I was inspired to write this article because of two entirely unrelated things that happened very recently. The first thing that happened was that a potential client contacted us about reviewing and potentially rewriting his business plan that was to be utilized in an effort to raise capital. This prospect was a U.S. subsidiary of a European company. When I reviewed his “business plan” what I found was an old fashioned strategic plan that you might have seen in the 80’s and that was totally inappropriate for its intended purpose.
The second thing that happened was a fairly negative article that appeared in The Wall Street Journal titled, “Strategic Plans Lose Favor.” I actually agreed with the substance of the article but that’s not the point. The point is that business people continue to confuse business planning and strategic planning, even to the point of sometimes combining the terms into something called “Strategic Business Plan.” I don’t know what a strategic business plan is but I do know the difference between a strategic plan and a business plan and I would like to clear up the differences right here and right now.
A strategic plan is an internal, highly proprietary document that should never be seen by anyone outside of an enterprise. A strategic plan is all about how a company competes in the market place. Given that simple statement, would you like your competitors to see your strategic plan? Of course not! The strategic plans of the 80’s were static 5 year planning documents that were typically dated by the time the CEO signed off on it. Today’s strategic plans are written for the purpose of reacting faster to customer needs and demands. In our faster paced business environment, today’s strategic plans must change weekly or monthly so that decision making is tied to evolving sets of market driven facts.
A business plan, on the other hand is a document that is intended to be used internally and externally to communicate a company’s vision and how it intends to achieve that vision. Sure business plans are confidential. You don’t want your competitors to see your business plan either. Business plans should be used internally so that everybody on the proverbially fast moving train knows the direction the company is headed and how it will get there. Business plans are intended to be used externally by lenders, investors, partners, suppliers, potential hires and anyone else that a company needs to communicate with.
I hope that this clears up any confusion between the two types of planning documents.
Photo: Johnny Goldstein
About the Author, Jimmy Lewin
