Strategy & Planning are not the same

Strategy & Planning  are not the same. 

Summary -

A strategy is an integrative set of choices that positions you on a playing field of your choice in a way that you win.

Strategy has a theory. That theory has to be coherent. It has to be doable.

Planning does not have any such coherence and no specification of a way that is going to accomplish collectively some goal for the company.

Planning

• You control costs.

• You are the customer.

• It's comfortable. 

Strategy specifies an outcome

• Actual customers are the customers.

• You don't control them.

• You don't control revenues. 

That means putting yourself out and saying, here's what we believe will happen. We can't prove it in advance, we can't guarantee it, but this is what we want to have happen and that we believe will happen.

When US air carriers were busily planning what routes to fly and da-da-da, there was this little company in Texas called Southwest that had a strategy for winning. And at first, that looked largely irrelevant because it was tiny. What Southwest Airlines was aiming for was an outcome. What they wanted to be is a substitute for Greyhound, a way more convenient way to get around at a price that wasn't  extraordinarily much greater than a Greyhound bus. Southwest said, everybody else is flying hub and spoke. They have hubs, and they fly hub and spoke. We're going to fly point to point so that we don't have aircraft waiting on the ground because you only make money when you're in the air. We're going to only fly 737s, one kind of aircraft, so that our gates are set up for those, our systems are set up for those, our training, our simulations are set up. We're not going to offer meals on the flights because we're going to specialize in short flights. We're not going to book through travel agents. We're going to encourage people to book online because that's less expensive for everybody and more convenient. So their strategy ended up having a substantially lower cost than any of the major carriers so that they could offer substantially lower prices.

Avoid the "planning trap":

• Accept angst - You can't prove in advance that your strategy will succeed.

• Lay out the logic. Then tweak. Strategy is a journey

• Keep it short - ideally 1 page

Not knowing for sure isn't bad management. It's great leadership.