Virtual Roundtable – Summary of Discussion on the Difference Between a Strategy and a Plan

The aim of the Beyond Default Roundtable discussions is to give practitioners in strategy and change an opportunity to share their experiences, challenge conventional wisdom, brainstorm ideas and network with peers who share the same interests and challenges.

In November 2022 a group of executives, consultants and academics met virtually to discuss the difference between a strategy and a plan. The discussion was led by David Trafford, co-author of Beyond Default and moderated by Chris Hallam, founder of CH Coaching Solutions.

As the Roundtable followed Chatham House Rules, the summary below only attributes information that is in the public domain.

Moderator: Welcome everyone. As many of you know these Roundtables are hosted by Formicio, a strategy and change management consulting and advisory company that David Trafford and Peter Boggis set up over 11 years ago. It’s also the home of Beyond Default, a book on strategy and change that David and Peter co-authored.

I thought a good place to start today’s discussion is to ask David what he sees as the difference between a strategy and a plan, and additionally why should anyone really care?

David: Thanks Chris and welcome everyone. Let me answer your latter point first. I do think there are some essential differences between a strategy and a plan, and I think these distinctions are important. They’re important because if we don’t understand these distinctions we’re in danger of muddling the work that we do and causing confusion. Then we’re in danger of calling our work a strategic plan, simply because we don’t know whether it’s a strategy or whether it’s a plan. All too often I see leadership teams fall over themselves through the imprecise use of language, so that’s why I think it’s important to get a greater level of clarity on the difference between a strategy and a plan.

Moderator: We probably should care about it from what you say because it actually does make a difference in the real world, in the sense that if leadership teams don’t use precise language they end up doing the wrong things in the wrong order, or conflating two problems and solving neither, so that answers my question why should we care. Would you share some of the distinctions.

David: Certainly. I think we all have a pretty good understanding of what a plan is and what it should contain. It should definitely define the outcome that you want the plan to deliver, whether that’s a new hospital, implementation of an IT system or delivery of a pop concert. It should also define the activities or tasks that need to be performed in order to achieve the outcome, along with the phasing of the activities. It should also define the dependencies between the activities as some will have to be completed before others can be started. It also needs to define the resources needed to execute the activities, whether they are materials, people or money. The risks and their mitigating actions should also be given, along with how stakeholders will be engaged. These are all the basic things that a plan should contain. In my experience, while most people know what a plan is, few are able to put a good one together.

Importantly, the purpose of a plan is to bring clarity on what needs to be done by when, and by whom. When we have that clarity it gives us the feeling of being in control, and when we feel in control we feel confident. That for me is the essential purpose of a plan.

Discussion: The only thing that I would add is that an important attribute of a plan is that it has a finite duration, in that it’s got a beginning and an end.

David: Agreed. If we now move to the definition of strategy and what it should contain it’s a little more difficult as different people have different views and opinions on what a strategy is, and thereby what it should contain. So, if it’s okay with you I’d like to share my definition of a strategy that’s based upon Beyond Default thinking. First of all, a strategy should define the default future of the organisation that the strategy is aimed at, which many of you will know is the place it will end up if its leaders take no action other than that currently planned. It should also contain an assessment of the exogenous and endogenous forces that are determining its current trajectory that’s taking it to its default future. All too often I see strategies where the context, that’s determined by these forces, is not considered. I believe that if you don’t understand the context, and equally importantly how it’s changing, you’re not able to make informed choices on what future trajectory to take. It should also give an assessment of whether the default future is acceptable or not. If it is acceptable then why, and if not, then why. If the default future is acceptable then there’s no need to develop a strategy. If it’s unacceptable then a strategy to put the organisation on a different trajectory is needed, which starts by defining strategic intent, which is what you want the organisation to be or become. It should also define what needs to change in order to transition to the target trajectory. To put it another way, what endogenous forces need to be strengthened, developed, established or acquired in order to ‘pull’ it onto its target trajectory. Equally, which endogenous forces, that are anchoring the organisation to its current trajectory, need to be weakened or eliminate. It’s important to remember that endogenous forces are those that originate from within the organisation and, as a result, are under management control. The approach to transitioning from the current trajectory to the target, whether that’s through implementation, where the organisation is ‘pushed’ onto its target directory, or operationalised, where people across the organisation ‘pull’ it onto the target trajectory is defined. Importantly, it should also summarise the strategic choices that have been made, where a strategic choice is one, that once executed, is difficult if not impossible to reverse or undo. All other choices are essentially planning choices that can be changed, albeit at a cost. Of course the strategy needs to be cognisant of the resources needed to execute and the risks of the strategic choices along with their mitigating actions.

That’s very much the Beyond Default definition of what a strategy is and what it should contain. I recognise that other people have different views. In our book Beyond Default we state the purpose of strategy is simply to figure out what needs to be done to change an organisation’s trajectory, from the one taking it to its default future to one that leads to an improved future.

