Strategic planning versus strategy formulation

HR Perspective with MEMORY NGUWI

I HAVE been involved in strategy for­mulation for many years, and one thing has become painfully clear to me: most organisations waste far too much time and resources on strategic planning in­stead of real strategy formulation. The default approach that many companies follow is to treat strategy as a set of activ­ities neatly written down in a document, complete with timelines, people respon­sible, and resource requirements.

This process often begins with a strengths, weaknesses, opportunities, and threats analysis and a few other stan­dard frameworks before moving straight into crafting so-called strategic objec­tives that are really just a list of things to get done. While that might be useful for organising work, it is not strategy formu­lation. It is simply planning.

The problem is that when people confuse the two, they end up executing plans that have no real strategic founda­tion, which is a waste of both effort and opportunity.

True strategy formulation is a com­pletely different discipline from strategic planning. It requires deeper thinking, sharper choices, and a willingness to wrestle with uncertainty. Strategy for­mulation is not about producing a list of tasks or vague aspirations like reducing costs or increasing customer satisfaction. Those are operational aims, not strate­gies.

A real strategy is a set of integrated choices designed to compel customers, partners, and even competitors to act in your favour. It demands clear answers to two core questions: where will we play and how will we win? These choices must be concrete, specific, and capable of guiding the entire organisation’s ac­tions in a unified direction.

The hallmark of a genuine strategic choice is that the opposite choice would not be obviously foolish. For exam­ple, if a company decides to target the mid-market segment rather than high-end corporate clients, the alternative of going after the high-end could still be a valid and potentially profitable decision for another business. That makes it a real choice.

By contrast, claiming your strategy is to improve customer satisfaction is meaningless because the opposite — deliberately making customers unhappy would never be rational. Such statements may sound positive, but they are not stra­tegic; they are simply basic expectations of any competent business.

The reason so many organisations default to strategic planning rather than strategy formulation is that planning feels safe. It creates the illusion of prog­ress because you can assign tasks, set deadlines, and track completion rates. It avoids the discomfort of making trade-offs and saying no to certain markets, products, or customer segments. It is also easier to measure the execution of activ­ities than it is to measure the success of a strategic position, which may only be­come clear over the years. Yet this com­fort is deceptive, because planning with­out the right strategic foundation means you may be working hard to implement the wrong ideas.

The cost of confusing planning with strategy is significant. Without true stra­tegic choices, companies dilute their fo­cus, spread resources too thin, and miss opportunities to outmanoeuvre compet­itors. They can end up with beautifully designed plans that are disconnected from any source of real competitive ad­vantage.

I have seen organisations spend months producing thick, glossy strate­gy documents that fail to shift the com­pany’s market position one inch. They might create a sense of busyness and alignment in the short term, but they do not change the game in the market.

Real strategy formulation requires a very different kind of process and a different kind of people. It starts with framing the high-stakes challenge or op­portunity the organisation must address. It involves identifying real alternatives rather than comparing a good option to an obviously bad one. It means answer­ing where to play and how to win in a way that defines the exact markets, cus­tomer segments, or geographies you will focus on, and the precise approach that will allow you to win there. These choic­es must be integrated so that they rein­force one another and align with the or­ganisation’s capabilities and systems.

Most importantly, strategy formula­tion demands the involvement of your very best thinkers, the people capable of creative, analytical, and integrative thinking. They must be able to challenge assumptions, debate rigorously, and ex­amine evidence from both the market and the organisation’s own data. It is not an exercise in filling in templates or pro­ducing impressive slides; it is thinking work, and it is often messy, uncomfort­able, and iterative. But when it is done well, the results are powerful because the organisation has a clear direction that in­spires confidence and drives coordinated action.

Strategic planning has a role, but it should only come after you have a sound strategy to plan for. Planning without a real strategy is like mapping out the perfect road trip without ever deciding on a destination. You may travel quick­ly and efficiently, but you will have no guarantee that you will end up anywhere worth going. The real value lies in mak­ing those tough, deliberate choices about where to compete and how to win, and then building the plan to deliver on those choices.

If companies invested as much ener­gy, brainpower, and resources into for­mulating real strategies as they do into producing plans, they would find them­selves with far stronger market positions, more coherent operations, and a greater ability to adapt to change.

The next time your organisation em­barks on a strategy process, pause and ask yourself: are we making real strate­gic choices, or are we just making plans? If the answer is the latter, stop, bring your best people together, and do the hard work of thinking. Decide where to play. Decide how to win. Make choices that truly matter. That is strategy formulation. That is how you create something worth planning for.

l Nguwi is managing consultant at In­dustrial Psychology Consultants (Pvt) Ltd. Email mnguwi@ipcconsultants. com

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