I’ve observed time and time again how difficult it is for executives to understand the distinction between strategy and planning when consulting as a business and marketing strategist and working with business owners, CEOs, corporate board members, and executives over the past few decades.
Businesspeople seem to assume they have a strategy more frequently than they do. What they have are a few task-based, short-term “plans” to handle a few circumstances.
Understanding differentiation is essential for an organization’s success since irrelevance leads to a company’s extinction.
Like a ship without a rudder, compass, sails, GPS, or charts, a firm without a plan is lost at sea. There is no breeze that favors a ship that is unprepared to sail. Given this, it is puzzling that so many businesses devote so little work to establishing their strategy.
Many CEOs waste too much time “putting out fires” and responding to what’s going on around them by spending a couple of days a year at an off-site retreat or strategy session, lose sight of any progress they may have achieved, and then quickly revert to their old behaviors.
When an organization loses focus on its main goal, it is unable to create and promote a compelling vision, which over time makes it far less strategic. This tendency is common in businesses run by complacent executives who are happy with the way things are.
In contrast, it’s equally common in businesses in rapidly expanding industry niches where untrained executives exhibit “shiny object syndrome” — they become distracted and chase after some of the many tactical “opportunities” they’ve recently become aware of — leading to tactics without a strategy and throwing organizations off course.
Military Strategy and Business Strategy Comparisons
The Chinese general, military strategist, and philosopher Sun Tzu wrote “The Art of War” in the 5th century BC. His works have had a significant impact on military strategy and military thinking for centuries. The fundamental ideas have also been used for decades to analyze corporate rivalry in the business sphere and have even permeated pop culture.
You might recall the fictional corporate thief Gordon Gekko telling his young student, Bud Fox, in the 1987 movie “Wall Street,” “I don’t throw darts at a board. I wager on some things. Read The Art of War by Sun Tzu. Every war is already won before it even begins.
Strategy without tactics is the longest path to success, according to Sun Tzu. Without a strategy, tactics are only pre-defeat noise.
For organizations to succeed, strategy and tactics must work together; one cannot succeed without the other.
The company’s established goals and the plan on how to accomplish them are outlined in the strategy. This is the direction the company wants to go in and the strategy it will use to get there.
To achieve the desired outcomes, suitable plans must be implemented throughout the entire business to hit checkpoints along the path to the final product. These are the steps that will be taken to follow that plan.
Techniques and Strategy
Creating a plan is challenging. It is even harder to maintain that plan.
You may already be considering the high opportunity costs of conflating strategy with planning, as well as how difficult it is for businesses to adopt either one since they don’t understand that the two are entirely different.
Consider how much time, money, effort, and resources are wasted by organizations when their methods are interpreted as strategies.
On the other hand, for other competitors in the market niche that have a clearly defined and have a sound strategy, as well as plans mapped out to be executed upon skillfully, fighting against these types of organizations might be advantageous.
Porter on Strategy by Michael
The hardest and most challenging subject I had to take for my MBA was “Microeconomics of Corporate Strategy and Competitiveness” taught by Harvard Business School professor Michael Porter. Michael Porter has been the greatly renowned on strategy since the 2005 passing of the legendary business theorist Peter Drucker. In fact, Porter is quoted five times more often than the next closest thought leader in corporate literature about strategy.
Companies are frequently controlled by managers rather than true leaders, and Porter argues that this makes a significant difference in the bulk of difficulties that organizations face.
Porter discusses in his course how CEOs who are frequently responsible for the strategies’ failure as they sabotage them from within their own organizations. Internal procedures that are so strict that they prevent strategic planning and execution are frequently to blame for this.
Porter claims that when it comes to competing, the most crucial mistake is when a company adopts the same strategy as other businesses in the niche that are all seeking to be the best and believe that, somehow, the outcomes they accomplish will be superior to those of their competitors.
The overestimation of the company’s capabilities is one example of another confirmation bias that results from having an excessively inward-looking emphasis, which is very prevalent. Operational effectiveness is sometimes misunderstood by executives as a strategy.
What Businesses Do Well Is Not a Competitive Advantage
A business will inevitably grow on its advantages. However, since businesses tend to exaggerate their advantages, trying to develop a strategy around those alleged advantages is a mistake.
The genuine strength in developing a plan must be in the areas where a company excels above its rivals. A corporation may be excellent at something, but that doesn’t imply that its rivals can’t be just as good—or even better. This brings us back to making deliberate choices about how to add value by doing things differently than competitors or doing things similarly but differently.
A marketing strategy is not one.
As a long-time business and marketing strategist, let me start by saying that I’m a strong supporter of applying best practices to every part of marketing, so please realize that this isn’t meant to be in the least bit disparaging of the sophisticated applied science known as marketing.
Marketing is frequently underappreciated, underused, and misunderstood. However, effective marketing is essential to a company’s success.
Even top-notch marketing needs a strategy that centers on how “purpose-built” value is communicated to customers as well as the unique creation of activities and occurrences that will most efficiently do so.
Although crucial, this element of strategy defies common sense because creating a competitive edge necessitates using a distinct value chain to deliver distinctive value. This might either imply engaging in activities that set you apart from your competition or engaging in similar activities but in a different manner.
Being market-driven is always preferable than being sales-driven.
However, how can a business succeed without the capacity to provide distinctive value if it is purely market-driven? And how does a company gain insights into what customers want, need, and value? How can a company that is purely market driven be an expert at grabbing the attention of potential customers, and generates levels of interest that lead to desire and purchase intent?
The Myth: Bigger Is Better
Because it sounds so wonderful, the “bigger is better” school of thought can be dangerous because it can unintentionally become the foundation of a plan without taking the company’s finances into account. Porter argues that there is no systematic evidence to suggest that the most prosperous or successful companies in any given field are the leaders in that market.
Like how growth-related objectives like reaching X billion in top-line sales or being bought by a specific date on the calendar are mistaken with strategy. Objectives by themselves do not constitute a strategy.
Companies must consider the intentional, cohesive decisions that spell out what they must do to achieve performance that is superior to that of their competitors and define how they’re going to achieve that exceptional level of performance, to develop a good strategy that increases profitability.
Finally, keep in mind that while a strategy outlines the objectives and how they will be met, a plan outlines the specific steps that will be taken to carry out the strategy.