# A Plan Is Not a Strategy #video https://www.youtube.com/watch/iuYlGRnC7J8 In the video "A Plan Is Not a Strategy," Roger Martin explains the distinction between planning and strategy. Planning involves outlining a set of activities or tasks that a company intends to undertake, such as improving customer experience or launching a new product. These activities are often within the company's control and focus on resource allocation. However, they lack the coherence and competitive focus necessary to achieve a strategic goal. In contrast, strategy is described as an integrative set of choices that positions a company on a chosen playing field to win. It involves a theory about why a company should compete in a particular market and how it can outperform competitors. Strategy requires a coherent plan that can be translated into actions, focusing on achieving a competitive outcome that involves customer engagement and market success. Unlike planning, strategy involves uncertainty and requires managers to accept that they cannot control all variables, but it offers the best chance of achieving significant success. <!-- Transcript: 00:00:00.000 ROGER MARTIN: This thingcalled planning has been around 00:00:02.760 for a long, long time. 00:00:05.310 People would planout the activities 00:00:07.290 they're going to engage in. 00:00:09.360 More recently, has been adiscipline called strategy. 00:00:12.930 People have put those twothings together to call 00:00:15.210 something strategic planning. 00:00:17.190 Unfortunately, those thingsare not the same, strategy 00:00:23.280 and planning. 00:00:23.822 So just putting themtogether and calling it 00:00:25.655 strategic planning doesn't help. 00:00:27.030 What most strategic planningis in the world of business 00:00:32.130 has nothing to do with strategy. 00:00:34.030 It's got the word, but it's not. 00:00:36.240 It's a set of activitiesthat the company 00:00:39.960 says it's going to do. 00:00:41.460 We're going to improvecustomer experience. 00:00:44.110 We're going to openthis new plant. 00:00:45.930 We're going to start a newtalent development program. 00:00:49.230 A whole list of them,and they all sound good, 00:00:52.260 but the results ofall of those are not 00:00:55.680 going to make the companyhappy because they 00:00:58.260 didn't have a strategy. 00:00:59.325 [MUSIC PLAYING] 00:01:02.920 So what's a strategy? 00:01:04.959 A strategy is anintegrative set of choices 00:01:08.760 that positions you on a playingfield of your choice in a way 00:01:12.630 that you win. 00:01:13.590 So there's a theory. 00:01:15.090 Strategy has a theory. 00:01:17.160 Here's why we should beon this playing field, 00:01:20.280 not this other one, and here'show, on that playing field, 00:01:25.300 we're going to bebetter than anybody else 00:01:27.360 at serving the customerson that playing field. 00:01:31.260 That theory has to be coherent. 00:01:33.450 It has to be doable. 00:01:35.370 You have to be able to translatethat into actions for it 00:01:38.400 to be a great strategy. 00:01:40.390 Planning does not have tohave any such coherence, 00:01:44.520 and it typically is whatpeople in manufacturing want-- 00:01:47.872 the few things they want,to build a new plant, 00:01:49.830 and the marketing peoplewant to launch a new brand, 00:01:51.997 and the talent peoplewant to hire more people-- 00:01:54.570 that tends to be a list thathas no internal coherence to it 00:02:00.000 and no specificationof a way that that 00:02:04.980 is going to accomplishcollectively 00:02:07.440 some goal for the company. 00:02:11.180 See, planning isquite comforting. 00:02:13.280 Plans typically have to dowith the resources you're 00:02:17.900 going to spend. 00:02:19.100 So we're going to build a plan. 00:02:21.290 We're going to hire some people. 00:02:23.420 We're going tolaunch a new product. 00:02:25.640 Those are all things that areon the cost side of businesses. 00:02:30.410 Who controls your costs? 00:02:32.690 Who's the customerof your costs? 00:02:35.510 The answer is, you are. 00:02:37.030 You decide how manysquare feet to lease, 00:02:39.650 how many raw materials tobuy, how many people to hire. 00:02:44.090 Those are more comfortablebecause you control them. 00:02:47.390 A strategy, on the otherhand, specifies an outcome, 00:02:52.430 a competitive outcomethat you wish to achieve, 00:02:55.770 which involves customerswanting your product or service 00:03:01.250 enough that theywill buy enough of it 00:03:04.580 to make the profitabilitythat you'd like to make. 00:03:08.450 The tricky thing about that isthat you don't control them. 00:03:14.540 You might wish youcould, but you can't. 00:03:17.570 They decide, not you. 00:03:20.510 That's a harder trick. 00:03:22.280 So that means puttingyourself out and saying, 00:03:26.370 here's what webelieve will happen. 00:03:29.480 We can't prove it in advance,we can't guarantee it, 00:03:34.220 but this is what wewant to have happen 00:03:36.200 and that we believe will happen. 00:03:39.350 It's much easier to say,I'll build a factory, 00:03:41.780 I will hire morepeople, et cetera, 00:03:43.910 than I will have customers endup liking our offering more 00:03:50.990 than those of competitors. 00:03:53.060 The tricky thing about planningis that while you're planning, 00:03:58.550 chances are atleast one competitor 00:04:01.880 is figuring out how to win. 00:04:05.580 When US air carriers were busilyplanning what routes to fly 00:04:11.640 and da-da-da, therewas this little company 00:04:15.030 in Texas called Southwest thathad a strategy for winning. 