Planning is one of the most fundamental managerial functions, but it is just the first step. If an organization wants to thrive, it has form a strategy.

Fremont, CA: The terms ‘Plan’ and ‘Strategy’ are used interchangeably in organizations. Even though the meanings of the words are quite similar, they are fundamentally different. Organizations must understand the difference between a plan and a strategy as they each have strengths and purposes, and they aren’t interchangeable. While strategies involve a blueprint for gaining competitive advantage, plans are the second-level goals in the hierarchy. For instance, even though the eye-ware sector is 400 years old, a company developed a strategy to design cheap, almost unbreakable, and lightweight plastic lenses. Adopting this strategy gave the company a competitive advantage over other eyeglass manufacturers.     

A complex strategy consists of several small plans. In continuity with the eye-ware example, the manufacturer had to find out the perfect material that was tough enough for daily use and soft enough at the same time for grinding to the correct magnification. Further, the makers had to locate and design the equipment, buff the lenses, make a contract with suppliers, advertise the new invention to the public, and finally find outlets to sell the products. Thus, each small plan of the strategy had a separate goal to accomplish.

A plan is useful when staying well organized and on-track is the highest priority. A plan provides the correct direction to follow, with milestones to reach the goals in an orderly fashion. A plan increases the transparency of work, stability, and eliminates false confidence. Furthermore, it leaves no room for assumptions. A strategy, on the other hand, plays center stage when collaboration, innovation, and creativity are of the utmost importance. An effective strategy is open to debate from every direction, embraces the right questions, and creative answers.  With channelized thought processes and continual momentum, the goals are effectively reached.

An organization might plan to launch a new product with comprehensive research, design, manufacturing, product placement, and marketing. However, the customers decide whether it is a winning product or not. On the contrary, a business team with a strategy applies lessons learned from the past to eliminate faults earlier in the product development process. The business team will use innovations throughout the design and manufacturing process and foresee to determine whether customers will want the product or not. Lastly, they will form creative marketing techniques to ensure a winning outcome. Organizations begin with a plan but always develop a strategy to achieve success.

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