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 of business
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 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
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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
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 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 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
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
but this is what we want to have happen
and and that we believe will happen
it's much easier to say i'll build a
factory i will hire more people etc then
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
is figuring out how to win
[Music]
when
u.s
air carriers were busily planning
you know what routes to fly and
there was this little company in texas
called southwest
that had a strategy for winning
and you know 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 uh bus
southwest said everybody else is flying
hub and spoke they have hubs and they
fly home and spoke we're gonna 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 on the flights because
we're going to specialize in 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 being
having a substantially lower cost than
any of the major carriers so 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
um were not trying to win against one
another they were all playing to play as
i say they were playing to participate
maybe maybe
buy 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
and the main
playing to play players have to have to
share a smaller pie that's left over
after southwest takes whatever share it
wants
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 it'll make you feel
somewhat nervous
because as a manager chances are you've
been taught you should do things 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 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 and
you can't know for sure
and that is not being a bad manager
right that is being a great leader
because you're giving your organization
the chance to do something great
the second thing i do is 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 to work
why do you do that it's because you can
then watch the world unfold
right 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 is a mechanism for tweaking it
toning it and refining it so it gets
better and better as you go along
another thing that helps with strategy
is not letting it get over complicated
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 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
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