The Plan vs. the Strategy

There's an old saying: “Never confuse hope for a plan.” It eventually took on another form: “Never confuse a plan for a strategy.”

We've all read quotes from an executive taking over a new organization saying: "I have a plan to turn things around."

We've all read quotes from a coach before a big game saying: "We have a great plan to win this game."

But a plan is different than a strategy. And unless a leader completely understands these nuances, the desired results will likely not be attained.

Roger Martin, the former dean of the Rotman School of Management at the University of Toronto, has written extensively on the differences between strategies and plans.

Using Southwest Airlines as his example, Martin explains that it based its business model on a strategy: A desire to go against the conventional airline wisdom of a hub and spokes. Southwest essentially wanted to replicate the Greyhound Bus business, only using airplanes.

It would use just one style of plane, offer cheap fares, and go to different cities that were not all interconnected, thus allowing passengers to get to their destination without making two or three stops. This strategy allowed Southwest to cut costs free of travel agents.

Many in the airline industry laughed and thought Southwest would go out of business within years.

But it didn’t — and soon, other airlines were adopting its model.

Southwest wasn’t planning for a future event. It began with a strategy that it thought could win the game — posing three critical questions that differentiated plan from strategy.

1. What is our objective? For Southwest, it was bringing the Greyhound Bus business to the air.

2. How can we use our assets to make our objective work? Southwest asked, what can we do differently that will ensure our success? It eliminated travel agents, which raised the fees, and it didn't serve food on planes.

3. What tactics do we need to install to achieve the goal? Southwest sold itself as a no-thrills airline, which doesn't mean the cheapest prices.

Once we understand the difference between planning and strategy, we will produce better results.