We quite often hear those two words a lot in the workplace. They are typically mentioned by management when referring to a goal the company is required to reach but more importantly, how the company is going to do so.
The 2 words however seem to be used interchangeably most of the time as though they both mean the same thing. They are even sometimes combined to form an additional term such as “Strategic Planning”.
A strategy and plan are however two very different things and, in this article, we shall try to break down the main differences so as to give you a clearer picture of the exact meaning of each.
The Basic Definitions
A strategy is mainly based on a theory. That theory should explain why a company is heading in a certain direction and why heading in that particular direction would help the company outperform competition and win. A typically good strategy should involve a coherent theory that is easy to translate into clear actions.
Planning on the other hand is a relatively simpler matter where it does not rely on a theory. A plan in most cases, is a list of steps necessary to reach a specific goal that is usually significantly smaller than goals associated with strategies.
Level of Control
One of the biggest differences between a plan and a strategy is the degree of control each affords you.
Planning is usually mainly dependent on the resources at your disposal. For instance, a company can plan to hire a team to build a new product. The company has control over its budget and will simply put a plan that said budget accommodates, there are no external factors that are beyond the company’s control. A company has full control over its spending.
Now if we follow the same example mentioned above, a strategy would not simply target hiring the team and building the product. The strategy should target having customers wanting to buy that product and to buy enough of it for the company to be profitable. A company has little control over its revenue.
Basically, building a company or a factory can be achieved through good planning. Having customers buy the products of said company or factory enough to sustain its existence and growth can be achieved through a good strategy.
Strategies are often associated with long term goals and are not associated with a robust list of steps and so, they are significantly easier to amend. Companies change their strategies all the time due to all sorts of reason such as the status of the global economy, market conditions, competition strategies…etc.
A plan however is usually far less flexible and any change in the conditions for which the plan was originally created may potentially lead to replanning from scratch.
Prediction of Results
It is possible to predict results associated with plans because as mentioned earlier, a company should be in full control of all aspects associated with a plan. A plan that does not achieve the results it was designed to achieve was probably a bad plan to begin with.
A strategy however is based on theory and a theory is -by definition- unproven. It is impossible to prove in advance that a certain business strategy will succeed. Since strategies usually employ long term goals however, they can be observed over time and if results are not achieved, the reasons can be analyzed and the strategy can be amended accordingly.
Both strategy and planning are equally fundamental to the success of any organization, they are however two very different things and are associated with very different goals.