Strategic thinking and strategic planning are related, but they are two distinctly different activities. First, let’s look at the definitions.
Strategic Thinking: Strategic thinking is an intensified exploration of strategy from new directions that create new concepts. It’s a thinking process, an exploration process, and a discovery process.
Strategic Planning: Strategic Planning is a planning process that determines how the organization will operate by identifying the specific tasks, the schedule, and how to measure success.
In simple terms, strategic thinking determines the “what” and strategic planning focuses on “how” to achieve the “what.”
Contractors far too often make the mistake of jumping into the planning process too soon. They do this in part because they are more comfortable with planning. After all they have a great deal of experience planning projects. When contractors are handed a complete set of construction document it makes sense for the contractors to immediately being to plan how they will construct the project because the project has already been defined. However, that is not always the case. For example, on a design-build project the design-build team must start by strategically thinking about the project. In essence, they must define the project in terms of the client’s needs and budget. It’s not good enough to simply define a building in terms of some generic type. The design or the building’s definition must incorporate the client’s specific and often unique needs and how best to achieve them before anyone can begin to plan the construction process. In essence, the team must determine “what” needs to be built before moving on to “how” to build it. In other words, a good design doesn’t stop with a generic type of building, such as an office building but further defines the building around the specific needs of the client. Don’t be confused by the fact that during design-build efforts, both designing and planning go on at the same time, but the planning is restricted to the elements already defined. The team merely doesn’t wait until all designing is completed before beginning to work on the plan.
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When contractors create their business strategy, the same rules apply. Instead of describing a generic construction company, contractors must explore from a variety of perspectives what services they are selling, what makes their clients different, and how they differentiate themselves from their competition. Failing to take the necessary time to perform this critical strategic thinking and jump into the planning phase too soon usually result in the contractor just tweaking its current business plan. Instead of analyzing “what” it should be doing, the contractor merely extends what it has already been doing and simply adjusts some of the financial figures. Unfortunately, the figures tossed around are more of a wish than anything derived from any hard research or thinking. In the end, contractors that don’t differentiate themselves from their competitors usually end up competing on price; instead of value.
Which is More Important: Strategic Thinking or Strategic Planning?
It’s not a fair question because both are needed. It like asking which is more important, knowing where we are going or having a means of travel to get there? Of course, you need a means of transportation, but if you don’t know the destination you are completely lost.
Peter Drucker has written that managers do things right while leaders to the right thing. This concept can be applied to companies also. The leading companies focus on doing the right things. In business terms that means they have the right strategy, which will only occur if they take the time to do the necessary strategic thinking. Of course, what’s needed is doing the right thing the right way. However, unless you start with the right thing you have no hope of achieving that goal.
Therefore, from that perspective, strategic thinking is more important because unless you first identify the right things to be done, you will remain stuck in the world of low-cost bidding. Even contractors forced to compete in the design-bid-build arena must have the right strategy. That enables them to compete based on their knowledge and experience to bring in a lower cost to win the bid, instead of just the lowest price.
Peter Drucker wrote in The Practice of Management, “Because the purpose of business is to create a customer, the business enterprise has two – and only two – basic functions; marketing and innovation.” Innovation is what allows you to differentiate your business from your competition and innovation comes from a thinking process, an exploration process, and a discovery process, just like strategic thinking. Daniel Pink wrote in The Whole New Mind, “For business, it’s no longer enough to create a product that’s reasonably priced and adequately functional.” In other words, today it’s essential for contractors to provide outstanding value by delivering better solutions for their clients and differentiating themselves by the value they deliver enabling them to avoid competing solely on price.
This goal can only be achieved by first developing a sound strategy through strategic thinking followed a by the completion of a strategic plan on how to achieve the desired strategy.
Ted Garrison; president of Garrison Associates, is a catalyst for change. As a consultant, author and speaker; delivers his Construction 3.0 Strategies that offer breakthrough solutions for the construction industry by focusing on critical issues in leadership, project management, strategic thinking, strategic alliances and marketing. Contact Ted at 800-861-0874 or Ted@TedGarrison.com. Further information can be found at www.TedGarrison.com.