Playing To Win

Strategy vs. Planning: Complements not Substitutes

Don’t be lulled into thinking that having a plan will save you from the fate of not having a strategy

This represents a bit of a milestone: the 20th in my series of Playing to Win Practitioner Insights (PTW/PI). This one was started with a question a couple weeks ago about how planning relates to strategy, a question that I have often gotten. In the days after that question, I was shown ‘strategic plans’ from two different organizations that helped highlight the confusion and provided me the motivation to invest a PTW/PI on the question of Strategy vs. Planning: Complements not Substitutes. (Links for the rest of the PTW/PI series can be found here.)

Though from contexts that couldn’t be much different, the two strategic plans were virtually identical. They specified a Vision and Mission (though interestingly, one had Vision on top of Mission and the other the opposite). Below that, each broke their organization into sensible domains — for one, it was Talent Development, Infrastructure, Brand, and Industry Evolution, for the other, it was Core Products, New Products, Infrastructure, Technology, and Scale. And then both plans laid out three or four sensible initiatives under each domain, for a total of 13–15 initiatives.

In neither case did the initiatives fail to make sense or appear counterproductive. But no matter how sensible the initiatives might be, in both cases, and for over 80% of strategic plans I am asked to assess, the set of initiatives doesn’t add up to a strategy. While they may be called strategic plans, sadly they are just plans.

What is the Difference?

In short, strategy is the act of making an integrated set of choices, which positions the organization to win; while planning is the act of laying out projects with timelines, deliverables, budgets, and responsibilities.

There are four important pieces to the definition of business strategy. First is choices. Strategy specifies the choice to do some things and not others. And that choice obeys the rule that if the opposite is stupid on its face, it doesn’t count as a strategy choice. Second is integrated set. The choices must fit together and reinforce one another; they aren’t just a list. Third is positions. The choices explicitly specify a territory in which the organization will play — and will not. Fourth is to win. Strategy specifies a compelling theory for how the organization will be better than its competitors in the chosen territory.

I see planning as having five important pieces. First is projects. They are not always referred to as such but there tends to be a list of efforts to take an activity from the existing state to a preferred state — for example, to expand a plant, to reorganize the sales force, or to digitalize the payments process. Second is timeline. Each project tends to have a specified date by which it is to be completed. Third is deliverables. Each project tends to have specified deliverables that describe the preferred state. Fourth is budget. Each project tends to have resources assigned to it that are designed to enable its completion but not allow spending greater than that amount. Fifth is responsibilities. The various responsibilities associated with the project tend to be specified and doled out — for example, who is responsible for proposing decisions and who for ratifying decisions.

Quite simply, they are truly different. But…

How do Strategy & Planning Relate to one Another?

In practice, I find strategy and planning to be treated as substitutes. In particular, planning is consistently utilized as a substitute for strategy. In this substitute capacity, planning is always called strategic planning because every organization knows that it needs something with ‘strategy/strategic’ in its title. Boards will insist on being presented with a strategic plan — or even better having a board/management strategy offsite! Plus, the addition of the adjective ‘strategic’ to any business noun makes it seem cool and important.

But strategy is less understood and has greater downsides than planning. For most, the definition of strategy is the above paragraph on planning. And if you present a strategic plan to the board and faithfully complete all the projects in the strategic plan, it isn’t management’s fault that the result was terrible. In fact, the situation in which all the projects in the plan are completed on schedule and on budget but the financials of the organization go to hell in a hand basket tends to be accompanied by management requests for full bonuses for having completed all the projects. If instead, management presents an explicit strategy and it fails, it is hard to hide behind anything. So, the rule is don’t do, strategy: plan.

Instead of substitutes, strategy and planning should be complements.

The choices of a strategy typically create projects unless the strategy specifies doing the same things the same way. While on occasion that is the choice, in most cases strategy choice involves building capabilities that are needed to win to a greater extent in the current or a new place to play. Some of those capabilities may not currently exist in the organization or, at a minimum, aren’t good enough. That makes it necessary to specify the projects, including timeline, deliverables, budget, and responsibilities for each such project.

Thus, there is no conflict between strategy and planning. Effective strategy needs thorough planning. And planning is of limited value without strategy.

That having been said, I have a somewhat different view of the planning that arises out of strategy than most. Rather than being dramatically different than the strategy work that proceeded it, I believe the decision-making involved in the projects flowing out of strategy is more similar to than different from strategy. To me, each project actually requires another round of determining an integrated set of choices that positions the organization to win in respect of that project. And when that set of choices for that particular project is made, it will beget another set of projects that need this sort of planning, and so on. It is, as the elderly lady is reputed to have said to William James: it is turtles all the way down!

So, they are complements to toggle between. Make choices, specify projects that must be planned, which involve more choices, which beget projects and so on back and forth.

Practitioner Insights

I divide my practitioner insights into advice for reviewers versus producers of strategic plans.

If you are in a position of reviewing a strategic plan, don’t be lulled or cowed into accepting a plan as strategy. You will be presented frequently with plans masquerading as a strategy, so it is an ever-present danger. The problem with plans is that they require massive amounts of investment and work — and often for very little reward. While competitors are unhampered in playing to win, your organization will be doing stuff — typically lots and lots of stuff. Instead insist on a strategy with an integrated set of choices that positions to win. It must provide a clear theory of advantage. If not it is a plan and nothing more. And on any project on which you approve the spending of time and money, make certain that contributes directly to the realization of that theory of advantage.

If you are in a position of producing a strategic plan, don’t forget that the reward to playing is consistently low. It doesn’t matter that your organization is working non-stop on a bunch of projects that the plan has laid out. While it may feel somewhat intimidating to come up with a clear theory of advantage that involves making real choices that are different from those of competitors, your reward is that having that clear strategy makes everything else easier. It is clearer which projects are essential and which are nice-to-have. The deliverables on each project are clearer. And the work will be more fulfilling because it will give you a chance of winning, not just playing.

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Roger Martin

Roger Martin

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Professor Roger Martin is a writer, strategy advisor and in 2017 was named the #1 management thinker in world. He is also former Dean of the Rotman School.