Strategy (from Greek στρατηγία stratēgia, "art of troop leader; office of general, command, generalship"[1]) is a high level plan to achieve one or more goals under conditions of uncertainty.
When you take the goals as given and exclude them from your test, there are a number of questions to answer in order to judge whether a strategy is sound.
Are the planning assumptions relevant and realistic? How good is the information on market and business environment, changes to be expected?
How was the strategy defined? Based on a defined and proven process?
What are the strategic options? Have they been carefully evaluated, taking the shareholders' risk appetite into account?
Is the strategy consistent? Are the individual levers - offering, go-to-market, etc. - well aligned and do they effectively and efficiently contribute to the overall strategy - growth/ harvest/ ...?
The next step, of course,
is to test whether the strategy can be implemented successfully.
Is the strategy known, well understood and accepted by the entire organization?
Is there a solid implementation program?
Is the organization able to execute? Are there any weaknesses, that can or can not be eliminated? Is the necessary improvement program in place?
Just formulating a strategy is a first step towards achieving a desirable outcome. However, there are many factors that govern whether or not the outcome will be sound, tangible or intangible. For instance, as pointed out Kauba, a solid implementation plan is a must for success.
As W. Edward Deming said in his book “The New Economics”, setting a particular numerical goal accomplishes nothing. Setting a method to achieve a common set of consistent goals is important.
The following paper reviews various strategies of management that are commonly employed for managing team-based programs and projects.
Then, it describes "why a management style, which is based on a set of constancy-of-purpose (governing) principles, is considered superior for managing a team-based organization".
Does "constancy-of-purpose" provide a test for soundness? I am not sure. Certainly, it does provide an important step towards soundness of such a strategic direction.
Article What Management Style is Considered Best for Team-Based Orga...
You may wish to determin outcomes representing succes of a strategy. Preferably, continuous measures. Then, you can compare different strategies on these outcomes.
The challenge one faces in answering your question is that there are many different definitions of strategy. Based on my experience, strategy consists of a limited number of decisions that can be used to characterize the business--even those who accept this choose different decisions but they can include: goals, staging and pacing, product/market focus, arena, value proposition, differentiators, core activities, economic logic, and vehicles. The implicit assumption of this approach is that strategy reflects choices made that balance internal and external conditions. The implicit assumption is that when all decisions fit with these conditions (note that internal conditions can be altered through managers' decision) then the company will have the best performance possible given the strategy.
Look at goals, they are set such that they satisfy the preferences of those making strategy. Different goals and different levels of achievement regarding these goals will likely resul in different choices regarding other decisions that are also part of strategy.
Stefan, Elisabeth, Brian, Irena and Harling , thank you for your quick and interesting answers.
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