Okay, so you’re running your business on the day-to-day, and things are going well. But you know that they could be even better. You reach out to a few successful business friends to ask what you can do better. You mention that you’re wondering if you need a strategy or a plan to grow your business.
One says, “You need a business strategy.” Another says, “You need a business plan.” And, of course, someone comes up with, “You need a strategic plan.”
But that doesn’t help, because you’re left wondering what the difference is between creating a strategy or a plan.
Strategy vs. Plan Fatigue
In today’s business environment, strategy and plan are often used interchangeably. And that’s where the confusion starts.
Somewhere along the line, the words were used so frequently that the blended together and now when we use them they don’t really have a specific meaning.
It’s called semantic satiation.
Leon James, a professor of psychology at the University of Hawaii, coined the term in 1962 and described it as a “kind of fatigue.” Through experiments, he proved that when words are used repeatedly over time, they trigger a reduced response – until, eventually, they don’t mean anything anymore.
For example, think of the “seven dirty words” that the FCC banned from TV. When those words first started popping up in comedy routines in the 1960s and 70s, audiences were shocked and would laugh because it was so unexpected. Today’s comedy routines include one of the seven dirty words, practically every other word, and no one is shocked or offended anymore. Over time they’ve lost their emotional impact and have become so commonplace they almost have no meaning to the listener. Just like a strategy or a plan.
Definition of a Strategy
There are seemingly millions of business consultants and management experts who have vastly differing opinions of what constitutes a strategy or a plan. And they are absolutely entitled to their individual opinions.
But to explain the difference between a strategy and a plan, let’s start by taking a look at leading strategy expert Graham Kenny’s definition of “strategy” as published in the Harvard Business Review.
Kenny’s definition states that a strategy is “a description of how a business will achieve a competitive advantage.” He goes on to say that a strategy is a comparison between organizations, not internal to any one organization.
In other words, a business strategy outlines the organization’s vision of its position/brand in the marketplace, value proposition (unique selling Proposition/USP), a description of its buyer personae, and guides the decision-making process for the business.
For example, during the COVID-19 lockdowns, a strategy for shuttered brick-and-mortar businesses might have been to increase online purchases. This would give the business a competitive advantage over its competitors, who are not able to process online purchases while closed. Based on the new purchase strategy, everyone in the business would know that decisions regarding products and services should be made based on the goal of increasing online purchases.
Definition of a Plan
Just like with the word strategy, there are many competing definitions of the word “plan.”
To understand the difference between a strategy or a plan, let’s use this definition from the Small Business Association: a plan is a series of steps that will be implemented to achieve the business goals outlined in the strategy.
So, in simple terms, a strategy is what you want to do and why you want to do it, and a plan is detailed information on how you will do it.
Let’s take another look at our brick-and-mortar business during a lockdown. We know their strategy is to increase online sales as they believe this will give them a competitive advantage over other sellers.
But how are they going to do that?
Maybe they add a shopping cart to their brochure website and then kick off a social media campaign to let buyers know that online purchases are now available.
Or maybe, the competitors have online ordering too, but there’s a $15 delivery fee. So, the business might decide to offer free delivery with a minimum purchase amount. They’re killing two birds with one stone here, offering additional value the competition doesn’t provide (free delivery) and bumping up the average purchase amount to qualify for free delivery. Nice move!
How Strategies and Plans Work Together
So, how should a strategy and plan work together?
The strategy should always be developed first. As entrepreneurs, it’s tempting to jump right in on a new idea and start implementing it. But, without a plan to guide decisions about priorities and allocation of resources, it’s easy to get distracted, and you may suddenly find yourself headed down a business rabbit hole.
With a defined strategy, you’re able to evaluate new ideas and their ability to establish or enhance your competitive advantage in the marketplace. For example, if you feel that pricing is one of your competitive advantages, implementing a costly project that doesn’t bring in more business could result in increased prices, eliminating a competitive advantage.
Once you’ve developed your strategy, it’s time to get down to brass tacks and create a plan.
A plan should include:
- What: A thorough description of the goal you want to achieve.
- How: Projects/tasks/steps that will be taken to achieve the goal and the resources needed (people, tools, etc.)
- Who: Identify specific team members who will be responsible and accountable for each project/task/step.
- When: Identify a timeframe to begin the project, intermediate dates for checking in on how the project is going, and a targeted end date.
- How Well: Metrics that you will use to identify and track the success of the project/tasks/steps.
Now that you know you need both a strategy and a plan, how can you identify which issues to solve with a strategy or a plan.
You need a strategy when…
- You don’t have a clear direction/destination for where the company is headed, or there is a lack of agreement about the direction/destination among the leadership team.
- Needs and expectations in the marketplace have changed dramatically, and you need to realign to maintain/reestablish your business/brand.
- There’s confusion among team members about the direction and priorities of the business.
- You are not making progress on your business goals with your current strategy.
- You want to define a new direction for your business.
You need a plan when…
- You have a well-defined strategy and are ready to move forward with implementing that strategy.
- You want to streamline existing processes or need to establish new processes.
- You have limited resources and must ensure they align with business goals and priorities.
- You have five or more team members and need to streamline the flow of information.
- You need to clarify roles/responsibilities and accountability for the leadership team and team members.
Businesses with a strategy and a plan are 70% more likely to still be in business after the first five years and typically experience 30% more growth.
Instead of thinking that you just need a strategy or a plan, go ahead and create both.
Then you’ll have a solid vision for your business and a roadmap for how you’re going to get there.
Want to clarify whether your business strategy and plans are working for your business?
Schedule a conversation, and let’s talk about it.