Wondering what is a strategy? And what sets it apart from a strategic plan? Know the terminologies and differences by reading this article.
Written by: James Milsom, Head of Marketing
It's critical for a business to grasp the difference between a plan and a strategy.
While they each have their strengths and purposes, they are not always interchangeable.
Different industries, clientele, and projects necessitate different approaches.
Today we're providing you with the common questions and the answers you need around strategy and strategic plans.
What Is A Strategy?
A strategy is a comprehensive game plan for attaining your organization's goals.
It is a combination of competitive movements and actions taken by senior management to achieve goals.
Strategies are practical and action-oriented activities that are based on practical experiences rather than academic understanding.
Strategy, therefore, lives and dies on in-depth examination by management of any move or action, implementation time, consequence, and rival reactions.
A strategy is more comprehensive than a strategic plan.
The issue of why is addressed by strategy. It has a broad scope and considers both the ultimate result and the many routes to the intended aim.
A strategy considers all affecting factors, both known and unknown, and grips with the entire issue rather than simply one outcome.
And, in the 2020s, this strategy has evolved thanks to what is known as the Business Agile approach - an always-on mindset for building, executing, and adapting strategy.
What Frameworks Are Used When Building A Strategy?
Some staples are in the toolkit of any person building a strategy - whether corporate, functional (i.e. Sales or Marketing), or product (i.e. a product line).
- SWOT Analysis
- Porter's Five Forces
- VRIO Analysis
- Gap Analysis
- Ansoff Matrix
- BCG Matrix
What Are The Different Types Of Strategy?
There are several types of strategy that can be pursued. Some examples of strategies include:
Penned by the renowned Michael Porter, his Competitive Strategy framework introduced what is known as 'Generic Strategies' - which rests on the concept of competitive advantage. As Toptal explains:
"There are two high-level ways that a firm can possess [competitive advantage]: through having the lowest costs or via product/service differentiation strategy. A firm must achieve one of those, or the third, a focused specialism of either strategy within targeted markets. If the firm does not focus on one of these, it could stretch itself too thin with contradictory strategy."
A corporate strategy is a strategy that is set at the very top of the organization, considering every function, site, and product of the business. It is here that broad strokes are made, and businesses (divisions), units, functions and more will move forward with their own strategies and strategic plans to deliver on the strategy.
Connecting into the corporate strategy, the business strategy is the level down, where the business takes a set budget and its corporate goals, and formulates a clear strategic portfolio to deliver on those goals.
The key here is for the business strategy to align to corporate vision, mission, and objectives.
And so the strategic cascade continues, moving onto functional strategy. Here, we begin to see the departments, such as Sales, Marketing, Product, and Finance, who works for the Business Unit, work together to produce optimum allocation of resources.
The key to success is ensuring that departments are aligned, hence why businesses choose to be customer or product-led - leading everything, every decisions, every resource, to align to the strategy.
An operating strategy can be seen as what many refer to as Continuous Improvement and Operational or Business Excellence.
The strategy concerns itself with reducing wasted efforts (i.e. through a Lean mindset), and delivering value to the customer.
Typically, you will find such a strategy within Production, Supply Chain, Logistics etc.
What Is A Business Strategic Plan?
A strategic plan is often a set of actions a business must follow to achieve a goal.
A strategy addresses questions such as how, when, where, who, and what.
It's an acceptable idea to have a strategy in place. It is critical to the success of practically any endeavor. However, making a strategy should not be the initial step in dealing with a problem.
Strategic planning is the systematic process of thinking about future action in advance.
It refers to creating a plan or a series of procedures that will aid in the achievement of organizational goals. Apart from organizing, regulating, motivating, leading, and making decisions, planning is one of the five management functions.
An example of strategic planning is Hoshin Kanri's X-Matrix, catchball, and 7 step process.
When remaining organized and on track is a top priority, a plan comes in handy.
The strategic plan gives you a solid foundation on which to build and a clear path to follow, with periodic checkpoints along the way to help you attain your final objective.
A strategy removes false optimism and boosts stability.
A strategy makes your work more transparent, eliminates assumptions, and demonstrates that you've given it a lot of thought and effort.
A business leader explaining the business strategy
What Are The Different Types Of Plans In A Business?
The following are examples of plan types you will find in your organization:
A business financial plan lays out the existing monetary situation, goals, cash flow projections, revenue forecasts, risks, and an investment strategy. By its very nature, it should be grounded in truth and widely recognized.
