Differentiating between strategy, plans and results
AG Lafley, former CEO of Procter & Gamble, gives his commentary on his friend and colleague, Roger Martin’s, articles. Using his vast experience in the world of business, AG describes the key takeaways you should get from these articles and how this information is vital to keep in mind when building or operating your own business.
My co-author of Playing To Win and strategy consulting partner for more than a decade at P&G, Roger Martin, has published two important and closely related articles, Stop Letting OKRs Masquerade as Strategy and Strategy vs. Planning: Complements not Substitutes.
Each article describes a different common practice at many companies, namely planning and Objectives and Key Results (OKRs). The former is used in a broad range of companies: public and private, small, medium and large, for-profit and nonprofit. The latter is commonly used in technology companies.
Both are fine and helpful complements to strategy that enable an organization to execute its Playing to Win (PTW) strategic choices. Plans address specific projects, specify deliverables/results, and include budgets, timelines and responsibilities while action plans help organizations get things done. OKRs set objectives — generally “big, audacious goals”— and then specify key results that will be tracked and measured. On the positive side, key results also specify desired outcomes or results.
However, in most cases, plans and OKRs become substitutes for strategy. Worse, plans and OKRs may have nothing to do with strategic choices that enable winning through choices that drive uniqueness/difference, create sustainable competitive advantage and result in superior value creation.
Leaders skip the hard thinking and tough decision making required to make the five coordinated and integrated choices that position their company to win: what is winning, where to play (WTP), how to win (HTW), must have core capabilities and enabling management systems. Without clarity about winning and mutually reinforcing choices, plans and key results are arbitrary. They are random activities that may or may not deliver winning business and financial results.
Plans and key results are often based on benchmarking and focus on doing what competitors do better— not on doing what the company should do differently to better serve customers, gain sustainable competitive advantage and deliver more value. Worse, plans and OKRs are based on the desires of the leader, or even knee-jerk reactions to industry trends or exhortations to combat the moves of a competitor. Programs of the month or even the year are not strategy, and certainly not PTW strategy.
LTW leadership is built on a foundation of PTW strategy. Understanding the difference between strategy, plans and key results is critical to improving business performance, your organization’s performance and your individual chances for success. Roger’s articles shed important light on the difference between strategy, plans and results.