00:04:20.519 And at first, thatlooked largely irrelevant 00:04:24.420 because it was tiny. 00:04:25.500 What Southwest Airlines wasaiming for was an outcome. 00:04:30.450 What they wanted tobe is a substitute 00:04:33.840 for Greyhound, a waymore convenient way 00:04:38.700 to get around at a price thatwasn't extraordinarily much 00:04:42.960 greater than a Greyhound bus. 00:04:46.560 Southwest said, everybodyelse is flying hub and spoke. 00:04:51.248 They have hubs, andthey fly hub and spoke. 00:04:53.040 We're going to fly point topoint so that we don't have 00:04:55.380 aircraft waiting on the groundbecause you only make money 00:04:58.230 when you're in the air. 00:04:59.280 We're going to only fly737s, one kind of aircraft, 00:05:03.870 so that our gatesare set up for those, 00:05:05.842 our systems are set upfor those, our training, 00:05:07.800 our simulations are set up. 00:05:09.270 We're not going to offermeals on the flights 00:05:11.970 because we're going tospecialize in short flights. 00:05:14.940 We're not going to bookthrough travel agents. 00:05:17.073 We're going to encouragepeople to book online 00:05:18.990 because that's lessexpensive for everybody 00:05:21.300 and more convenient. 00:05:22.830 So their strategy ended uphaving a substantially lower 00:05:27.270 cost than any of themajor carriers so 00:05:30.420 that they could offersubstantially lower prices. 00:05:33.030 Because it had away of winning, it 00:05:35.610 got bigger and then bigger andthen bigger and then bigger 00:05:40.230 and bigger and biggerand bigger until it 00:05:42.300 flies the most passengerseat miles in America. 00:05:46.380 The major carrierswere not trying 00:05:50.970 to win against one another. 00:05:52.980 They were all playingto play, as I say. 00:05:55.740 They were playing toparticipate, maybe buy 00:06:00.030 more planes, get moregates, maybe grow some, 00:06:02.880 not having a theory ofhere's how we could be better 00:06:07.620 than our competitors. 00:06:10.350 And that was fine untilsomebody came along and said, 00:06:13.380 here's a way to bebetter than everybody 00:06:16.620 else for this segment. 00:06:19.060 And so that segment then goes. 00:06:21.240 It's gone [FAST-MOVING SOUND]. 00:06:22.590 And the main playingto play players 00:06:26.700 have to share asmaller pie that's 00:06:28.980 left over after Southwesttakes whatever share it wants. 00:06:32.535 [MUSIC PLAYING] 00:06:35.310 If you're trying to escape thisplanning trap, this comfort 00:06:39.390 trap of doing somethingthat's comfortable but not 00:06:42.720 good for you, how do you start? 00:06:46.110 The most importantthing to recognize 00:06:48.600 is that strategy will haveangst associated with it. 00:06:54.210 It'll make you feel somewhatnervous because as a manager, 00:06:59.370 chances are you've beentaught you should do things 00:07:02.640 that you can prove in advance. 00:07:04.850 You can't prove in advance thatyour strategy will succeed. 00:07:09.565 You can look at a plan andsay, well, all of these things 00:07:11.940 are doable. 00:07:12.940 Let's just do those becausethey're within our control. 00:07:15.450 But they won't add up to much. 00:07:17.040 In strategy, you haveto say, if our theory 00:07:20.970 is right about what we can doand how the market will react, 00:07:24.570 this will position usin an excellent way. 00:07:27.720 Just accept the fact thatyou can't be perfect on that, 00:07:31.890 and you can't know for sure. 00:07:34.020 And that is notbeing a bad manager. 00:07:37.230 That is being a greatleader because you're 00:07:40.620 giving your organization thechance to do something great. 00:07:46.120 The second thing Ido is say, lay out 00:07:49.080 the logic of yourstrategy clearly. 00:07:52.890 What would have to be true aboutourselves, about the industry, 00:07:56.140 about competition, aboutcustomers for this strategy 00:08:01.230 to work? 00:08:02.320 Why do you do that? 00:08:03.120 It's because you can thenwatch the world unfold. 00:08:07.110 And if something that yousay is in the logic that 00:08:10.800 would have to betrue for this to work 00:08:12.510 is not working outquite the way you hoped, 00:08:16.170 it'll allow you totweak your strategy. 00:08:18.360 And strategy is ajourney, what you 00:08:20.580 want to have as a mechanismfor tweaking it, honing 00:08:23.160 it, and refining it so itgets better and better as you 00:08:26.460 go along. 00:08:28.170 Another thing thathelps with strategy 00:08:30.990 is not letting itget overcomplicated. 00:08:34.380 It's great if you can writeyour strategy on a single page. 00:08:38.520 Here's where we'rechoosing to play. 00:08:41.740 Here's how we'rechoosing to win. 00:08:43.650 Here are the capabilitieswe need to have in place. 00:08:46.080 Here are the management systems. 00:08:47.830 And that's why it's goingto achieve this goal, 00:08:50.490 this aspiration that we have. 00:08:52.980 Then you lay outthe logic, what must 00:08:56.010 be true for that all towork out the way we hope. 00:09:00.330 Go do it, and watch andtweak as you go along. 00:09:05.050 That may feel somewhat moreworry-making, angst-making 00:09:10.630 than planning, but I wouldtell you that if you plan, 00:09:16.900 that's a way toguarantee losing. 00:09:20.140 If you do strategy, it givesyou the best possible chance 00:09:25.210 of winning. 00:09:27.000 -->