Archive - 23/03/2015

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What is the difference between Strategic Planning and Business Planning?

What is the difference between Strategic Planning and Business Planning?



I get a lot of calls and email from people asking me questions about strategic planning. After the first few minutes of conversation or reading the email it becomes clear that many people are talking about a business plan when they refer to a strategic plan. So, I thought I would discuss the difference between the two.

Planning is planning, but a strategic plan has a quite different purpose to a business plan.
Usually a strategic plan is an internal document that provides an overall direction for a business that looks out over a longer timeframe than a business plan. I explain it by calling it a “helicopter view”, that is, you provide a view of the topography your business operates in, you identify your current position and you identify where you want to go, and you provide a broad “strategic” direction of your desired path to get there. There are very few details for a number of reasons.
Firstly because of the longer timeframe many details that you require to make detailed plans are unavailable. Then the purpose of a strategic plan, to set strategy, does not require detail but rather needs to identify key strategic issues that the company will face over 5 to 10 to 20 years, and the strategies it will use to get there. In my helicopter analogy, you know you want to go east – you do not at this stage need to know which of 5 available roads you will take.
A business plan on the other hand should be prepared to cover a shorter timeframe, from 1 to 5 years. Since it is expected to contain some more detail about the actual steps you will need to take to implement your strategy, the inputs that will affect your decisions need to be more predictable, hence the shorter timeframe. Logically then, you may formulate a 10 year strategic plan, then follow up with two sequential 5 year business plans.

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