Strategy and planning are not the same

You must have heard phrases like “we need to create a strategic plan” many times than you have heard ‘we need to create a strategy.”
 Lewis Ndichu
Lewis Ndichu

You must have heard phrases like “we need to create a strategic plan” many times than you have heard ‘we need to create a strategy.”

This is because many people see strategy as an exercise in producing a planned document. In this conception, strategy is manifested as a long list of initiatives with timeframes associated with resources assigned.

What is interesting is that the initiatives are themselves often called ‘strategies’. That is each different initiative is a strategy and the plan is an organised list of strategies.

But how does a strategic plan of this sort differ from a budget? Many people I have interacted with do not distinguish between the two and wonder why a company needs to have both. I think they are right.

The vast majority of strategic plans that I have seen over the years are simply budgets with a lot of explanatory words attached.

This may be because the finance function is deeply involved in the strategy process in most organisations. But it is also the cause of the deep antipathy I see, especially among line executives, toward strategic planning.

I know few people who look forward to the beginning of the next strategic planning cycle.

To make strategy more interesting and different from a budget, we need to break free of the obsession with planning.

Strategy is not planning, it is the making of an integrated set of choices that collectively position the firm in its industry to create sustainable advantage relative to competition and deliver superior financial returns.

Once this is made clear to line managers, they recognise that strategy is not just fancily-worded budgeting, which increases their interest in it.

Obviously, you cannot execute a strategy without initiatives, investments and budgeting.

It is important to get managers focused on the strategy that will make the initiatives clear to understand.

Note that there is one strategy for a given business not a set of strategies. It is one integrated set of choices: What is our winning aspiration? Where will we play? How will we win? What capabilities need to be in place? And what management systems must be instituted?

That strategy tells you what initiatives are likely to produce the result you want. Such a strategy makes planning easy. There are fewer fights about which initiatives should and should not make the list because the strategy enables discernment of what is critical and what is not.

This conception of strategy also helps define the length of your strategic plan. The five questions can easily be answered on one page and if they take more than five pages (one page per question) then your strategy is probably morphing unhelpfully into a more classical strategic plan.

Recently, I facilitated a day long strategy and by the end of the day, we had gotten a nice set of integrated choices. But the manager was troubled, prompting me to ask him what the matter was. “Is that all have to do?” he asked as if he had cheated on exams.

If you pass the five-page mark, it is time to ask: Am I answering the five key questions or am I doing something else mistaking it for strategy? If it is the latter; eject!

 

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