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A Plan Is Not a Strategy

Mar 06, 2024
ROGER MARTIN: This thing called

plan

ning has been around for a long, long time. People would

plan

the activities they will do. More recently, there has been a discipline called

strategy

. People have put those two things together to call something strategic planning. Unfortunately, those things are not the same thing,

strategy

and planning. So just throwing them together and calling it strategic planning doesn't help. What is the most strategic planning in the business world has nothing to do with strategy. It has the word, but it is not the word. It is a set of activities that the company says it will carry out.
a plan is not a strategy
We are going to improve the customer experience. We are going to open this new plant. We are going to start a new talent development program. A whole list of them, and they all sound good, but the results of all of them won't make the company happy because they didn't have a strategy. So what is a strategy? A strategy is an integrative set of options that position you on the playing field of your choice so that you win. So there is a theory. Strategy has a theory. Here's why we should be on this playing field, not this playing field, and here's how, on that playing field, we will be better than anyone else at serving customers on that playing field.
a plan is not a strategy

More Interesting Facts About,

a plan is not a strategy...

That theory has to be coherent. It has to be feasible. You have to be able to translate that into actions for it to be a great strategy. Planning doesn't have to have that consistency and it's usually what people in manufacturing want: the few things they want, build a new plant, and the marketing people want to launch a new brand, and the talented people wants to hire more people: This tends to be a list that has no internal consistency or specification of how some objective for the company will be collectively achieved. Look, planning is pretty comforting. Plans usually have to do with the resources you are going to spend.
a plan is not a strategy
So let's build a plan. We're going to hire some people. We are going to launch a new product. These are all things that are on the cost side of businesses. Who controls your costs? Who is the customer of your costs? The answer is that you are. You decide how many square feet to rent, how many raw materials to buy, how many people to hire. They are more comfortable because you control them. A strategy, on the other hand, specifies an outcome, a competitive outcome that you want to achieve, which involves customers wanting your product or service enough to buy enough to get the profitability you want.
a plan is not a strategy
The complicated thing about this is that you don't control them. Maybe you wish you could, but you can't. They decide, not you. That's a harder trick. That means reaching out and saying, this is what we think will happen. We can't prove it in advance, we can't guarantee it, but this is what we want to happen and believe will happen. It's much easier to say: I'll build a factory, hire more people, etc., so that customers end up liking our offering more than the competition's. The tricky thing about planning is that while you're planning, chances are at least one competitor is figuring out how to win.
When American airlines were busy planning which routes to fly and da-da-da, there was a little company in Texas called Southwest that had a strategy to win. And at first, that seemed largely irrelevant because it was small. What Southwest Airlines was looking for was a result. What they wanted to be is a Greyhound substitute, a much more convenient way to get around at a price that wasn't extraordinarily higher than a Greyhound bus. Southwest said, everyone else is flying downtown and talked. They have shafts and fly in a hub-and-spoke manner. We are going to fly point to point so we don't have planes waiting on the ground because you only make money when you are in the air.
We're only going to fly 737s, one type of airplane, so our gates are configured for them, our systems are configured for them, our training, our simulations are configured. We are not going to offer meals on flights because we are going to specialize in short flights. We will not book through travel agents. We will encourage people to book online because it is less expensive for everyone and more convenient. So their strategy ended up costing substantially less than any of the major airlines, so they could offer substantially lower prices. Because he had a way to win, he got bigger and then bigger and then bigger and then bigger and bigger and bigger until he flies the most passenger seat miles in America.
The major airlines were not trying to outdo each other. Everyone played to play, as I say. They were playing to get in, maybe buy more planes, get more doors, maybe grow some, without having a theory of how we could be better than our competitors. And that was fine until someone came along and said, here's a way to be better than everyone else in this segment. And so that segment continues. He went away . And the major players on a play-by-play basis have to share a smaller pie that's left after Southwest takes the piece it wants. If you're trying to escape this planning trap, this comfort trap of doing something that's comfortable but not good for you, how do you start?
The most important thing to recognize is that the strategy will have anxiety associated with it. It will make you a little nervous because, as a manager, you've probably been taught that you should do things that you can demonstrate beforehand. You can't prove in advance that your strategy will be successful. You can look at a plan and say, well, all of these things are doable. Let's do them because they are under our control. But they won't add up to much. In strategy, it must be said that if our theory is correct about what we can do and how the market will react, this will position us excellently.
Just accept the fact that you can't be perfect at it and you can't be safe. And that is not being a bad manager. That's being a great leader because you're giving your organization the opportunity to do something great. The second thing I do is say: clearly lay out the logic of your strategy. What would have to be true about ourselves, about the industry, about the competition, about the customers for this strategy to work? Because you do that? It's because then you can see how the world develops. And if something you say is in the logic that would have to be true for this to work doesn't work as you expected, it will allow you to modify your strategy.
And strategy is a journey, what you want to have as a mechanism to modify it, hone it, and refine it so that it gets better and better as you go. Another thing that helps with strategy is not letting it get too complicated. It's great if you can write your strategy on a single page. This is where we choose to play. That's how we choose to win. These are the capabilities we need to have in place. Here are the management systems. And that is why we will achieve this goal, this aspiration that we have. Then you lay out the logic, what must be true for everything to turn out as we expect.
Do it, observe and modify as you go. This may seem more worrying and distressing than planning, but I would tell you that if you plan, it is a way to guarantee loss. If you strategize, you will have the best possible chances of winning.

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