Understanding Strategy and Planning: What People Actually Do

Contrary to popular belief, the terms strategy and planning are not abstract or nebulous concepts. They involve a tangible and methodical process that brings together a range of considerations to make informed decisions. Let's dive into what happens when someone says they are developing a strategy and planning.

Defining Strategy

Strategy is the roadmap that guides an organization or individual towards their goals. To illustrate, imagine you are planning to travel from Los Angeles to New York City. You have many possible ways to do this: by airplane, train, car, ship, or even on foot. Each option has its pros and cons: cost, time, convenience, and personal preference.

The choice of the best option is not a haphazard one. You consider your specific needs and constraints, such as when you need to be in New York, what you can afford, and any concerns you have regarding each mode of travel, like fear of flying or seasickness.

Once you sort through these factors, you arrive at a strategic decision. For most people, flying commercially is the most practical choice. This process of making an informed, rational decision based on your unique circumstances is strategy.

Understanding the Concept of Tactics

Tactics are the specific steps you take to implement your strategy. If your strategy is to fly commercially, your tactics might be to book a ticket on Jet Blue from Long Beach, California, with a specific departure and arrival time.

Tactics are the granular actions that align with your strategy. While strategy sets the overall direction, tactics are the day-to-day or step-by-step activities that move you closer to your goals.

Comprehending the Importance of Planning

Planning is the comprehensive process that defines what you will do, how you will do it, when you will do it, and who is responsible for each task. It involves more than just setting goals; it involves mapping out the steps needed to achieve those goals, setting deadlines, and assigning responsibilities.

Example 1: Business Strategy

A business strategy involves understanding the forces affecting your industry. These include:

Bargaining power of suppliers: How much control do suppliers have over the prices they charge? Bargaining power of customers: How much say do customers have in terms of pricing and product features? Threat of substitutes: How easy is it for customers to switch to a competitor? Threat of new entrants: How inviting is the market for new competitors? Competitive intensity in the industry: How competitive is the market with existing competitors?

For instance, in the airline industry, high bargaining power of suppliers might mean paying premium prices for fuel, while low barriers to entry from Ryanair or other low-cost carriers represent a threat of new entrants.

A good strategy would then be to capitalize on favorable forces (like low operational costs due to advanced technology) and mitigate these threats (like investing in customer loyalty programs to combat the threat of substitutes).

Example 2: Personal Planning

Strategy and planning also apply to personal life. For instance, if you want to write a book, your strategy might be to focus on a niche market that hasn't been fully explored, while your tactics could include outlining the chapters, setting deadlines for each section, and assigning writing time.

In a business context, a complete plan might look like this:

Goals: increase market share Strategy: launch a marketing campaign targeting high-value customers Tactics: run social media ads, host webinars, and offer exclusive discounts to early investors When: next quarter, with specific dates for each tactic Cost: detailed budget for marketing expenses Responsibility: assign tasks to marketing, sales, and PR teams

Conclusion

Developing strategy and planning is not just about deciding what to do; it's about understanding the underlying dynamics, prioritizing actions, and aligning resources effectively. Strategy is the big picture, planning is the detailed roadmap, and tactics are the daily activities that keep the wheels turning.

Whether in a business setting or in your personal life, these processes ensure that you are moving towards your goals with purpose and efficiency.