Project versus Strategic Planning
Strategy is one of those concepts we vaguely understand, until someone tasks us with coming up with a definition for same. Then you will hear terms like “long-range planning”, or “high-level planning”, or even “something that happens beyond my pay grade”. In a way, they are all right, but the concept itself is still elusive.
Here at Velopi, when we started to develop our Program Management Essentials and Program Management Professional (PgMP)© Exam Preparation courses, we recognized strategy and strategic thinking as key concepts for anyone interested in this area. Since Program Managers start life as Project Managers, the easiest way we found to get the concepts across was to relate them to project planning.
If you consider a typical project, the first time we hear about it is when the Project Charter is written. We might, as Project Managers, be called in to assist in developing the charter, but the project will not get to the formal planning stage unless the powers that be – the board of directors, or the portfolio planners – give it the nod.
Then, during our planning work, we might encounter different ways of achieving the project’s goal and we will have to agree an approach with the external stakeholders and the project team. Even at that stage, we still have to convince the sponsor that our proposed budget and schedule are reasonable and that the amount of risk associated with the project is acceptable to the organization.
In other words, we need to have consensus before we start into the execution phase of any project. Similarly, once the project is up and running, everyone benefits in some way. The project team gets paid and gains experience during the effort and the stakeholders will get a product, service or result at the end. So, believe it or not, project planning is all about having consensus and providing benefits.
Consider instead the situation where you are managing a football team. Your goal is to win the next match. To do this, you will study the opposition and decide which team to field in order to overwhelm them on the pitch. You will train that team in set pieces that will play to your team’s strengths and exploit the opposition’s weaknesses.
Unfortunately, there is another manager doing the exact same level of planning and this is the crucial difference: the football match is what is called a “zero-sum” game: for your team to win, the other team has to lose. So, your team will line out on match day with a strategy in mind. If you have decided the opposition is weak, you will choose strong forwards and base your strategy around racking up as high a score as possible. If you rate the opposition as strong, you might adopt a more cautious approach.
However, as soon as the whistle blows, all your preparation could be blown out of the window. The opposition might play an entirely different game to what they did previously. Your approach to the game might not work in the face of real opposition. At this point, the effective manager, will adapt the strategy on the fly and make changes to reflect the emerging situation. The problem is, the other manager will see what you are up to and react accordingly as well. Whoever finds an unanswerable strategy wins.
It is the same in business. If you have devised the proverbial better mousetrap and you decide to enter the mousetrap business, you will need to acquire market share. There are several ways you can do this: You can adopt the Ryanair model and enter as a cost leader: We will give you the same as the others, but at a significantly lower cost. You can put yourself forward as a product leader – very likely if you have a better mousetrap. This is the approach Apple takes, for instance. Finally, you can target a niche in the market and tailor your product or service to cater for that niche specifically.
Whatever approach you take the existing mousetrap manufacturers will react. Our strategic planning must take this into account. However, the drawback with strategic planning is that we have no idea what this reaction will be. This is the rationale behind Eisenhower’s quotation: “plans are useless, but planning is indispensable”. A strategic plan is great until the opposition or the competition reacts. Then all bets are off. However, if you have taken the time to consider possible reactions, you can roll out Plan B and then Plans C to Z. It is like playing chess: after every move, the battlefield must be re-evaluated and the next move made in this context.
Many self-made organizations are content with a certain market share. They want to make a living out of their business but are not greedy for world dominance. Sadly, these companies often fall victim to hungry newcomers, who also want market share and will try to seduce your customers with better prices, better products or better service. How will you react?
Established organizations can be proactive or reactive. Proactive concerns are always looking for sharks in the water. They maintain their R&D investment to ensure that their products and services remain attractive in the marketplace. They also keep an eye on costs to ensure that they are not becoming fat and complacent. Alternatively, you can wait until a competitor emerges and then study the new chessboard before deciding on a strategy. Sadly, with so much disruptive technology emerging, this approach can often be too late.
A sobering example of this is Eastman Kodak. This company weathered the digital camera revolution successfully. It developed its own range of digital cameras and even created machines that could read digital memories and print out digital pictures, giving customers the best of old and new. Having achieved this, Eastman Kodak was blown out of the water by the Smartphone. If you are in the market for a holiday snaps type camera, why bother when you have a perfectly adequate camera in your phone?
So the acts of project and strategic planning are the same. However, what happens when you implement your plans is radically different. A project plan is a product of consensus and is designed to create universal benefits; a strategic plan is asking for trouble. We are going to do something that will provoke a reaction; the trouble is, we cannot predict what that reaction will be. To be successful, we need to be able to cope with it.