational text of the field, made a distinction that remains essential: strategy is not the same as operational effectiveness. Doing what you do well, efficiently and reliably, is operational effectiveness, and it matters. But it does not generate sustainable advantage, because competitors can copy best practices. Strategy is about doing different things, or doing the same things in fundamentally different ways, so that your position is difficult to replicate (Porter, 1980). For a small charity providing mental health support in a rural county, this might mean the depth of community trust it has built over twenty years, a trust that no new entrant can replicate by simply hiring more staff.

Porter argued that choosing a competitive position means making trade-offs. The SME that tries to serve every customer segment at every price point is not strategic; it is unfocused. The charity that tries to address every social problem is not comprehensive; it is spread too thin to do any of them well. Strategy is the discipline of deciding what not to do.

Core concepts

Porter's five forces framework, developed in his 1979 HBR article and elaborated in Competitive Strategy (1980), provides a structured way to understand the competitive environment in which a project or organisation operates. The five forces are: the threat of new entrants, the bargaining power of suppliers, the bargaining power of buyers, the threat of substitute products or services, and the intensity of rivalry among existing competitors (Porter, 1980). For a charity, the framework translates usefully: funders are buyers with real bargaining power; other charities working in the same area are rivals for grants and volunteers; changing government policy is a substitute that can render an organisation's service redundant overnight.

SWOT analysis, mapping internal Strengths and Weaknesses against external Opportunities and Threats, is a simpler but still valuable tool for strategic diagnosis. Its origins are often traced to Albert Humphrey's work at Stanford Research Institute in the 1960s, though the attribution is debated. What matters is the discipline it imposes: good SWOT analysis forces an honest inventory of what an organisation does well and where it is genuinely vulnerable, before the pressure to appear confident takes over.

Robert Kaplan and David Norton's Balanced Scorecard, introduced in their seminal 1992 Harvard Business Review article, offered a tool for translating strategic intent into operational measurement. Rather than tracking only financial indicators, which show where you have been, not where you are going, the scorecard tracks performance across four perspectives: financial, customer, internal processes, and learning and growth (Kaplan and Norton, 1992). For a small organisation, the scorecard's most useful contribution is conceptual: the reminder that strategy is delivered through people (the learning and growth perspective), processes, customer relationships, and financial sustainability, all at once. A project plan that addresses only budget and timeline is not a strategic plan.

The key distinction between deliberate strategy, consciously chosen and carefully implemented, and emergent strategy, what actually happens in practice as organisations adapt to circumstances, comes from Henry Mintzberg's influential scholarship (Mintzberg and Waters, 1985). For small organisations with limited resources and rapidly changing contexts, the honest answer is usually that strategy is partly deliberate and partly emergent. Acknowledging this is not a failure of planning; it is an honest recognition of complexity.

The Irish context

Enterprise Ireland provides direct strategic development support to Irish businesses through its management development programme, Business Accelerator programme, and access to international markets support (Enterprise Ireland, 2024). Local Enterprise Offices (LEOs) offer equivalent support for micro and small enterprises, including one-to-one mentoring on strategic planning and competitive positioning. These are not merely nice-to-have supports, they reflect a structural recognition that strategic capability is underdeveloped in Irish SMEs, and that external challenge and expertise can unlock strategic clarity that internal reflection alone rarely achieves.

For the Irish charity sector, strategy has a particular dimension that for-profit frameworks can miss: the tension between mission fidelity and income diversification. A charity's strategic position is defined by its charitable purpose, which is legally protected and cannot simply be pivoted when funding changes. The charity that moves too readily into whoever's grant priorities are current may compromise the community trust and expertise that constituted its actual competitive advantage. The Charities Regulator's first Governance Code principle, Advancing Charitable Purpose, requires charities to be clear about what they exist to do and to measure their success against that purpose, not against income alone (Charities Regulator, 2018). This is strategy as discipline: the refusal to let funding availability substitute for strategic choice.

