A Plan is Not a Strategy: Understanding the Difference
Planning has been an integral part of human endeavors for centuries. People meticulously outline activities and tasks, aiming to achieve specific objectives. However, in recent times, a discipline called strategy has emerged, often conflated with planning. This amalgamation has given rise to the concept of strategic planning. Yet, it’s crucial to understand that strategy and planning, despite being interconnected, are fundamentally different.
The Misconception of Strategic Planning
In the business world, what is often labeled as strategic planning is typically a collection of planned activities rather than a true strategy. Companies create lists of actions they intend to undertake, such as improving customer experience, opening new facilities, or launching talent development programs. While these plans sound promising, they seldom lead to the desired outcomes because they lack the essence of a coherent strategy.
Defining Strategy
A strategy is an integrative set of choices that positions an organization in a specific way to achieve a competitive advantage. It is underpinned by a theory explaining why certain decisions are made and how they will lead to superior performance in the chosen playing field. This theory must be coherent, actionable, and capable of being translated into specific actions to be effective.
Planning, on the other hand, involves a series of activities focused on resource allocation, often without internal coherence or a clear path to achieving a collective goal. It is comforting because it deals with controllable elements such as costs, resources, and internal processes. However, it lacks the strategic vision required to navigate the complexities of the market and competition.
The Comfort Trap of Planning
Plans typically revolve around resource expenditure—building new facilities, hiring staff, launching products—all of which are within the control of the company. This control provides a sense of comfort and certainty. However, true strategic success involves specifying competitive outcomes that depend on external factors, particularly customer behavior, which is inherently uncontrollable.
For example, when U.S. airlines were preoccupied with planning their routes and operations, Southwest Airlines developed a winning strategy. Southwest’s goal was to offer a convenient alternative to bus travel at competitive prices. Their strategy included flying point-to-point routes, using a single type of aircraft, avoiding meal services on short flights, and encouraging online bookings. This coherent strategy allowed them to significantly reduce costs and offer lower prices, ultimately outcompeting major carriers.
Escaping the Planning Trap
To break free from the comfort of planning and embrace strategic thinking, organizations must accept that strategy involves uncertainty and cannot be proven in advance. Managers often prefer plans they can control and measure, but these plans rarely lead to substantial success.
To develop a successful strategy, start by clearly articulating the logic behind it. Outline the assumptions about the market, competition, and customer behavior that must hold true for the strategy to succeed. This clarity allows for monitoring and adjustments as the external environment evolves.
Additionally, keep the strategy simple and straightforward. A well-defined strategy can often be summarized on a single page, detailing where the organization chooses to compete, how it will win, the necessary capabilities, and the management systems required.
Conclusion
While planning provides comfort through control and predictability, it is not a substitute for strategy. Strategy involves making integrative choices that position an organization for competitive success. Embracing strategic thinking requires accepting uncertainty and focusing on coherent, actionable theories that can be adjusted as conditions change. By doing so, organizations can navigate the complexities of the market and achieve lasting success.
Roger L. Martin CM is the former Dean of the Rotman School of Management at the University of Toronto and an author of several business books. Martin has expanded several important business concepts in use today, including integrative thinking. He has been recognized by several business publications as one of the field’s most important thinkers