A Plan Is Not a Strategy

Summary

The video explores the distinction between strategy and planning, emphasizing that they are not synonymous. Roger Martin explains that while strategic planning is commonly misunderstood as a merger of strategy and planning, true strategy involves a coherent set of choices aimed at achieving a competitive advantage. Unlike planning, which focuses on activities and resource allocation, strategy centers on desired outcomes and requires embracing uncertainty and risk. Examples, like the successful strategy of Southwest Airlines, illustrate how having a clear and focused strategy can lead to significant competitive advantages.

Highlights

• Strategy and planning are often confused but are fundamentally different. 💡
• Planning focuses on activities like building plants or hiring, which are within control. 🌱
• True strategy focuses on positioning and winning in a chosen field. 🥇
• Southwest Airlines succeeded by choosing distinct operational strategies over traditional methods. ✈️
• Strategies should be coherent, actionable, and adjustable as circumstances change. 🔄
• Clarity, simplicity, and the ability to adapt are vital components of effective strategy. 📄

Key Takeaways

• Strategy is not the same as planning; merging them as 'strategic planning' can be misleading. 🧩
• True strategy involves a coherent set of choices aimed at competitive advantage. 🏆
• Planning is about listing activities, while strategy focuses on achieving desired outcomes. 🎯
• Embracing the uncertainty of strategy over the comfort of planning can lead to success. 🚀
• Southwest Airlines' strategic choices led to significant growth and competitive advantage. ✈️

Overview

Ever wondered why your elaborate plans just don't bring the results you hoped for? Roger Martin lays it out: strategy and planning are as different as chalk and cheese! While planning deals with activities you control, like building plants, strategy is where you embrace risk and aim to win on your chosen playing field. Spoiler: just calling it 'strategic planning' doesn't magically make it effective!

Let’s dive into how strategy really works. It’s all about making a coherent set of choices that positions you to win. Unlike planning which comforts you with control, strategy dares you to dream about outcomes you can’t guarantee. You’re crafting a theory of how you'll be better than the competition, just like Southwest Airlines did with their low-cost, efficient model, catching bigger airlines snoozing.

Got a plan? Tear it up and write a strategy instead. Keep it simple and make it nimble. Your strategy should fit on one page, detailing where you'll play and how you'll win. Accept you can’t predict everything but be ready to fine-tune as the world changes. Remember, while planning might feel safe, it’s strategy that really gives you the chance to succeed and grow.