Porter's more recent concept of shared value, the idea that businesses and organisations can create economic value in ways that simultaneously create societal value, has particular relevance for Irish organisations operating at the intersection of commercial and social objectives (Porter and Kramer, 2011). Social enterprises, cooperatives, and charities that generate earned income are not compromising their missions by doing so; they are building the sustainability that allows their missions to be pursued over the long term.

Common pitfalls

Three strategic failures recur in small Irish organisations. The first is strategy as document: an annual planning day produces a fifty-page strategy document that sits unread on a shelf. Real strategy lives in prioritisation decisions, resource allocation, and what the board says no to. The second is mistaking activity for strategy: a full programme calendar and a busy team are signs of operational effectiveness, not strategic clarity. If you can't explain in one sentence what distinctive value you provide and to whom, your strategy is incomplete. The third is failing to review. Mintzberg's work on emergent strategy reflects the reality that context changes, new competitors emerge, funding landscapes shift, service user needs evolve. A strategy that was right three years ago requires review, not nostalgia (Mintzberg and Waters, 1985).

Watch / Listen / Read

Watch, Why business can be good at solving social problems by Michael Porter (TEDGlobal 2013, 16 min). Porter makes the case for "shared value", the idea that the most sustainable strategies, especially for organisations working at the social-commercial boundary, create value for both the organisation and its community simultaneously. Directly relevant to Irish charities and social enterprises. Available at link.

Listen, The McKinsey Podcast features regular conversations with strategy practitioners and researchers on competitive positioning, organisational design, and strategic execution. Available at https://www.mckinsey.com/featured-insights/mckinsey-podcast; search "strategy" for relevant episodes.

Read, Kaplan, R.S. and Norton, D.P. (1992) 'The Balanced Scorecard: Measures that Drive Performance', Harvard Business Review, 70(1), pp. 71–79. The original article that introduced the four-perspective framework, still the clearest single-page argument for measuring strategy rather than just finances. Available at https://hbr.org/1992/01/the-balanced-scorecard-measures-that-drive-performance-2.

Quick quiz

1. According to Porter (1980), what is the key distinction between strategy and operational effectiveness?
2. Name the five forces in Porter's competitive analysis framework.
3. What are the four perspectives in the Kaplan and Norton (1992) Balanced Scorecard?
4. Which Charities Governance Code principle requires charities to define and measure their charitable purpose?
5. What concept did Mintzberg and Waters (1985) use to describe strategy that actually emerges from an organisation's responses to changing circumstances?

Answers: (1) Strategy is about doing different things or doing things in fundamentally different ways; operational effectiveness is about doing the same things well. (2) Threat of new entrants, bargaining power of suppliers, bargaining power of buyers, threat of substitutes, rivalry among existing competitors. (3) Financial, customer, internal processes, and learning and growth. (4) Principle 1, Advancing Charitable Purpose. (5) Emergent strategy.

References

Charities Regulator (2018) Charities Governance Code. Dublin: Charities Regulator. Available at: https://www.charitiesregulator.ie/en/information-for-charities/charities-governance-code (Accessed: 27 April 2026).

Enterprise Ireland (2024) Management and leadership development. Available at: https://www.enterprise-ireland.com/en/management-business-growth/ (Accessed: 27 April 2026).

Kaplan, R.S. and Norton, D.P. (1992) 'The Balanced Scorecard: Measures that Drive Performance', Harvard Business Review, 70(1), pp. 71–79.

Mintzberg, H. and Waters, J.A. (1985) 'Of Strategies, Deliberate and Emergent', Strategic Management Journal, 6(3), pp. 257–272.

Porter, M.E. (1980) Competitive Strategy: Techniques for Analyzing Industries and Competitors. New York: Free Press.

Porter, M.E. and Kramer, M.R. (2011) 'Creating Shared Value', Harvard Business Review, 89(1/2), pp. 62–77.