Strategy Definition versus Strategic Planning

One of the most overused word in consulting is probably the word “strategy”.

During my time at Capgemini, together with former AT Kearney consultants, we used to make fun of the “Techies” when they qualified decisions to buy computers as “Strategic Decisions”. Later, working together with former McKinsey and LEK consultants, they made fun of me for saying that “Strategy” consisted in leveraging the business through technologies.

With more than 15 years of consulting experience, I have now seen most of the ways of declining the word “Strategy”. I will highlight here the differences between Strategy Definition and Strategic Planning, two assignment qualifiers whose semantic similarities may be misleading.

Both assignments seem alike. Indeed, in both cases, we will be defining the strategy of the company and designing a road map.

Oversimplified view of a strategic road map.

However, “Defining the Strategy” consists in defining the “who”, the “what” and the “how”:

  1. Defining the customers that we want to serve “who”
  2. Defining the products and services that we want to sell “what”
  3. Defining ways to go-to-market “how”

It may sound easy but making decisions about the “who”, the “what” and the “how” is in practice very tricky because most companies what it all. They want to address all the market, sell as much as possible and follow as many routes as possible.

Defining the Strategy is about making decisions and voluntarily discarding customer segments, products, services and potential market opportunities.

To make informed decisions, companies need to understand their competitive landscape, their customers, their addressable market, their competitive advantages, market regulations, internal constraints, financial issues and market trends.

PSP Players' map
Example of a sector’s competitive landscape

Performing such an analysis comprehensively requires a lot of desk research, gathering direct information from interviews and questionnaires and above all, a strong methodology and a team of bright and very well prepared people.

Designing a company’s Strategy properly is a high-value added exercise.

By contrast, a “Strategic Planning” only requires the company’s decision makers to agree on the compass that they want to follow moving forward.

The framework is similar, you start with a current situation, the “As-Is”, you define your objectives, the “To-be” and in between, you have to define a series of activities to hit a number of milestones that will take the organisation from the “As-is” to the “To-be”.

What differs is the process to complete the exercise.

Inputs from a Strategic Planning do not have to come from the market or external sources but from the company’s leaders.

In other words, company’s leaders are the ones to decide what to write in the Strategic Planning based on their vision of the future. It is down to the decision makers to run their own research to make informed decisions, or not. Some may prefer to follow their “guts feeling”, or to take decisions based on internal forces, such as “messages” they want to send to their employees or “conflicts” between departments that they want to address. Chances are high, that internal decision makers be biased, or simply too lazy to challenge their beliefs.

A Strategic Planning is a wish list from Governance.

The output is also different.

Whereas a company’s strategy must be summarizable in half a page, the executive summary of a Strategic Planning is likely to expand over 50+ pages. Its format could be a list of 8-12 “Strategic Visions”, each of them broken down into 2-4 “Strategic Missions”, who in turn are broken down into 2-4 “Strategic Actions”. Strategic Visions can eventually be grouped by workstreams as illustrated below:

WORKSTREAM: New Business Models

  1. Strategic Vision: “Incorporate a collaborative platform to offer specialised legal services of high quality to cover the entire spectrum of the Roman law”.
    1. Strategic Mission: “Guaranty the right balance between…”
    2. Strategic Mission: “Develop and promote the use of the platform”.
      1. Strategic Action: “Prepare…”.
      2. Strategic Action: “Find…”.
      3. Strategic Action: “Join…”.
    3. Strategic Mission: “Foster cross-selling between the stakeholders…”.
  2. Strategic Vision: “…”.

In my opinion, the overuse of the word “strategy” in Strategic Planning conceals the little value added of the exercise. It is just a tool to organise the thoughts of the governing team.

Even if the exercise adds little value, every company should have a Strategic Planning up-to-date.

To quantify the value difference between a Strategy Definition and a Strategic Planning, I would quote that, for a mid-sized company, acquiring a Strategic Planning externally shall cost between $15,000 and $40,000, whereas hiring consultants to define a Strategy shall range from $60,000 to $200,000.

Companies should not embark on a Strategic Planning without having a clear Strategy already defined.

In addition, I would strongly recommend every company to challenge their existing Strategy – when they have one – before redacting their Strategic Planning. Too many companies surf on historical decisions that no one ever dares challenge anymore.

The market is changing rapidly and decisions taken a few years ago may no longer be appropriate. Failing to rethink the company’s Strategy periodically is a recipe for failure.

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