ANNOUNCER: HBR On Strategy.
HANNAH BATES: Welcome to HBR On Strategy, case research and conversations with the world’s high enterprise and administration specialists, hand-selected that can assist you unlock new methods of doing enterprise. Today, we carry you a dialog with one of many world’s main thinkers on technique – Roger Martin, former dean of the Rotman School of Management on the University of Toronto. In this episode, you’ll study the distinction between technique and planning AND the way to escape the widespread traps of strategic planning. Martin says beginning with a plan is reassuring to many people, nevertheless it’s a horrible option to make technique. His episode, known as “A Plan is Not A Strategy,” initially aired as a part of the HBR Quick Study video collection in June 2022. Here it’s.
ROGER MARTIN: This factor known as planning has been round for a lengthy, very long time. People would plan out the actions they’re going to have interaction in. More not too long ago, has been a self-discipline known as technique. People have put these two issues collectively to name one thing strategic planning. Unfortunately, these issues should not the identical, technique and planning. So, simply placing them collectively and calling it strategic planning doesn’t assist. What most strategic planning is on the earth of enterprise has nothing to do with technique. It’s acquired the phrase, nevertheless it’s not. It’s a set of actions that the corporate says it’s going to do.
We’re going to enhance buyer expertise. We’re going to open this new plant. We’re going to begin a new expertise growth program. An entire record of them, and all of them sound good, however the outcomes of all of these should not going to make the corporate pleased as a result of they didn’t have a technique. So, what’s a technique? A method is an integrative set of decisions that positions you on a enjoying area of your alternative in a approach that you simply win. So, there’s a concept. Strategy has a concept. Here’s why we ought to be on this enjoying area, not this different one, and right here’s how, on that enjoying area, we’re going to be higher than anyone else at serving the purchasers on that enjoying area. That concept needs to be coherent. It needs to be doable. You have to have the ability to translate that into actions for it to be a nice technique. Planning doesn’t should have any such coherence, and it usually is what folks in manufacturing need– the few issues they need, to construct a new plant, and the advertising and marketing folks wish to launch a new model, and the expertise folks wish to rent extra folks– that tends to be a record that has no inner coherence to it and no specification of a approach that that’s going to perform collectively some purpose for the corporate.
See, planning is kind of comforting. Plans usually should do with the sources you’re going to spend. So we’re going to construct a plan. We’re going to rent some folks. We’re going to launch a new product. Those are all issues which might be on the fee facet of companies. Who controls your prices? Who’s the client of your prices? The reply is, you might be. You determine what number of sq. ft to lease, what number of uncooked supplies to purchase, how many individuals to rent. Those are extra snug since you management them. A method, however, specifies an end result, a aggressive end result that you simply want to obtain, which includes prospects wanting your services or products sufficient that they’ll purchase sufficient of it to make the profitability that you simply’d prefer to make. The difficult factor about that’s that you simply don’t management them. You would possibly want you might, however you’ll be able to’t. They determine, not you. That’s a tougher trick. So which means placing your self out and saying, right here’s what we consider will occur. We can’t show it prematurely, we are able to’t assure it, however that is what we wish to have occur and that we consider will occur. It’s a lot simpler to say, I’ll construct a manufacturing unit, I’ll rent extra folks, et cetera, than I’ll have prospects find yourself liking our providing greater than these of rivals.
The difficult factor about planning is that whilst you’re planning, likelihood is a minimum of one competitor is determining the way to win. When US air carriers had been busily planning what routes to fly and da-da-da, there was this little firm in Texas known as Southwest that had a technique for profitable. And at first, that seemed largely irrelevant as a result of it was tiny. What Southwest Airlines was aiming for was an end result.
What they wished to be is a substitute for Greyhound, a far more handy option to get round at a worth that wasn’t terribly a lot larger than a Greyhound bus. Southwest stated, all people else is flying hub and spoke. They have hubs, and they fly hub and spoke. We’re going to fly level to level in order that we don’t have plane ready on the bottom since you solely become profitable whenever you’re within the air.
