What's your evidence for 'strategic = stupid'?
Nothing depresses a board more than being told they're about to get presented with a 'strategic investment'. This means management is about to make an investment proposal where they can't see how they're ever going to make a return, but want to do it anyway.
Ditto the heads of sales or marketing, when the VP of business development comes in with a potential 'strategic partnership'. This means they'll be spending lots of time and money on a vague relationship with some other firm, with no concrete possibility of revenue in their lifetime - although there will be lots of web site photo opportunities These are what Americans call 'Barney relationships', after the dinosaur in the kids' TV show.
'I love you, you love me'.
By the way, 'VP biz dev' is the top candidate for the most devalued business title in the dot.com fallout. Forbes ran a great description of these VPs as 'adolescent sleazeballs in leisure suits, doing sales without quotas'.
(Some biz dev VPs are very good, though, especially my clients - hi Paco!)
You're getting off-subject.
Sorry. Here's another one: 'strategic customers'. These are big customers who never generate a penny in profit. They get prices below cost, and demand super-human service. They promise long-term commitment, or lots of profits for you as the relationship builds, but start negotiating with your closest competitor the moment they've finalised a deal with you. The salesforce calls them 'strategic' because salesforces get commissioned on revenue, not on profit.
One more example: 'strategic investors'. This is basically the same as 'strategic investments', but from the sellers' perspective rather than the buyers'. There are lots of TMT and dot.com businesses out there right now 'looking for strategic investors'. This is shorthand for 'We can't find any VC or bank willing to fund us one more cent, so we're hoping to find some old-economy sucker, awash with cash, who'll see a 'strategic fit'.'
Ah ha! 'Strategic fit'. There's another one. 'Strategic planning', of course, went out of fashion about 15 years ago - but for different reasons.
The whole concept of long-term, five to 10-year planning was discredited as business cycles shortened and market change accelerated. Henry Mintzberg has a good book on this.
How has 'strategic' come to be so devalued?
I think it's largely a backlash against the tech/dot.com frenzy and collapse.
At their peak, these businesses were being appraised and valued on the basis of eyeballs, revenue-multiples and operating losses: the more you lost, the more you were worth. Old-economy business couldn't use the old language of cashflow and p/e to describe a potential investment, and they couldn't just tell their boards: 'Hey, what the hell, let's make a punt, everybody else is.' Instead, they started using the word 'strategic' a lot.
Back in the 1970s and '80s, I remember that the word 'strategy' was commonly used but 'strategic' much less so. 'Strategic' is a last-decade thing.
If there's a backlash against 'strategic', is there a backlash against 'strategy'?
Interesting. Even if the board hates strategic investments, they are still all ears when the CEO steps up to lay out The Strategy, and if he or she hasn't got one, investors are very nervous. 'Strategy' hasn't been tarnished with the same brush as 'strategic'.
Of course, the need for strategy is as real as ever. But strategy is about seeing your way to long-term growth in cashflow. And investments, partnerships and customers are valuable insofar as they help to build cashflow - they're not 'strategic' or 'unstrategic', they're either NPV-generating or NPV-destroying.
So what would you use instead of 'strategic'?
If 'strategic' meant 'big', I'd say so - 'big investment' or 'big, difficult customer'. If it also meant 'highly risky and uncertain', I'd say: 'big, highly risky and uncertain investment, with a potentially large upside' - and I'd use a high discount rate on projected cashflows (although I would also try to project the cashflows).
And if by 'strategic partnership' I meant: 'I had a great lunch with the CEO, and it would be cool to do something together', I'd think hard about what that future-cashflow-generating-something might be before I spent much time and money on it.
Now, if you'll excuse me, I'm off to make a strategic investment in renovating my French farmhouse - if there are any potential strategic investors out there, I could be persuaded to open up the equity and let you participate