Is Strategy Planning?

I recently overheard someone saying that we need to plan our strategy. Post a brief discussion, the statement reflected the belief that strategy is about planning. Furthermore, any differences between the two were semantics.  This blog attempts to explore the relationship between strategy and planning and in doing questions whether the term strategic planning is a misnomer. I would argue that “theorizing” is a better description of what takes place within the bowels of the strategy machinery. We compete off both our belief systems and corresponding actions. I argue that we are under-conscious about how to conceive and capture the former and thus our ability to comprehend strategy in practice.

My view is that strategy is a conceptually a different class of action to planning and that differences matter. That said, they are not unrelated and are mutual requirements. Having searched around for articles and blogs that attempt to describe the differences I became concerned that the sample content I read was not expressing the differences in a clear enough way.  The majority of the literature argued in summary –

  1. Strategy is conceptual, wide in view, future goal orientated, option refining and about answering the why’s
  2. Plans are actionable task orientated lists of how you are going to deliver on objectives and goals set within strategy. They take care of the how’s

The most effective answer I found was that expressed by Roger Martin: Strategy is not planning — it is the making of an integrated set of choices that collectively position the firm in its industry so as to create sustainable advantage relative to competition and deliver superior financial returns. (1)

I agree with his view. My concern is that it stops short of expressing what underpins the choices and thus a fuller conception of what strategy is. Strategy involves both the development and application of a commercial theory.  To this extent, a theory is a set of mental models that house the firm’s beliefs, insights, assumptions and principles on how it perceives the world to operate, it’s continued unfolding and what opportunities and challenges this may present within the context of where you are and what you have. In its most deconstructed form the theory states that you believe A will occur and that B will result. This cognitive layer is foundational, hard to capture and codify. It permeates the narrative and simultaneously illuminates and hides our operating reality.

Every firm has a theory whether the practitioners realize they are practicing or not. Likewise, as Prof Nick Binedell expressed to me – if you don’t know what your strategy is, you have one anyway because it is simply the sum of all your actions that may or may not form a cohesive pattern. (2) Richard Rumelt states the most important element of strategy is a coherent viewpoint about the forces at work, not a plan (3). Stated differently, companies compete first and foremost on their internally derived theories on what’s at work and what to do about it. This is the core of strategy.  These mental models are cognitive maps that influence what ideas you value and back, how you make decisions, build competencies, perceive competitive activity and biases you unknowingly engage. Examples would include explicit beliefs as well as more implicit harder to uncover concepts –

  1. Driverless cars will dominate in X years changing the nature of road based traffic coordination technology and demand for certain classes of vehicles
  2. Drone technology will dominate small to medium sized logistics modes by year X driving demand for cloud based AI navigation management platforms and services
  3. Private Label brands will continue to grow at an accelerated pace, displacing named brands within large mass market retailers
  4. Medical equipment will become increasingly digitized, home based and coupled with integrated cloud based diagnostic services
  5. Media planning and buying will be increasingly disintermediated by AI and bots removing the need for dedicated media management houses by year Y
  6. Business case returns need to exceed X % and require $1bill revenues horizons in order to be backed
  7. Revenue growth is more valuable than margin growth
  8. Critical business processes can never be outsourced
  9. Product portfolio growth is more valuable than channel expansion
  10. Millennials don’t want long term employment

While exploring the subject with Dr. Grant Sieff, (4) he further asserted that the term theory potentially over-expresses the codification or explicit rationality of your beliefs. He included concepts like passion, conviction, excitement, a ‘hunch’, or what feels right as part of the strategy spectrum.

According to Jules Goddard and Tony Eccles (5), the difficulty of strategic thinking and the development and practice of a coherent theory is both:

  1. Seeing the world not only accurately,
  2. but also, differently

For a theory to be valuable it needs to be true. A misconceived insight or set of beliefs is a flaw in strategy. For the strategy to be differential it needs to be asymmetrical or different.  A failure on both fronts makes the best laid plans blunted. Theories have nested within them the broad challenges that their pursuit entails. Good strategy practice requires the establishment of options that overcome them. Each option will entail different market entry orders, business models, time frames, risk profiles etc.

Good strategy is a good theory made manifest. Theory creation is an ongoing discovery, thinking and sense making process coupled with emergent plans that drive coherent and specific action in pursuit thereof.

Plans act upon and are informed by theories. They do this is two ways –

  1. Establish the next best position that if attained would progress the theory
  2. Establish ways to overcome the proximate problems and challenges that are being discovered or resulting from previous actions

Embedded herein is another implication. Strategy plans are concerned with the here and now. What is constraining the theory from being expressed within the confines of where we are and what plans can we put into play to overcome them? Theories are discovered and emerge over time. They are established and executed through a procession of adaptive plans. Plans establish goals and objectives linked to proximate next best positions helping guide resource allocations, budgets and KPI’s. Plans outputs are actions congruent with what you believe to be true and what is required to establish this truth.

 

Managerial Implications

  1. Could your executive, independently, describe the commercial theory being practiced?
  2. How different would their language, descriptions and conceptions be?
  3. Would they describe your theory or your strategic objectives?
  4. How could you best capture the implicit ideas, assumptions, beliefs and principles that are underpinning your operational actions?
  5. Is the theory still relevant and how would you know?
  6. What are the implications for opportunity assessment and associated decision making?
  7. What processes do you have in place to test the veracity or truth claims of your strategy?
  8. How different is your theory to that of your competitors?
  9. How are goals and objectives laid out in your immediate plans supportive of your theory?
  10. Where in your organization is theorizing and planning actually taking place?

References

  1. Don’t Let Strategy Become Planning, Roger L. Martin, FEBRUARY 05, 2013 – https://hbr.org/2013/02/dont-let-strategy-become-plann
  2. Expressed in a personal mail – https://www.linkedin.com/in/nick-binedell-81b7517/?ppe=1
  3. Richard Rumelt, McKinsey Quartly 2008
  4. Expressed in a personal mail – https://www.linkedin.com/in/grantsieff/?ppe=1
  5. Uncommon Sense, Common Nonsense, Jules Goddard and Tony Eccles pg 60
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