In order to focus a company’s efforts, a strategy must lead to a concentrated allocation of resources and talent on a macro level. But also it must align the (operational) decision-making in the company on a micro level. Both are necessary. Without alignment, a concentrated deployment of talent and investment is meaningless (well-deployed people doing random stuff). And if the operational decision-making is aligned but talent and investment are not deployed in a concentrated way the strategy lacks impact (people doing the right stuff but not enough of them).

Unfortunately, achieving focus while ensuring alignment can be tricky. Focus is generally achieved by less. The clearer and more single-minded a thought is the better it focuses. One sentence focuses better than two. Alignment, however, works the other way around. Because understanding is the key to alignment: the better you can explain something the better you can give the “why” to a decision, the more you can illuminate its background, the better you will be able to align the thinking and decision-making of others.

We really need to talk about strategy.

Having a strategy is almost universally hailed as a business necessity. Nobody wants to be caught running a business without a strategy, right?

So one would expect that a subject with so much significance is well-researched and defined and that there is somewhat of an educational standard for it. But that is not the case.

There is simply no broad agreement neither on the concept of a strategy (what is a strategy?), the purpose of a strategy (what does a strategy do?) nor the embodiment of a strategy (what does a strategy document actually look like as an organizational artifact). A lot of excellent management and leadership books leave the subject out entirely, or only touch it in an incidental fashion and with confusingly varied positioning of the topic ranging from purpose to planning. Also the relationship between a strategy and a plan – two very different things as I argue here – is unclear.

There are a lot of ways to think about what an organization is and how it operates. I don’t think that one is right and the others are wrong. What is important though is that any organizational development, any work on the organization itself, is based on an organizational strategy. Because improving an organization is a complex task and a strategy is the best way to deal with complexity. It is simply not possible to plan organizational change because you don’t control the people of which an organization consists. You can plan actions but you cannot plan the reactions. So instead, leaders must decide on an approach that they believe will have the biggest positive effect on their organizations, try it, observe, and adapt. They must decide on an organizational strategy.

Compared to the foggy use of the term strategy, the concept of a plan seems familiar and straightforward. Everybody knows what a plan is, right? And at first sight, a plan and a strategy have some things in common. Both look into the future. Both guide a company towards goals.

But here the commonalities end. A strategy and a plan are fundamentally different from each other in what they are concerned with and what type of problem they address (a) and how they affect the organization and interact with each other (b).