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Businesses don’t often find success through blind luck or acting on instinct. Rather, success in business is the byproduct of a good strategy. Not only does a concrete strategy help a business solidify its direction, but it also helps boost efficiency and streamline the path to reaching goals.
In the business world, strategy is usually broken down into two parts — strategic thinking and strategic planning. They are two sides of the same proverbial coin. Strategic thinking and planning are fundamental components of an effective business strategy, enabling business leaders to clearly define their most important goals and the steps to achieve them.
To create a successful business, leaders should learn about strategic thinking and planning, understand the differences between the two, and implement best practices. Those who wish to learn about the concepts of business and the most in-demand skills are encouraged to seek an advanced education, such as an MBA degree.
What Is Strategic Thinking?
Strategic thinking is what business leaders consider the first part of a two-part business strategy development. Before a strategy can be planned, it must first be conceived. Strategic thinking is a concept that focuses on the development of new strategic elements and ideas that will inform the strategic planning phase. Some of the main components of strategic thinking include:
Brainstorming: The process of openly discussing business problems and potential solutions. The loose structure, inclusiveness, and “all ideas are welcome” mentality has proven to be an effective group method of generating a wide range of possible solutions.
Scenario planning: The process of examining a business scenario, identifying all possible actions the organization could take, and then itemizing all positive and negative potential outcomes. Scenario planning allows business leaders to see what could happen to their organization in specific situations.
Mediation: Sometimes two parties can’t agree on how to pursue a solution or determine which business problem is a higher priority. Mediation uses a neutral third party to help the two parties reach a decision or a compromise.
Although the concept of strategic thinking is multi-faceted, the overall rationale behind it has proven successful in helping companies create new ideas, develop unique strategies, and discover ways to gain a competitive advantage. Since strategic thinking is what ultimately informs the strategic plan, business leaders are meticulous in deciding which solutions and ideas best serve their organization’s long-term goals.
What Is Strategic Planning?
Strategic thinking helps clearly define the goals an organization wants to accomplish. Strategic planning, on the other hand, addresses the “how” of the matter. For instance, a company may surmise they must sell ten million units of their software by the end of the fiscal year to achieve their revenue goals. Strategic planning is the act of plotting the specific steps the organization must take to achieve that success.
The main identifiers of strategic planning include:
Mission statement: A concise explanation of an organization’s purpose and intent. For example, Google’s mission statement is: “To organize the world’s information and make it universally accessible and useful.”
Benchmarks: The series of smaller goals that must be achieved to hit the ultimate goal. For instance, an annual goal may be broken down into twelve monthly benchmarks, and each monthly benchmark may be broken down into a series of weekly benchmarks.
Timeline: Not to be confused with a deadline, a timeline plots the main benchmarks or milestones of the plan and assigns timeframes to each one. However, timelines are always subject to challenges that can throw off the schedule — such as a shortage of employees or the loss of a key partnership. It’s not uncommon for timelines to be reconfigured to suit the organization’s current landscape.
Another relevant aspect of strategic planning is tactics. If strategy represents the overall plan, then tactics are the individual actions necessary for the plan’s execution. For instance, a car company may use the tactic of offering a limited-time rebate on vehicles or increasing their pay-per-click marketing campaign budget to reach their end-of-year sales goal.
Further, there exists a subset of tactics known as analytical tactics, which is when an organization employs business analysis techniques to glean useful information that will help them reach their end goal. Examples of analytical tactics include SWOT (strengths, weaknesses, opportunities, and threats) analysis and gap analysis. These tactics are used to establish an organization’s competitive position and compare current performance to desired performance, respectively.
One final noteworthy detail about the concept of strategic planning is that it can be applied to the many different facets of an organization, such as finance or human resources. In fact, the strategic planning that occurs at the micro level usually serves the overall plan at the macro level.
Differences Between Strategic Thinking and Planning
Strategic thinking and strategic planning are both essential business concepts that help companies find success, but what are their core differences?
Keep the following in mind when differentiating strategic thinking and planning:
Strategic thinking is what informs the blueprint created during strategic planning. The order cannot be reversed.
Strategic thinking is broad and open to all ideas; strategic planning is precise and focuses only on ideas that are worth pursuing.
Strategic thinking addresses where the organization wants to go and the goals they want to achieve; strategic planning addresses how the organization will do that and when it will do that, based on a timeline.
Strategic thinking requires skills such as creativity, open-ended thinking, and problem-solving — while strategic planning requires organization, critical thinking, and risk management.
Strategic thinking is an ongoing process; strategic planning is bound by timelines.
Although these two concepts have several attributes that set them apart, effective leaders have designed forward-thinking strategies by using them synergistically.
Become a Strategic Leader
Strategic thinking and planning are two critical business concepts that top organizations regularly employ. However, the right individuals must be in place to guide their workforce through each phase, which is where strong leadership and business skills are most valuable. Those who aspire to learn the most in-demand competencies and skills are encouraged to find the right educational path capable of developing them.
Once the core curriculum has been completed, students will be able to select from a wide range of business concentrations, such as marketing, management, or data analytics. The business concentrations allow students to develop specific skills and knowledge that will apply to their intended career paths.
Learn more about the MBA program and discover how an advanced education can support your professional endeavors in business.