A Plan Is Not A Strategy

One of my first corporate roles often involved strategic planning across several departments and teams. And while there were many unknown variables, reducing uncertainty was crucial to achieving our plans. Whenever I wasn't entirely sure or convinced that a plan would work, one of my mentors reminded me that "hope is not a strategy."

While I understood why he would say this, it took me a while to digest and dig deeper into its meaning and the thought process involved in replacing hope in my strategy.

What is strategy, anyway?

Often, team leaders and managers who are faced with the monumental task of creating or developing a strategy tend to think in a linear manner and end up writing recipe-style, step-by-step descriptions on corporate-approved project templates that include a series of tasks seeking to achieve the stated goal.

At its peak, Yahoo could have bought an unknown search engine called Google, but the strategy was to focus on Yahoo kids. Blockbuster could have acquired a DVD shipping business called Netflix, but its strategy was to open more stores. The legacy airlines sought to keep their market share and add more flights. At the same time, a small carrier wanted to go after a completely different customer, replacing Greyhound as a more effective method of transportation around Texas. Southwest Airlines was profitable for 47 years in a row, while many of the legacy carriers (Easter, PanAm, TWA, and others) are no longer in business. There are countless more cases, big and small. 

Strategy challenges current models, even the most profitable ones because it leads to imagining the ideal future. Changing the status quo and creating a conceptual vision of a world where your most profitable product or service is no longer the norm will hurt many sensitivities, egos, and feelings.

Strategy expands the market, not just shrinks the current market share.

Strategy is about making bold choices. It's about defining a vision and working your way backward.

Planning is about managing current resources. It's about focusing on the present to move forward.

Strategy leads from the future. Planning responds to the present.

Stephen R. Covey, in "7 Habits of Highly Effective People," defines the difference between leadership and Management as follows: "Management is a bottom-line focus: How can I best accomplish certain things? Leadership deals with the top line: What do I want to accomplish?"

Management is doing things right; leadership is doing the right things.

Mr. Covey envisions the difference between these two as a group of producers cutting their way through the jungle with machetes. The producers, the problem solvers, are cutting through the undergrowth, clearing it out.

The managers are behind them, sharpening their machetes, writing policy and procedure manuals, holding muscle development programs, bringing in improved technologies, and setting up work schedules and compensation programs for machete-wielders.

The leader is the one who climbs the tallest tree, surveys the entire situation, and yells, "Wrong jungle!"

But how do the busy, efficient producers and managers often respond? "Shut up! We're making progress."

How would you be able to determine you're in the wrong jungle?

It seems easy enough: Imagine the future and work your way backward.

(Sigh)

However, defining a vision is not daydreaming. It is hard work. It is not about a fork in the road. It's about carving a new path.

When there is no path, the path is made by walking.

However, let's state the obvious – if the future is all but certain, then the starting point of strategy is uncertainty, immediately dismissing most strategies as unpractical. Therefore, strategy can't be based on developing certainty about the future.

In most cases, the vision is not a defined landscape portrait. It's closer to a Picasso. It must be observed, evaluated, criticized, and examined from several perspectives and angles. From afar. And yet, the answer may not still be clear or unanimous.  

While each strategic move differs for everyone, some approaches can still help define it.

The "Blue Ocean Strategy" states that the business universe consists of two distinct kinds of space: the red and the blue oceans. Red oceans represent all the industries today—the known market space, where all the competitive rules are acknowledged and well understood. The goal is to capture more of the current market share in a zero-sum game.

Blue oceans refer to all the industries not in existence today—the unknown market space—where demand is created rather than fought over - and the growth opportunities are rapid and profitable.

A study of business launches found that 86% of new ventures were product extensions, and only 14% were geared toward creating new markets or products. These line extensions accounted for 62% of revenues and 39% of profits. Yet, these 14% delivered 38% of revenues and 61% of total profits.

The Blue Ocean Strategy states several principles:

-Strategy is not about technological innovation: cutting-edge technology may be involved in the development of strategy but is not the defining feature;

-Both incumbents and new entrants can often create great strategies within their core industries;

-Traditional units of strategic analysis - company and industry - are wrong; the most appropriate unit of analysis is the strategic move.  

In a Blue Ocean strategy, there is uncontested market space; competition is marked as irrelevant; creation and capture of new demand are at its core; cost trade-off models are broken, and the alignment of the company's activities is toward the pursuit of differentiation and low cost.

That last tenet is crucial for success: Rejecting the conventional wisdom that a trade-off exists between value and cost, it embraces the vision that successful companies can simultaneously pursue differentiation and low cost.

When Reed Hastings and Ted Sarandos visualized their company's strategy around streaming, they made a bold choice: they did not invite anyone from the DVD division to their meetings, even though 100% of their revenue came from DVDs. They knew that the compromises demanded would cause the strategy to fail.

Blue Ocean Strategy is an innovative way of rethinking strategy. What will it take to break free from the status quo and create your growth, Captain?