A Plan Is Not a Strategy

In my journey through the entrepreneurial landscape, I've come to realize a fundamental truth: planning and strategy, while often used interchangeably, are not the same. This revelation came to me during a presentation by Roger Martin, a renowned thinker on strategy and the former dean of the Rotman School of Management at the University of Toronto. As I listened to him, I felt a deep resonance with his words, and I'd like to share my reflections on this topic.

For as long as I can remember, the concept of planning has been deeply ingrained in our collective psyche. We plan our days, our projects, and our futures. In the business realm, planning has evolved into a discipline, often merged with the concept of strategy to form what many refer to as "strategic planning." However, as I delved deeper into Martin's insights, I realized that most of what passes for strategic planning in the business world has little to do with actual strategy. Instead, it's a list of activities or goals that a company aims to achieve. While these activities might sound impressive, they often lack a cohesive strategy that ensures the company's success.

So, what is a strategy? In my understanding, a strategy is an integrated set of choices that positions a company in a specific market or field, enabling it to outperform its competitors. It's not just about doing things; it's about doing the right things for the right reasons. A strategy is underpinned by a theory—a rationale that explains why a company should operate in a particular market and how it can serve its customers better than anyone else. This theory should be coherent, actionable, and, most importantly, it should differentiate the company from its competitors.

Planning, on the other hand, often lacks this coherence. It's a collection of disparate activities that different departments want to pursue. For instance, the manufacturing department might want to build a new plant, while the marketing team is keen on launching a new brand. These activities, while important, don't necessarily align with a unified strategy that propels the company forward.

I've come to see that planning is comforting because it deals with things we can control, like costs. We decide how many people to hire, which products to launch, or where to open a new office. These decisions are within our grasp. Strategy, however, is more challenging because it deals with outcomes we can't control, like customer preferences or market dynamics. It requires us to step out of our comfort zones, make bold choices, and accept the inherent uncertainties of the business world.

A poignant example that Martin shared was the rise of Southwest Airlines. While major U.S. air carriers were busy planning routes and expanding their fleets, Southwest had a clear strategy. They aimed to be a more convenient and affordable alternative to bus travel. They chose to fly point-to-point, use only one type of aircraft, and avoid traditional booking methods. This strategy, rooted in a deep understanding of their target market, allowed Southwest to grow exponentially, eventually becoming one of the largest carriers in the U.S.

This story reinforced my belief that while planning is essential, it's not a substitute for a well-thought-out strategy. Companies that focus solely on planning, without a clear strategy, risk being outmaneuvered by competitors who have a vision and a plan to achieve it.

To avoid falling into the "planning trap", I've learned to embrace the uncertainties of strategy. It's okay to feel anxious or uncertain; that's part of the process. What's crucial is to have a clear logic behind the strategy. By understanding the underlying assumptions and continuously monitoring the market, companies can adjust their strategies as needed, ensuring they remain relevant and competitive.

My journey through the world of business has taught me the importance of distinguishing between planning and strategy. While both are essential, it's the strategy that provides a roadmap for success. As I move forward in my career, I'm committed to ensuring that my decisions are not just based on plans but are rooted in a solid strategy that offers the best chance of success.