Table of Contents
Planning is not a strategy:
The phrase “strategic planning” is a combination of these two ideas.
Importantly, planning and strategy are not the same thing.
So it is ineffective to simply combine them and call it strategic planning.
The real-world delusion
Most strategic planning in the business world has little to do with strategy.
The word is present, but it’s not there in the thought process
Most business ‘ strategic planning is simply planning. It is a list of commitments made by the company to carry out certain duties, such as.
- The client experience will improve.
- The opening of this brand-new facility is approaching.
- A brand-new effort for talent development is being introduced.
There is usually a large list of planned activities, and while they all appear good, the company won’t be happy with the results if there isn’t an overarching strategy in place.
So what exactly is a strategy?
A strategy is a thorough set of choices that positions you and your company for success on a particular playing ground.
Strategy starts with a theory
And from that strategic theory comes the plan
An example of a theory is ‘Here are several reasons why we ought to be on this field rather than that one, as well as how we’ll be able to better service the clients there than anyone else’
There are three elements to a theory
- It must be plausible.
- It has to be doable.
- You must be able to translate it into actions for it to be a successful strategy.
The difference between strategy and planning is – planning need not be coherent in this way
Planning tends to have no internal coherence, and no plausible indication of how those things will work together to achieve a company goal.
Why do leaders focus so much on strategic planning ?
In actuality, strategic planning is quite reassuring.
Plans frequently touch on the resources you want to use.
So, executives come up with a plan, such as
- We intend to hire some personnel.
- We’re releasing a brand-new item.
For businesses, these things fall under the heading of cost-related expenses.
You get to decide how much raw materials you buy, how much space you lease, and how many workers you hire.
These are comfortable because you have more control over them.
A strategy, on the other hand, describes the competitive result you intend to achieve, which is ‘enough people will want your product or service to justify buying enough of it to achieve the required level of profitability’
You have no control over them, thus that presents a problem.
Decisions are made by them, not by you.
This is what makes strategy difficult, because it means putting yourself out there and saying, “Here’s what we think will happen. Although we can’t prove it in advance or give a guarantee, this is what we hope will happen.
Boards of directors and CEO’s do not like words such as ‘think’ and ‘hope’.
Building a facility, hiring more people, etc. are much easier promises to make than persuading customers to choose your product over that of competitors.
Good strategy is hard
Strategy is difficult because at least one competitor is likely developing a competitive move at the same time.
Let’s examine an instance when strategy won out over planning.
While US airlines were busy deciding which routes to fly and other things of the sort, South-west was a small business in Texas that had a successful strategy.
And at first it seemed to be largely unimportant because it was so modest.
South-West Airlines was looking for a certain unique outcome.
They aimed to replace Greyhound by offering a far more practical mode of transportation at a price that wasn’t significantly higher than that of a Greyhound bus.
According to South-West’s strategic planning insights, all other airlines flew hub-and-spoke.
They have hubs and fly hub and spoke. And there was little rivalry among the major carriers.
However, Southwest’s 6 point strategic planning was:
- we’ll fly point to point to avoid having planes wait on the ground – because you can only generate money when you’re in the air.
- We will only be flying the 737, which gives us the flexibility to configure our gates, systems, training, and simulations properly.
- We won’t serve meals on the planes because we’ll concentrate on short flights.
- We won’t book your journey through a travel agent.
- We will urge customers to book online because it is generally more practical and less expensive to do so.
They were able to provide prices that were substantially lower than any of the major carriers because their strategic planning ultimately reduced costs.
Because it had a way of winning new customers, it grew bigger and bigger and bigger and bigger – until it now flies the most passenger seat miles in America.
All the other airlines were simply planning to participate – maybe buy more planes, get more gates, maybe expand a little bit.
They weren’t playing with any strategic theory of how they could surpass their competitors.
But Southwest asks the question “What’s a way to be better than everyone else”
The end result of Southwest’s strategic planning was that other key players had to divide the little pie that was left after South-West had taken whatever piece it wanted.
How do you avoid falling into the “planning trap”?
How can you start avoiding this strategic planning trap – this comfort trap of acting in a way that is practical -but difficult?
The most important thing to recognise is that the strategic planning will be anxiety-provoking. You have to become comfortable with anxiety. In fact, you have to seek anxiety
If you’re a manager, you’ve probably been instructed to take actions that you can justify in advance, so you will feel secure.
But with strategy, you cannot prove in advance that your idea will be successful. Your idea will be theoretical.
It is much easier to plan around those things that are under your control.
However, if you do, they won’t add up to much. They will be incremental at best
The upside of theoretical strategy is that if your predictions of what you can achieve and how the market will respond are correct, it will put you in a very advantageous position.
The downside of theoretical strategy is that you must accept, and be comfortable with the fact that that you’re not perfect, and you can’t know for sure.
And that does not indicate bad management.
If fact, it displays excellent leadership because you are giving your company a chance to succeed massively.
My strategic planning advice
Ask yourself one question.
What would need to be true about you, your company, the industry, your competitors, and your target audience for this strategy to work?
It is those variables that you plan around.
And this will enable you to change your course of action if something you say is inconsistent with the reasoning that must be true for this to occur.
The most important point to understand and accept is that strategy is not static.
Strategy should change, or evolve on a daily, weekly or monthly basis. Gone are the days when strategy was outlined once per year
Therefore, you need a mechanism to tweak, hone, and improve your plan along the road so that it gets better and better.
A final word
Don’t make your strategic planning complicated.
You must be able to outline your strategy on a single page.
Only then will you have the mental flexibility to adjust as you go.