Moderator: Listening to what you say makes me think that there are some areas where organisations don’t make the necessary distinctions. For example, when you talk about endogenous forces, in my world one of those would be change management capability. Often leaders don’t think about this and therefore it’s not part of the assessment of their capability and therefore not considered. The other thing I thought was interesting was disclosing the strategic choices that have been made. It’s like showing your workings out and making your choices transparent. I wonder how often we see leadership teams who are open enough to do that, to be really brave and say we’ve strategically decided to do this, and not this.

Discussion: The whole trajectory idea I love and I quote very often when talking with clients and others. However I do take a slightly different view to the role of strategy: it’s related, but it’s a slightly different viewpoint. For me a strategy as an assessment of the choices that you have to make to achieve an outcome, so I agree that choices are really important. For me if you’re trying to achieve an objective or an outcome it’s how you best use the resources and facilities that you have to win the game. That for me is the fundamental role of strategy. You could say it’s about assessing the endogenous and exogenous forces and deciding the right path. But for me strategy is about using your understanding of the big picture to select an optimal path to reach an outcome. If you can marshal the resources you have to win, that’s the role of strategy. Once you’ve decided what the best path is you then have your strategy implementation plan, which is how you operationalise and deliver it. I think it’s related to what David said, but I think it’s about choices. For me it’s less about the path.

David: What I’m doing is putting some detail on how you make those choices, what you need to look at and what you need to consider in order to make them informed, as opposed to ill-informed, choices. I believe that in order to make informed choices you need to understand the influence of the exogenous and endogenous forces and how they are changing. I make the distinction between exogenous forces, which because they originate from outside the organisation you can only respond to, and endogenous forces, which because they originate from within the organisation are under management’s control. Understanding the influence of these forces I believe gives insight and, as a result, better decision-making.

Discussion: I’d just like to explore what the previous speaker said about resources. My question is whether it’s about assessing the resource you have, or the resources you need in order to deliver a target outcome? Should a strategy be about defining a target outcome and then shaping the resources needed, or about deciding what you can do with the resources you’ve already got?

Discussion: That’s a very good call-out, thanks. You’re right, it’s not about resources it’s actually about capabilities. It’s about what capabilities we have today, what capabilities we need and the level of maturity they need to be to successfully execute the strategy.

Moderator: I wonder whether organisations are good at assessing their capabilities or whether they over-egg them based on a fictitious track record of what they’ve done before? Do they say that they’re going to be better at it this time without actually assessing their capabilities?

Discussion: What I often see is a strategy that’s led, or ‘framed’, by a financial plan where a budget is given at the outset, rather than based upon what’s needed to succeed.

Discussion: I don’t see much difference between what David and the previous speaker were saying, what I see is alignment in terms of the starting point and the steps needed to create the desired outcome. It is about choices, but what I understand David is saying is that if you don’t map out your trajectory to your desired future and assess the influence of the exogenous and endogenous forces, you’re likely to still end up with your default future.

Discussion: Lots of organisations have a set of objectives that they try to drive towards. I think it’s about being conscious about the path you’re going to take and why, rather sleepwalking to that future. I agree that it should be a conscious path. Whether you call it a trajectory or a set of options that’s the bit that’s often missing my experience.

Discussion: I think it’s really interesting comparing and contrasting David’s earlier description of a plan compared with a strategy. I see one common point being the stakeholders. When you’re communicating and implementing a strategy you’ve got a number of really important stakeholders and you need to be really sensitive that they all understand the terminology you’re using and the trajectory you’re taking.

David: Yes, that’s an important point. Another distinction between a strategy and a plan is that when you’re developing a strategy, particularly at the beginning, there’s a lot of ambiguity, there’s a lot of uncertainty and it’s not immediately apparent what the solution should be, or what choices should be taken. This often results in CEOs and other senior stakeholders getting very nervous. All too often it’s wrongly assumed that leaders have all the answers, so developing a strategy shouldn’t take any time at all. But developing a well-thought-through strategy does take time, and the process can be uncomfortable. The risk is trying to remove this discomfort by moving to planning too early. The reason is that having a plan leads you to believe that you’re in control, which in turn gives you comfort. One of the big distinctions between a strategy and a plan is that even when you’ve developed the strategy there is no certainty that it will be successful. When you’ve developed a plan you believe that, assuming it’s executed correctly, it will deliver the target outcomes. So the difference between a strategy and a plan is: firstly, their purpose is different; secondly, the choices and decisions made are very different and have different levels of certainty; thirdly, the information they contain is quite different.

