While the terms “strategy planning” and “strategic planning” are sometimes used interchangeably in casual conversation, they actually refer to distinct business management processes. Understanding the main differences between the two is important for organizations looking to leverage either discipline more effectively.

Strategy planning is focused specifically on developing competitive strategies related to a business unit, product, or key activity. Its purpose is to gain and sustain a competitive advantage against rivals in a particular market arena. In effect, strategy planning looks externally at dynamics like customer needs, supplier power, substitute offerings, and competitive differentiation to inform how the organization can win market share.

The output is an integrated set of choices regarding where to invest resources to outcompete other players in a well-defined business arena. Example strategy planning decisions involve choosing target customer segments, identifying differential value propositions, focusing R&D and innovation on key areas, developing a competitive pricing approach, and decisions on where to expand geographically.

In contrast, strategic planning takes a broader view to determine how the entire organization can achieve its vision, mission, and overarching objectives. That encompasses a deeper examination of the company’s internal capabilities, resources, operating model, culture, and structure. The output of strategic planning is typically a long-range plan spanning 3-5 years that charts direction for the whole organization.

While strategy planning focuses on a particular business sphere or unit, strategic planning sets direction for the entire enterprise. Strategic planning guides executive leadership on how to align the organization, allocate resources, manage change and risk, and measure success organization-wide. It results in big-picture decisions on organizational structure, needed capabilities, technological infrastructure, financial management, and other cross-cutting policies and initiatives.

In practice, strategy planning and strategic planning should work symbiotically. Strategic plans establish foundational organizational objectives and capabilities needed across all business activities. That guides strategy planning for particular units or spheres of the business focused on competitive differentiation and advantage. Likewise, strategy plans inform strategic planning decisions regarding organizational resource allocation, change initiatives, and risk management related to specific business arenas.

Aligning strategy planning and strategic planning enables both tailored competitive strategies and enterprise-wide coherence and coordination. The symbiotic interplay provides the strategic foresight and organizational alignment needed to sustainably outcompete rivals in key areas while dynamically adapting the broader enterprise for continued success.