Argues that strategy formulation across sectors is different. Often the use of normative approaches to strategic management that have sprung from research and experience within the private sector do not pay sufficient cognizance to the subtle differences that drive non‐profit and human‐service‐oriented public sector organizations. Analyses the interplay of variables such as environment, values and leadership to ascertain their significance in strategy formulation. Includes four case organizations from these two sectors in order to develop theoretical insights. Uses Ellen Chaffee’s models of linear, adaptive and interpretive strategy to analyse these variables across the sectors. Unlike other theories of strategy, Chaffee’s models are hierarchical and accommodate distinctive characteristics that motivate human service organizations. Identifies patterns of proactivity in strategy formulation, and concludes that transformational leadership enjoys a necessary relationship with value consensus, and together these form a sufficient condition to describe two case organizations from different sectors as interpretive in their strategy formulation.