Chapters

• 00:00 - 00:30: Introduction to Planning and Strategy In this chapter titled 'Introduction to Planning and Strategy', Roger Martin discusses the evolution and distinction between planning and strategy. He highlights that planning as a practice has existed for a long time, while strategy has emerged more recently as a discipline. Though these two concepts are often combined into 'strategic planning', Martin argues that merely combining them does not create effective strategic planning. He implies that there is a fundamental difference between planning and strategy that is often overlooked in the business world.
• 00:30 - 01:00: Strategic Planning vs. Strategy The chapter differentiates between strategic planning and strategy, emphasizing that strategic planning comprises a list of activities a company plans to undertake, like improving customer experience or starting new programs. However, without an underlying strategy, these activities might not lead to desired results for the company.
• 01:00 - 01:30: Defining Strategy The chapter titled 'Defining Strategy' explores the concept of strategy as an integrative set of choices. It emphasizes the importance of positioning oneself on a specific playing field to achieve success. The theory behind strategy involves selecting the right playing field and excelling in serving the customers on that field better than competitors.
• 01:30 - 02:00: The Nature of Planning vs. Strategy The chapter discusses the difference between planning and strategy, emphasizing that a successful strategy must be coherent and actionable. In contrast, planning doesn't require internal coherence and is often seen in various departments' wish lists, such as manufacturing wanting to build a new plant, marketing aiming to launch a new brand, and human resources seeking to hire more staff. These plans can often lack a unified, strategic direction.
• 02:00 - 02:30: The Challenges of Customer-Based Strategy The chapter titled 'The Challenges of Customer-Based Strategy' delves into the complexities of establishing a unified plan within a company that aligns with its overall goals. It highlights that while planning may offer comfort, these plans tend to focus predominantly on the expenditure aspects, such as hiring personnel and launching new products, rather than effectively addressing the strategic integration of customer-centric approaches.
• 02:30 - 03:00: Planning vs. Strategy in Business The chapter examines the distinction between planning and strategy in the business context. It emphasizes that while planning involves making decisions on costs and resources that a business controls, strategy focuses on achieving desired competitive outcomes. Planning is internally focused, dealing with aspects such as leasing space, purchasing raw materials, and hiring employees. In contrast, strategy requires understanding and influencing external factors, particularly consumer demand for products or services.
• 03:00 - 04:00: Case Study: Southwest Airlines The chapter titled 'Case Study: Southwest Airlines' explores the complexities of achieving profitability in a business where customer decisions play a crucial role. The narrative emphasizes the uncontrollable nature of consumer behavior, pointing out that despite a company's desire to influence purchasing decisions, ultimately, customers make their own choices. As such, companies must present their value propositions and trust their strategies despite lacking conclusive proof or guarantees of success.
• 04:00 - 05:00: Comparison of Major Airlines' Strategies The chapter discusses the challenges and complexities involved in strategic planning within the airline industry. It highlights the difficulty of making plans that will lead to a preferable outcome compared to competitors. The narrative emphasizes that while companies can confidently plan logistics like building factories and hiring people, predicting and ensuring customer preference over competitors' offerings is much more challenging.
• 05:00 - 06:00: Escaping the Planning Trap The chapter titled 'Escaping the Planning Trap' discusses how companies often get bogged down in planning rather than focusing on winning strategies. It uses the example of US air carriers that were heavily engaged in route planning, in contrast to Southwest Airlines, a small company that concentrated on creating a winning strategy. Despite its small size, Southwest's focus on outcomes rather than just planning set it apart and contributed to its success.
• 06:00 - 07:00: The Importance of Strategic Logic Southwest Airlines aimed to be a convenient alternative to Greyhound with competitive pricing. The company decided to differ from traditional airlines' hub-and-spoke model by employing a point-to-point flight strategy. This approach ensured that their aircraft rarely stayed idle on the ground, as profitability comes from time spent flying. To further streamline operations and reduce costs, Southwest exclusively utilized Boeing 737 aircraft.
• 07:00 - 08:00: Keeping Strategy Simple The chapter titled 'Keeping Strategy Simple' discusses the implementation of a streamlined strategy by a company focusing on efficiency and cost-effectiveness. Their approach includes setting up specific operational gates, systems, training, and simulations that cater to short-flight services. This decision is backed by the choice not to provide meals during flights and to bypass travel agents by encouraging online bookings. These measures collectively contribute to a significantly reduced operational cost compared to major airlines.
• 08:00 - 09:00: Conclusion: Strategy vs. Planning The chapter discusses the differences between strategy and planning through the case of a successful company that managed to offer lower prices, subsequently growing significantly. The company managed to dominate the aviation market in America by focusing on winning. In contrast, major airlines were portrayed as merely aiming to maintain their presence rather than strategically seeking to outdo each other.

