How does [strategic] thinking differ from planning?

The leaders of two different companies contacted me this week to ask if I could facilitate a corporate strategy session for their organisations. Both are both respected, long-standing participants in their respective sectors. One is currently updating its strategy, and the other has some concerns over the performance of an important business unit:

• Derry*: The board and CEO have recently reviewed business performance, conducted an environment scan, identified options and developed a draft strategy. The request from the CEO is to facilitate a joint board/management session to challenge the assumptions; test linkages between purpose, strategic priorities and action plans; and, help the board reach the point of deciding whether to approve the proposed strategy or not.
  

• Terra*: The CEO is concerned about a steady decline in the fortunes of a business unit over several years. "We do good work, and customers like us, but we struggle to win new business. We seem to lack a differentiator." I asked about the purpose of the business as a whole, because steady decline over several years can be an indicator of a bigger problem. The CEO said that the rest of the business was doing well—the implication being that the corporate strategy is correct. It was his view that the problem is purely one of execution within the business unit.

While these two situations were quite different, they highlight an important dichotomy that seems to catch more than a few people out—the vital difference between strategic thinking and strategic planning, and the importance of doing both:

• Strategic thinking is the process of finding options. It's about the big picture, casting the net wide, to discover possibilities. It's not about solving problems or picking a winner.
  
• Strategic planning is the process of narrowing down options, of selecting the preferred one to achieve the business' goal, and of creating action plans. It's exactly about solving problems.

Derry has been through the thinking process and the planning process. Therefore, the discussion with the board and the CEO should be a real pleasure, because they have a context against which to conduct the debate. In contrast, the Terra CEO seems to have treated the troubled business unit in isolation from the rest of the company, and jumped to the conclusion that something is wrong within the unit. It could be, but I wonder whether the company has a bigger problem: whether the corporate strategy has some holes in it. Why has business declined? Is the once-strong market for the business unit's services still there? What part does/should the business unit play in the wider corporate strategy? The world may have moved on, so fixing a unit without grounding it in reality can be a waste of time and money. 

The process of thinking about the wider context, the market within which a business operates is vital. The temptation is to go straight into problem solving mode is powerful—everyone likes the satisfaction of having created a plan to solve a problem. However, this is rarely the best first step. My fear for Terra that any work on the business unit will simply paper over a bigger problem. I've suggested some questions for the CEO to ponder before he goes too much further. The next conversation will be very interesting. In the meantime, the Derry workshop is booked.

* Usual story: the company names have been changed, to protect the parties involved.