The Vital Distinction: Strategy First, Planning Afterward

By: Chad Person

As CPA firms gear up for a new year and engage in their strategic planning sessions, it’s essential to understand the critical difference between strategy and planning. While both are essential to success, they should not be confused or combined into a single process. 

 

The Essence of Strategy: Choosing Where to Compete and How to Win 

Strategy is the art of making intelligent choices about where to compete and how to win. It involves analyzing the external environment, identifying opportunities, and aligning resources to achieve long-term goals. Strategy is a forward-looking, outside-in approach that sets the direction for the organization. It’s about understanding the complex and rapidly changing landscape, where technological disruptions, regulatory changes, and evolving client expectations demand a nuanced approach. A well-crafted strategy empowers firms to make bold decisions, such as venturing into new services, adopting cutting-edge technologies, or redefining client relationships by identifying clear competitive advantages and areas for innovation. 

 

The Role of Planning: Translating Strategy into Action 

On the other hand, planning focuses on the logistical aspects of executing the chosen strategy. It creates a roadmap with forecasts, budgets, and blueprints, ensuring orderliness and discipline in the implementation process. Planning is an internal exercise that aims to provide predictability and control. It translates strategic objectives into actionable tasks, allocating resources efficiently and setting realistic timelines. Planning involves detailed risk assessment to navigate potential challenges without deviating from the strategic path and fosters collaboration across departments to align all team members with the firm’s goals. 

 

The Pitfalls of Combining Strategy and Planning 

However, combining strategy and planning into “Strategic Planning” can be detrimental. Evidence shows that it often leads to overemphasizing planning and neglects the essence of strategy, resulting in a mere 10 percent strategy and 90 percent planning. This balance is crucial; without the discipline of planning, even the most visionary strategy can falter. Yet, a strategy must guide the firm through uncertain terrains with agility to maintain relevance and competitiveness. 

 

Prioritizing Strategy to Foster Success  

The golden rule is prioritizing strategy and planning afterward to ensure success and foster an outside-in capability. By giving the strategy its due consideration, organizations can make informed decisions and set the right direction before diving into the logistical details. The interplay between strategy and planning must be dynamic, adapting strategies in response to new information or changes in the external environment. By respecting the distinct roles of strategy and planning, CPA firms can navigate the complexities of the modern business environment with confidence and clarity, ensuring vision and execution align to steer the organization toward its objectives.