Strategy helps us see farther
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Roger Martin of the Rotman School explains how 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.
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. 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.
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.
Roger Martin is former Dean of Rotman School.
Read the whole thing here.
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