Every business owner should include both strategic and tactical planning as part of the business plan development efforts. Yet there are some important differences between the two. Here are the major differences between strategic and tactical planning:
Strategic planning
The essence of strategic planning is to focus on the long-term. Strategy involves taking into account the overall market conditions, as well as what conditions are likely to be like in four to five years from now. Strategic planning may also consider larger changes, such as industry regulation and proposed rules changes, as well as the probable decisions of those within complementary industries, such as suppliers, or alternative options for customers. Proper planning also identifies the underlying assumptions made as part of the business plan. If it is later found that these assumptions are not true, then the plan should be modified. The more likely an assumption is to be faulty, and the greater the impact, the more time which should be spent both developing alternatives in the plan, as well as considering other opportunities which may emerge. At its core, strategic planning answers the question: What business are we in?
Tactical planning
The essence of tactical planning is a focus on the short-term. Tactics involve accepting a basic strategy, and then finding a way to execute that strategy well, by changing short-term behaviors and goals, within the time frame of a year or less. While tactics are more subject to change based upon day-to-day events, and the consequent feedback received, they generally do not question the underlying assumptions as strategic planning does. Repeated tactical challenges can reveal gaps in understanding in the strategic planning, yet better tactics can generally not resolve these gaps alone. For this reason, if changing tactics does not get the business back on track quickly, then the problem may be a strategic one instead. At its core, tactical planning answers the question: How does our business operate, to achieve desired results? (more…)