Plan vs. strategy

Plan vs. strategy

A strategy determines what an organization needs to do to meet business objectives. A plan outlines how the strategy will be executed. It may take the form of an outline, scheme, program, blueprint, or layout.

Understanding strategies

At the most fundamental level, strategies determine how a business will achieve its goals.

The best strategies are robust, flexible, and adaptable when circumstances change. Effective strategies allow the business to build critical momentum and secure a competitive advantage.

Strategies are often prepared when collaboration, innovation, and creativity are of the utmost importance.

They tend to facilitate healthy debate from both sides of the argument and clarify how a company will further its mission and vision.

Some of the key components of a good strategy include:

  1. Asking the right questions.
  2. Learning lessons from the past.
  3. Future predictions.
  4. Committing to change.
  5. Evolving when necessary.
  6. Determining how to integrate, and
  7. Analyzing potential pathways. 

Note that every company should have an overarching strategy and not a set of strategies, plural.

Strategy encompasses a set of choices that determine where the company wants to be, how it intends to get there, and the skills, expertise, and systems that will allow it to win.

Tesla’s ambitions to become the most compelling car company in the world and accelerate the shift toward affordable, sustainable vehicles have been supported by one strategy.

The company entered the EV market at the premium end and is progressively reaching more price-conscious consumers via higher unit volume and lower prices.

Understanding plans

Plans dictate how certain goals are achieved and tend to be final. In other words, an unsuccessful plan is more likely to be scrapped and a new plan devised.

Since plans are more difficult to adjust, they tend to take longer to develop because organizations work harder to ensure every detail is correct. 

Most plans include detailed information on the following:

  • The tasks and activities that need to be executed.
  • Roles and responsibilities.
  • A task and activity schedule, and
  • Clarification on how the strategy can be performed on time and within budget. This incorporates risk, quality, resource, stakeholder, change, and financial management, among other disciplines.

Plans are useful when efficiency and timelines are important. They provide a coherent framework that enables the organization to move in the same direction and establish certain milestones that must be met along the way.

Plans also eliminate false confidence at the organizational level and increase transparency at the employee level as they leave no room for assumptions.

Various types of plans can support different parts of the strategy. These include financial, tactical, contingency, succession, and operational plans.

Key takeaways:

  • A strategy determines what an organization needs to do to meet business objectives, while plans clarify how the strategy will be carried out.
  • The best business strategies are robust, flexible, and adaptable when circumstances change. They are prepared when collaboration, innovation, and creativity are of the utmost importance.
  • Plans dictate how certain goals are achieved and are more concrete in nature. Unlike a strategy that can be adjusted over time, plans need to be correct from the outset and if unsuccessful, it is better to move to Plan B than make alterations to Plan A.

Connected Business Frameworks

first-principles-thinking
First-principles thinking – sometimes called reasoning from first principles – is used to reverse-engineer complex problems and encourage creativity. It involves breaking down problems into basic elements and reassembling them from the ground up. Elon Musk is among the strongest proponents of this way of thinking.
ladder-of-inference
The ladder of inference is a conscious or subconscious thinking process where an individual moves from a fact to a decision or action. The ladder of inference was created by academic Chris Argyris to illustrate how people form and then use mental models to make decisions.
six-thinking-hats-model
The Six Thinking Hats model was created by psychologist Edward de Bono in 1986, who noted that personality type was a key driver of how people approached problem-solving. For example, optimists view situations differently from pessimists. Analytical individuals may generate ideas that a more emotional person would not, and vice versa.
second-order-thinking
Second-order thinking is a means of assessing the implications of our decisions by considering future consequences. Second-order thinking is a mental model that considers all future possibilities. It encourages individuals to think outside of the box so that they can prepare for every and eventuality. It also discourages the tendency for individuals to default to the most obvious choice.
moonshot-thinking
Moonshot thinking is an approach to innovation, and it can be applied to business or any other discipline where you target at least 10X goals. That shifts the mindset, and it empowers a team of people to look for unconventional solutions, thus starting from first principles, by leveraging on fast-paced experimentation.
design-thinking
Tim Brown, Executive Chair of IDEO, defined design thinking as “a human-centered approach to innovation that draws from the designer’s toolkit to integrate the needs of people, the possibilities of technology, and the requirements for business success.” Therefore, desirability, feasibility, and viability are balanced to solve critical problems.
pareto-principle-pareto-analysis
The Pareto Analysis is a statistical analysis used in business decision making that identifies a certain number of input factors that have the greatest impact on income. It is based on the similarly named Pareto Principle, which states that 80% of the effect of something can be attributed to just 20% of the drivers.

Other related business frameworks:

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