Strategy & Planning

Many people tend to prioritize strategic planning, but they overlook an important distinction: Strategy and planning are separate endeavors that should not be confused.

Although the term “strategic planning” is commonly used, it is inherently flawed. Strategy involves defining the “what,” while planning focuses on the “how.” Strategy determines the desired outcome or destination, whereas planning deals with the specific tactics for achieving that outcome. Blurring the lines between the two only leads to confusion and complexity.

Planning, or tactics, is primarily concerned with implementation and the practical aspects of “how” things will be done. While strategy focuses on doing the “right things,” tactics are about “doing things right.” It is important to translate the conceptualized strategy into operational realities for manufacturing or distribution companies. In reality, strategies tend to fail not in formulation but in execution, accounting for over 90% of failures.

When implementing a strategy, it is crucial to consider how the organization needs to change and evolve to support it. Are the necessary people, skills, and capabilities available to execute the strategy? If not, various options should be evaluated. Are the existing processes and systems aligned with the strategy? It is unlikely, as there is almost always a need for adjustments, upgrades, or new processes. Additionally, does the organizational culture and communication systems support the strategy? Many factors must be considered to ensure success.

The biggest problem with how organizations approach strategy is their confusion between strategy and plans. These are not interchangeable terms. Strategic planning is, in fact, an oxymoron. This confusion often leads to missed targets. Therefore, it is essential to clarify expectations and differentiate between strategy and planning before embarking on any strategic initiatives.

What value will you create?

A strategy is a framework for making decisions on how to navigate the business landscape. These decisions occur daily throughout the organization and encompass various aspects such as capital investments, operational priorities, marketing, hiring, sales approaches, branding efforts, and individual task management. Without a strategic framework to guide these decisions, organizations become scattered, achieve little, waste profits, and face significant confusion and discord.

A strategic framework must establish how the organization will deliver value that customers are willing to pay for, as well as define target revenues and profits. While the strategy does not provide all the answers for implementation (that’s where planning comes in), it clearly defines the game the organization is playing and how it intends to win. It also identifies the areas the organization chooses not to pursue, even if requested by its best customers.

Identifying products, services, and target markets is just the starting point. The strategic framework must also establish a business model that enables the profitable creation of sufficient value.

Identifying the core capabilities essential for success is crucial. This affects various aspects, such as whether the sales team needs to have charismatic personalities or technical expertise, or whether the operations team should specialize in custom projects or high-volume production. Clearly defining which systems need to be top-notch ensures alignment and proper resource allocation.

What sales and distribution channels will you use?

How will the organization reach its customers? Will it employ salespeople, sales reps, physical stores, or online platforms like Amazon? Will it showcase expertise through keynotes or focus on SEO to attract customers online?

How will you deliver products or services? Electronically, through FedEx, with an in-house installation team, using drones, or through alternative means?

Addressing these questions is vital for understanding necessary investments, setting profit expectations, and determining areas in which the organization needs to excel.

What kind of revenue and profits should you expect?

What will it take to achieve profitability and expected sales volumes?

Why do you believe you can outperform the competition?

Businesses do not operate in isolation. When playing the game of business, there are other players in the sandbox. Therefore, the strategy must establish how the organization intends to win the game. What sets it apart? Why would customers choose it over competitors offering similar products and services? Is the competitive edge still valid?

Strategic clarity is paramount. These are the significant decisions that drive all other aspects, including investments, hiring, development, and timelines. These decisions enable cohesive planning and align everyone toward shared objectives.

When working with clients, very few are ready to start from scratch. Often, the answers to the questions mentioned above may seem obvious to them. However, this is precisely why they need a professional capable of challenging assumptions and shifting paradigms, like myself. All these questions need to be openly discussed. Without them, organizations cannot make significant changes or seize big opportunities. Instead, they may only make incremental changes at best.

If you are ready to take your organization to its pinnicale, let us start a conversation and see if might be of service. Book a meeting.

Here is some more on the topic from Harvard Business Review Review