Moderator: What I think is interesting about what you say, from my point of view, is that it speaks to the human condition, the notion that most humans move away from pain rather than towards pleasure. That they are broadly speaking risk averse and seek comfort and reassurance from a plan that makes everybody feel that they’re moving forward rather than staying in the uncomfortable space of uncertainty, ambiguity and risk. I end up working with individuals who, in common language, ‘bottle it’ too early and jump to the plan. As a consequence they end up with something very suboptimal. If they were self-aware enough to stay uncomfortable for longer they would end up with a far better outcome. It’s interesting that what you say plays to the human condition around risk aversion.

Discussion: It’s seen as the safe and acceptable face of leadership action. That’s why I like ‘strategic intent’ because when I talk to people about leadership I often ask them what’s their intent as the leader? They often can’t answer that because they haven’t really thought about it. If they had a strategic intent it would align with their actions as the two would be in the same space, trying to achieve the same thing.

Discussion: I’m enjoying the discussion as it’s helping me to clarify a few things. My question relates to timescales. One of the questions I’m often asked when involved in developing a strategy is, what’s the timescale? I find I often dodge the question by saying it’s obviously not this year. In doing that I’ve made the assumption that you couldn’t jump to the desired state tomorrow. I think the answer to my question is that it depends upon the delta between the default future and the desired future. The time that it takes to execute that may be years, or a matter of days or weeks depending on the nature of your business and the amount you’re willing to spend on the change. Thinking about the strategy that David helped us with, while it seems to be taking an awfully long time to execute what occurs to me is that it doesn’t really matter as long as we’re on our strategic trajectory. The timescale is not a major risk for us, but if you’re in a situation that’s time limited then it would be important.

David: I’d like to make a couple of comments, firstly that the previous speaker’s organisation doesn’t have a plan, but it does have a clear strategy. What it’s doing is operationalising that strategy by engaging people in pulling the organisation onto its target trajectory. What I’m observing is that more and more people are getting engaged and doing stuff aimed at realising the strategic intent. But there’s not one big plan, it’s a number of initiatives aimed at pulling the organisation onto its target trajectory. It’s a good example of an organisation that’s got a strategy for achieving its strategic intent but doesn’t have a plan per se, which I think is a positive thing.

My second comment is about timeline. Many of you know that I prefer to talk about strategic intent rather than visions or end-states because I think the purpose of strategy is to change an organisation’s trajectory overtime. To illustrate my point let’s imagine I’m a CEO of a legacy bank that wants to become a truly digital enterprise, like one of those challenger banks we hear so much about. Many banks have tried this and failed because they don’t have a clear vision of what being a truly digital enterprise really means and they focus too much on short-term planning. Another example is the UK Government’s aim to digitise the National Health Service, a laudable intent but not one that can be achieved in the immediate term via a single plan. In 2013 they tried to do this with patient records. The project was eventually abandoned and about £10 billion written off. At the time they didn’t understand what digitising patient records really meant and as a result the plan was too complex to succeed. What’s important in these situations is having a strategy that transitions your organisation to its target trajectory overtime.

Discussion: If stakeholders are more comfortable with a plan than a strategy, how can we make the strategy, or strategic intent, more interesting?

Discussion: From a physiological point of view I’m not sure it’s about making it more interesting. I think it’s about whether the individuals are prepared to be vulnerable enough to fail publicly amongst their peers because that is the reality of being in an uncomfortable space where you’re stretching an organisation and trying to do something strategically that they’ve never done before. Also, if your default trajectory is so unacceptable it should feel uncomfortable. It shouldn’t be an easy or interesting exercise, it should feel really uncomfortable.

Discussion: In my experience it’s a long journey from a strategy to a plan, they’re not as close as everyone seems to think. For me the layer that sits between them is, and I’m going to use some old language here, enterprise architecture, blueprints and designs. Once we know what the default future is, and we know what the desired future is, we can build pictures of what we need to create. Once we understand how much of that picture has already been implemented it gives us insight into how the plans can be made much better. What I see in most organisations is too much focus on strategy and not enough focus on planning. People who do planning need to focus more on the end-goal and then work back from that. What most organisations say is ‘that’s too difficult’ so let’s crack on and see where we get to in a couple of months. We’ll then move it about a bit if we’re not going in the right direction. And then it all goes wrong. In my view most plans fail because the end-goal is incorrectly analysed. Furthermore, most organisations don’t do product-based planning so they don’t actually know what it is that they’re aiming for, they think they do, but they don’t. Also, most strategy work is complicated by the fact that organisations think it’s about the future, when actually it isn’t. It’s about now, it’s about the choices we make today that will get us on a trajectory to the desired future, while recognising that the exogenous forces at play, including things like competitor actions could change our whole analysis of how we need to respond.