A Plan Is Not a Strategy Transcription

• 00:00 - 00:30 ROGER MARTIN: This thing called planning has been around for a long, long time. People would plan out the activities they're going to engage in. More recently, has been a discipline called strategy. People have put those two things together to call something strategic planning. Unfortunately, those things are not the same, strategy and planning. So just putting them together and calling it strategic planning doesn't help. What most strategic planning is in the world of business
• 00:30 - 01:00 has nothing to do with strategy. It's got the word, but it's not. It's a set of activities that the company says it's going to do. We're going to improve customer experience. We're going to open this new plant. We're going to start a new talent development program. A whole list of them, and they all sound good, but the results of all of those are not going to make the company happy because they didn't have a strategy. [MUSIC PLAYING]
• 01:00 - 01:30 So what's a strategy? A strategy is an integrative set of choices that positions you on a playing field of your choice in a way that you win. So there's a theory. Strategy has a theory. Here's why we should be on this playing field, not this other one, and here's how, on that playing field, we're going to be better than anybody else at serving the customers on that playing field.
• 01:30 - 02:00 That theory has to be coherent. It has to be doable. You have to be able to translate that into actions for it to be a great strategy. Planning does not have to have any such coherence, and it typically is what people in manufacturing want-- the few things they want, to build a new plant, and the marketing people want to launch a new brand, and the talent people want to hire more people-- that tends to be a list that has no internal coherence to it
• 02:00 - 02:30 and no specification of a way that that is going to accomplish collectively some goal for the company. See, planning is quite comforting. Plans typically have to do with the resources you're going to spend. So we're going to build a plan. We're going to hire some people. We're going to launch a new product. Those are all things that are on the cost side of businesses.
• 02:30 - 03:00 Who controls your costs? Who's the customer of your costs? The answer is, you are. You decide how many square feet to lease, how many raw materials to buy, how many people to hire. Those are more comfortable because you control them. A strategy, on the other hand, specifies an outcome, a competitive outcome that you wish to achieve, which involves customers wanting your product or service
• 03:00 - 03:30 enough that they will buy enough of it to make the profitability that you'd like to make. The tricky thing about that is that you don't control them. You might wish you could, but you can't. They decide, not you. That's a harder trick. So 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,
• 03:30 - 04:00 but this is what we want to have happen and that we believe will happen. It's much easier to say, I'll build a factory, I will hire more people, et cetera, than I will have customers end up liking our offering more than those of competitors. The tricky thing about planning is that while you're planning, chances are at least one competitor
• 04:00 - 04:30 is figuring out how to win. 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.
• 04:30 - 05:00 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,
• 05:00 - 05:30 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
• 05:30 - 06:00 that they could offer substantially lower prices. Because it had a way of winning, it got bigger and then bigger and then bigger and then bigger and bigger and bigger and bigger until it flies the most passenger seat miles in America. The major carriers were not trying to win against one another. They were all playing to play, as I say. They were playing to participate, maybe buy
• 06:00 - 06:30 more planes, get more gates, maybe grow some, not having a theory of here's how we could be better than our competitors. And that was fine until somebody came along and said, here's a way to be better than everybody else for this segment. And so that segment then goes. It's gone [FAST-MOVING SOUND]. And the main playing to play players have to share a smaller pie that's left over after Southwest takes whatever share it wants.
• 06:30 - 07:00 [MUSIC PLAYING] If you're trying to escape this planning trap, this comfort trap of doing something that's comfortable but not good for you, how do you start? The most important thing to recognize is that strategy will have angst associated with it. It'll make you feel somewhat nervous because as a manager, chances are you've been taught you should do things
• 07:00 - 07:30 that you can prove in advance. You can't prove in advance that your strategy will succeed. You can look at a plan and say, well, all of these things are doable. Let's just do those because they're within our control. But they won't add up to much. In strategy, you have to say, if our theory is right about what we can do and how the market will react, this will position us in an excellent way. Just accept the fact that you can't be perfect on that,
• 07:30 - 08:00 and you can't know for sure. And that is not being a bad manager. That is being a great leader because you're giving your organization the chance to do something great. The second thing I do is say, lay out the logic of your strategy clearly. What would have to be true about ourselves, about the industry, about competition, about customers for this strategy
• 08:00 - 08:30 to work? Why do you do that? It's because you can then watch the world unfold. And if something that you say is in the logic that would have to be true for this to work is not working out quite the way you hoped, it'll allow you to tweak your strategy. And strategy is a journey, what you want to have as a mechanism for tweaking it, honing it, and refining it so it gets better and better as you go along. Another thing that helps with strategy
• 08:30 - 09:00 is not letting it get overcomplicated. It's great if you can write your strategy on a single page. Here's where we're choosing to play. Here's how we're choosing to win. Here are the capabilities we need to have in place. Here are the management systems. And that's why it's going to achieve this goal, this aspiration that we have. Then you lay out the logic, what must be true for that all to work out the way we hope.
• 09:00 - 09:30 Go do it, and watch and tweak as you go along. That may feel somewhat more worry-making, angst-making than planning, but I would tell you that if you plan, that's a way to guarantee losing. If you do strategy, it gives you the best possible chance of winning.