Stephen Butler explains why strategic planning is an oxymoron and how it differs from tactics and plans.
It’s that time of year: companies are starting to think about their strategic plans.
But should they?
“Strategic planning”, as ex-head of University of Toronto Rotman Business School Roger Martin has pointed out, is an oxymoron, like “zero tolerance” or “unbiased opinion.”
“Strategy” is about how we will make money: what will make clients spend money on our goods and services.
“Planning” is about expenses: what we will do to make the above happen, and be ready for it when it comes.
It’s no surprise there’s so much confusion. Most b-schools continue to use #MichaelPorter’s model of strategy which focuses on price vs differentiation—and basically comes down to whether you’re in a commodity business or not (hardly anyone is) and doesn’t offer much guidance for leaders.
Does the confusion matter? Yes—because as Martin, Alex M H Smith and others keep highlighting—the word “strategic” has become so diluted as to be slapped on virtually anything without adding meaning.
For example:
“Strategic” is often code for “money losing”—even if it has no valid long term rationale attached to it.
A client recently realized that having an “AI strategy” was about as meaningful as having an “Excel strategy”.
Yet a remaining challenge with distinctions drawn by leading lights on the subject is that they speak in terms of what strategy “does” or “is about”, as opposed to what it IS.
To clarify the difference—and why it matters—for a client, we recently came up with the above illustration at Sagely.
What it shows:
“Tactics” are linear actions: something we’ll do to create value in a specific way.
“Plans” are logically prioritized lists of tactics: some to create value, some to drive learning, and so on.
“Strategy” is the logic. It is a distinctive, iterative process of logically related actions that drive learning, ideas, and actions—which build upon each other to accumulate useful knowledge, productive assets, and thus value.
Key points include:
- Prioritized tactics
- Linear actions
- Strategy defined
Read the full article, Distinguishing Strategy vs Tactics vs Plans, on LinkedIn.