“A plan is not a strategy,” says Roger Martin, former dean of the Rotman Business School at the University of Toronto.
While the words ‘strategic planning’ are usually put together, they mean two very different things, resulting in confusion.
Done with a lot of noisy song and dance, this is why your plan called ‘strategic’, just sits on the shelf gathering dust.
For Martin, a strategic plan is, “An integrative set of choices that position you on the playing field of your choice, in a way that you win.”
Strategy is tricky, demanding an injection of an MRI-like revealing diagnosis. In comparison, planning is easy. Anyone can do it.
Art of strategy has a theory asking, for instance: a) Why, which playing field do you choose? and b) How are you going to serve customers? In essence: the unique strategy needs to be coherent and be doable.
Planning is like a warm bath
In contrast, planning is comforting; it does not need to be coherent. Typically, planning is done in the domain of the ‘known’ on the cost side of the organisation.
The ambitious CEO will want to open a new office in Kigali, and the marketing and sales director aims to launch a new product. Finance folks will stress cost accounting and need a new enterprise resource planning software.
Not to be left behind, the HR manager will want to launch a trendy mental health ‘wellness’ initiative and address the decision-making ‘organisational silos’, going into the realm of culture change.
And, the ‘to do list’ of planning activities will go on and on. These are all inward things the company can pretty much control, as they are the equivalent of an internal customer.
Outward and unpredictable
The strategy has an outward focus on the often unpredictable customer, who the company can not control. Creating angst, strategy is uncomfortable. Good strategy applies a variant of the centuries old scientific method and is based on a hypothesis, ‘a best guess’.
Hopefully, based on analysis, one is saying – ‘Here is what we think will happen’. It is impossible to prove the strategy will work in advance, in the domain of the unknown. Coherence is an absolute requirement, nothing can be contradictory.
Senior managers supported by the board of directors, have to lay out a transparent logic of what has to be true for the strategy to succeed, taking into account, for instance, customer preferences, unmet needs, likely competitor behaviours and broader fast-moving industry trends. Here, one is thinking a few steps ahead like a chess master.
Not knowing requires leadership
“In strategy, not knowing isn’t bad management, it’s great leadership,” says Martin. For the professor emeritus, strategy is about choosing where to play, and how to win and then creating the management systems, the infrastructure that supports that happening. Easier said than done.
In practice, strategy is like driving down a mountainous narrow winding road in the thick fog. So forget the five-year plan, and escape the illusion of the crystal clear view of long-term planning, in a deceptive hazy cloudy reality.
The only way for the management team to succeed to is be agile, constantly adapting. In operationalising the strategy, closely monitoring it, seeing what is working, and what is not.
Why is this so hard to do?
Part of the problem is not understanding the fundamental distinction between planning and strategy. Don’t worry, even MBA graduates have a problem with this peculiarity. After all, a four-year-old child can plan.
It’s easy to make long lists of a jumble of wide-ranging good intentions, all pretty much within the managers' control and label it with the high-sounding, exotic word: strategic.
To set an imaginative strategy, based on hard analysis and a dash of ‘out of the box’ creative thinking, that captures the market, meeting customers’ needs, perhaps even addressing needs they did not even realise that they had, now that is tough but doable.
Forget doing age-old worn-out SWOT exercises, focus on being [numbers and facts] analytical, using inductive logic, setting hypotheses of what one thinks is happening, and then doing the objective research to prove, or disprove what you think may be true.
Don’t try and be all things, to all people. Strategy is about making trade-offs, and creating value, along a chain of activities. What is the unique value proposition for the customers, and how does one price the offering?
It is about choosing what not to do, as much what to focus on. This is not easy, it forces managers to question fundamental assumptions, and conventional wisdom.
David is a director at aCatalyst Consulting