We’re going to solely fly 737s, one form of plane, in order that our gates are arrange for these, our programs are arrange for these, our coaching, our simulations are arrange. We’re not going to supply meals on the flights as a result of we’re going to concentrate on brief flights. We’re not going to e book via journey brokers. We’re going to encourage folks to e book on-line as a result of that’s inexpensive for everyone and extra handy. So, their technique ended up having a considerably decrease value than any of the main carriers in order that they might provide considerably decrease costs.
Because it had a approach of profitable, it acquired greater and then greater and then greater and then greater and greater and greater and greater till it flies essentially the most passenger seat miles in America. The main carriers weren’t attempting to win in opposition to each other. They had been all enjoying to play, as I say. They had been enjoying to take part, possibly purchase extra planes, get extra gates, possibly develop some, not having a concept of right here’s how we may very well be higher than our rivals.
And that was tremendous till any person got here alongside and stated, right here’s a option to be higher than all people else for this phase. And in order that phase then goes. It’s gone. And the primary enjoying to play gamers should share a smaller pie that’s left over after Southwest takes no matter share it desires.
If you’re attempting to flee this planning entice, this consolation entice of doing one thing that’s snug however not good for you, how do you begin? The most necessary factor to acknowledge is that technique can have angst related to it. It’ll make you’re feeling considerably nervous as a result of as a supervisor, likelihood is you’ve been taught it’s best to do issues that you could show prematurely.
You can’t show prematurely that your technique will succeed. You can take a look at a plan and say, effectively, all of these items are doable. Let’s simply do these as a result of they’re inside our management. But they gained’t add as much as a lot. In technique, you need to say, if our concept is true about what we are able to do and how the market will react, this can place us in a wonderful approach.
Just settle for the truth that you’ll be able to’t be excellent on that, and you’ll be able to’t know for positive. And that’s not being a unhealthy supervisor. That is being a nice chief since you’re giving your group the possibility to do one thing nice. The second factor I do is say, lay out the logic of your technique clearly. What must be true about ourselves, concerning the business, about competitors, about prospects for this technique to work?
Why do you do this? It’s as a result of you’ll be able to then watch the world unfold. And if one thing that you simply say is within the logic that must be true for this to work will not be figuring out fairly the best way you hoped, it’ll permit you to tweak your technique. And technique is a journey, what you wish to have as a mechanism for tweaking it, honing it, and refining it so it will get higher and higher as you go alongside.
Another factor that helps with technique will not be letting it get overcomplicated. It’s nice if you happen to can write your technique on a single web page. Here’s the place we’re selecting to play. Here’s how we’re selecting to win. Here are the capabilities we have to have in place.
Here are the administration programs. And that’s why it’s going to realize this purpose, this aspiration that we have now. Then you lay out the logic, what should be true for that every one to work out the best way we hope. Go do it, and watch and tweak as you go alongside.
That could really feel considerably extra worry-making, angst-making than planning, however I’d inform you that if you happen to plan, that’s a option to assure shedding. If you do technique, it provides you the absolute best probability of profitable.
HANNAH BATES: That was Roger Martin — Professor Emeritus and former Dean of the Rotman School of Management on the University of Toronto. That video is a part of the HBR Quick Study YouTube collection – brief takes on large matters in enterprise and work. It was edited and produced by Scott LaPierre, with video and animation by Dave Di Iulio, Elie Honein, and Alex Belser. More HBR Quick Study movies will be discovered on YouTube or HBR.org. HBR On Strategy shall be again subsequent Wednesday with one other hand-picked dialog about enterprise technique from the Harvard Business Review. In the meantime, we have now one other curated feed that it’s best to take a look at: HBR On Leadership. And go to us any time at HBR.org, the place you’ll be able to subscribe to Harvard Business Review and discover articles, movies, case research, books, and after all, podcasts, that may make it easier to handle your self, your groups, and your profession. This episode of HBR On Strategy was produced by Anne Saini, and me, Hannah Bates. The present was created by Anne Saini, Ian Fox, and me. Special due to Maureen Hoch, Adi Ignatius, Karen Player, Anne Bartholomew, and you – our listener. See you subsequent week.