David: In chapter 7 of Beyond Default we talk about going from strategy to execution via a stage called design. It’s when design choices are made about the organisation you’re going to build, which includes enterprise architecture. These are design choices not planning choices and some of those choices are strategic in that if you get them wrong they are very difficult, if not impossible, to reverse or undo. This is particularly the case when we’re talking about creating the digital enterprise. For example, a past client’s strategic intent was to be a digital challenger bank. Unfortunately they jumped straight into planning and made some wrong choices on the technology platform they were going to use. They are now on their third generation of digital technology in eight years! The issue was that they didn’t spend enough time ‘designing’ the digital bank. This was partly due to the Board not understanding what being a digital bank really meant. As the result the digital technology they initially chose may have been appropriate 15 years ago, but not in today’s digital world.

Moderator: What you’ve done there is to introduce a bit of scaffolding that connects the strategy with the plan.

Discussion: There’s an interesting disconnected or dichotomy forming in my head. If we talk about the behaviours of human beings and look at what strategies often are, which is about creating a compelling future and telling people what they could get, they don’t recognise that they are deployed or implemented by human beings. The question is, is that the wrong way round? Furthermore, I see a difference in success between sports teams and organisations. Why are sports teams generally better at being a collective unit than organisations? I wonder if it’s a result of the incentives and understanding of the single unifying common purpose that you see in sports teams. It’s the whole piece about if, as human beings, our default nature is to be more fearful of loss than excited about gain, is strategy the wrong way round? The other thing that organisations do very poorly is aligning incentive measures with the behaviours and outcomes needed in order to deliver the strategy. So for me we have this dichotomy where we’ve got to get better at putting in place measures and outcomes that flip I’m happier where I am because I’m more worried about what I might lose out on and fear of the future, to what I might gain.

Moderator: There’s a lot of change management theory around this. Kotter’s principles come to mind where the first step is to build a ‘burning platform’ for change; the compelling case for doing something different. My comment on sports teams is that often we’re a great team on paper, but they make us play on grass every week. It’s that difference between the reality and the planning. The fact that we’re made to play on grass every week screws us up because we’re no good at running on grass. So while you can simulate stuff you actually have to do it and build a track record of success. I also think the rewards are a bit more binary in sport than they are in organisations, where they are more nuanced.

Discussion: My question relates to a previous point about how to get leaders interested in the hard work of strategy and confronting their default future. I’m reminded of a three-day workshop I ran for 40 people from a financial services company. While there was no disagreement about the disruptive nature of the default future, the participants – all wealthy executives in the latter years of their careers – didn’t want to rock the boat. Also, I recently did a behavioural survey for a major home appliances company and the divisional head was shocked to see that achievement of people didn’t matter. What mattered was not rocking the boat, not causing conflict and not risking their careers. So, how do we get people connected to a joint purpose that’s more than just surviving with a lot of money for their retirement? How do we help them open up to each other and go beyond pretending to be successful all the time? How do we get them to admit that they are not in control and admit that they’re afraid and don’t know what needs to be done to achieve a better future?

Discussion: In my view if I don’t get significant disagreement when running a strategy session, I start to really worry. When everybody completely agrees on a strategic choice it implies that people are not looking widely enough or have different viewpoints. I think that healthy disagreement around a strategy is probably a good thing because it opens up viewpoints to things they haven’t considered before. Taking the easy path is not always the right path. This is really uncomfortable for a lot of people and I think it comes back to what David said earlier about the difference in outcomes between a strategy versus a plan. For me the outcome of a strategy is a hypothesis, the outcome of the plan is a deliverable. For a lot a people just having a hypothesis means they don’t have a strategy, but that’s all it is. You have an idea about what’s going to win that has to be tested and the risks validated. A lot of people are really uncomfortable with the outcome of the strategy being a hypothesis, but that’s what it is, a hypothesis.

Moderator: Organisations have built everything that they do in terms of measuring executive success around certainty, rather than their ability to manage ambiguity and uncertainty. They don’t have the necessary KPIs or measures, so they don’t incentivise people to be vulnerable.

David, I’m conscious that as we have about three or four minutes left it would be good if you could draw the strands together for us.

David: I think it’s been a very good discussion that’s helped to clarify some of the distinctions between a strategy and a plan. I certainly think we’ve put more substance around these distinctions, which is very positive. Only by keeping to these distinctions will we avoid the muddled thinking and confusing language that we see so much of. I’d like to leave you with one final request and that is please never use the term ‘strategic plan’. If your plan is important then call it an important plan, but don’t call it a strategic plan. We all have a duty to be disciplined in our use of language. Thanks again for participating in an excellent discussion.

Moderator: I think we could, and probably will, come back to this topic in other ways. Looking forward, our next Roundtable is scheduled for 9 February 2023, where we will be discussing whether capabilities are the key to successful strategy. We hope to see you then. Thanks again for joining us and goodbye.

Note: This is a summary of the discussion that has been condensed and edited for clarity.

Please email David if you have any points that you would like to raise.

More articles, blogs, podcasts and videos are available on the Beyond Default Resources page.