The tactical plan outlines the goals, actions, resources, and measurement of efforts to deliver on an objective.
For example, a marketing strategy will have a tactical plan that spans SEO, PPC, content, marketing technology, and outbound channels, and can even be set beneath the marketing plan itself, for instance with a campaign.
Ultimately, the tactical plan deals with the responsibilities and operations of lower-level departments.
An operational plan concentrates on standardizing standard processes and procedures.
Often found in the world of project management and business process teams, operational plans go ahead and outline what the business needs to be successful and keep running.
The necessity for one lies in ensuring employees know their responsibilities and what they need to deliver in a time-boxed period - hence the use of project charters.
A contingency plan is a form of scenario planning. It typically is a course of action that will be taken when certain events unfold.
For example, should the organization have aggressive churn in a year, this may lead to the business pivoting away from new business generation and focusing on customer relationships.
Another example could include creating a development and test version of your website in the event of a hacking event.
When creating one, it is best to be proactive, and form a well-researched and viable backup plan.
As organizations grow and change, so too will the shape of their workforce.
Naturally, senior management will look to their existing teams to see who can progress up the ranks of the organization, and that means going through a process of identifying, developing, and evaluating talent.
What Are The Differences Between Strategy And Plans?
Here are the steps, says the plan. But here are the optimal steps, say a strategy.
The strategy is concerned with the whys, whereas the plan is concerned with the how.
In an ideal world, the strategy always comes first and informs the plan's specifics.
A strategy is an underlying knowledge that ties all of the plans together to achieve the desired results. And, in time, businesses eventually form Strategy Realization Offices (SRO) and practice Strategic Portfolio Management to help connect strategies to plans.
Who Creates And Owns A Strategy?
Managers are forced to plan for a variety of scenarios. So much so that planning is one of management's four core roles.
Managers can ensure that they are working toward an organizational goal by doing so. That's why in successful organizations you will have business unit, product, and functional leaders work with the SRO to coordinate and deliver their plans.
Operational, tactical, and strategic plans are the three essential plans that a manager will utilize to pursue corporate goals.
If you see these three plans as stepping stones, you can understand how their interdependence helps achieve corporate objectives.
Operational plans are required to attain tactical objectives, and tactical plans lead to strategic goals being realized.
Then, as is customary in planning, there are backup plans for backup plans that fail. Contingency plans are what they're called.
Who Creates And Owns A Strategic Plan?
Strategic plans start with an organization's goal and are built with the whole company in mind.
Top-level executives, such as CSOs and Heads of Strategy will create and implement strategic plans to depict the organization's intended future and long-term goals.
Strategic plans, in essence, are projects where the business wants to be in three, five, or even ten years.
Top-level managers' strategic plans serve as the foundation for lower-level planning.
When planning for the future, which is uncertain, it is beneficial to strategize and analyze the numerous circumstances you may encounter. And accept to adjust your approach if necessary, so you can keep going forward rather than starting over.
Because there are so many distinct company strategies, we've included the top five here. You'll need to look at the market and think thoroughly about the essential foundations of your business to pick and adopt the right one. Keeping this in mind, planning your approach should be a breeze.
No matter how big or little, strategic planning will significantly influence the outcome and revenues of your company.
Learn More About Strategy And Strategic Planning
Click here to learn more about strategy or take a look at these content recommendations:
- Read Our Strategic Portfolio Management 101: Strategic Portfolio Management is becoming increasingly popular as more businesses look to optimize and improve their time to market, address their CAPEX, achieve their ESG targets, and realize their strategic goals - so what does it all mean?
- The Key To Strategy Execution: Read our eBook to help you with implementing a new strategic portfolio management plan, with advice on how to execute your plan successfully and avoid common mistakes.
- Help Your Business Become Agile: Discover why an adaptive approach to strategic planning and execution begins with Operational Excellence.
About the author
James Milsom is Head of Marketing at i-nexus. James has wide-ranging experience in markets such as telecommunications, energy, education, and software.
As Head of Marketing, his drive is to raise awareness and understanding of the challenges facing enterprises in delivering strategic objectives and transformation amidst changing markets and the obstacles traditional tools and methods present leaders.
If you’d like to talk more about Strategy Execution, reach out to James on email@example.com or connect with him on LinkedIn for the latest insights.