Strategy and strategic plans: How they differ and why it matters
- Strategy defines the long-term direction for the enterprise by describing what success looks like and what needs to be done to achieve that success.
- Strategic plans cover the midterm horizon and describe how the strategy will be executed by identifying the roadmap of initiatives necessary to deliver the strategy.
- Operational plans define the projects, programs and products required in the short term to deliver the initiatives identified in the strategic plans.
The strategic planning process must cover all three horizons, as they serve different purposes.
Strategy defines the long-term strategic ambition and focus of the enterprise
Strategy defines what the enterprise will do to compete and succeed in its chosen markets or, for the public sector, it describes what the enterprise will do to successfully fulfill its mission.
In this horizon, the enterprise will also define what functional leaders need to do to contribute to enterprise success. The strategy horizon typically covers a period of three to five years. However, this may be longer for certain sectors or industries.
Strategic plans define how strategy will be realized over the midterm
Strategic plans describe how the enterprise will realize its long-term ambitions. They identify the roadmap of initiatives and portfolio of investments that will be required to achieve the objectives defined in the strategy.
Strategic plans will be created for the key business domains such as IT, marketing and supply chain. For example, the strategic plan for information and technology will define the target architecture needed to deliver the strategic actions defined in the strategy, and the required target IT operating model. It will also identify the roadmap of initiatives and investments that will be required to reach those targets and execute the strategy.
Operational plans cover the short-term execution
Operational plans identify the projects, programs and products required to deliver the initiatives identified in the strategic plans. They are focused on the execution of the changes required to realize the enterprise’s strategic ambition. Operational plans are usually closely related to the enterprise’s budget process and are not, therefore, typically affected by the same confusion as strategy and strategic plans.
Operational plans normally cover a period of six to 12 months.
Stay alert to disruption during strategic planning
It’s critical to scan and respond to trends and disruptions that could impact your strategy and strategic plans and change your strategic assumptions.
Strategic planning cycles should incorporate mechanisms, including scenario planning, to vet assumptions for relevance.
Ignoring or devaluing trends and disruptions can result in you overlooking threats and opportunities that could affect your value proposition and competitive positioning.
