Difference between a plan and a strategy

Note: now is the time to suspend the building of your own cognitive model and think about a model that applies to a community.

In previous chapters, we dealt at length with the distinction between cooperation and collaboration. It took up much time because it was apparent, from the reactions of the review readers of this book that the idea of people collaborating together without having to be in agreement or having a common goal is not intuitive and therefore a difficult proposition to accept.

It seems that ingrained into our culture is an opposition to individuals having independence. This makes it difficult for many people to fully come to terms with any system that does not tie people together through some form of rules - whether those rules are explicit , or, tacitly rely upon some form of ethical standards. This presents a problem for the application of Game Theory because this doesn't recognise any universal rules, particularly if they are artificially imposed. That is not to say that Game Theory opposes such rules, it's just that Game Theory does not necessarily take them into account.

In a stable and predictable environment, Game Theory strategies seldom conflict with established rules and procedures because rules and procedures are generally arrived at as a consequence of previous practical experience. As Game theory is also based upon building from previous experience it is not surprising that there is little conflict.

The difficulty arises in new and unfamiliar environments where conventional rules and procedures start to break down. Then, a Game Theory strategy might have considerable divergence from the accepted way things are normally done. This is particularly noticeable when it comes to the concept of planning. Just as there is a reluctance to accept that collaborative activity can allow independence, so, there is a reluctance to abandon the long proven practice of careful planning.

Plans and planning, as understood in the conventional world of business management, are a subset of strategies. They are a particular type of strategy that can be used in reasonably predictable environments. In Game Theory, these would be called algorithms rather than strategies. Both strategies and plans (algorithms) are sets of rules or lists of instructions. They guide actions in order to achieve goals or objectives.

An algorithm or plan is used where the route to a goal can be specified as a sequence of logical steps; it is where a full path to the goal can be written down as a list of instructions or detailed in a contractual document. The simplest algorithms might be a set of instructions to use a piece of electronic equipment, or, the assembly instructions for its construction. Such algorithms are used when all information necessary for reaching a goal is available.

The perfect example of an algorithm is a computer program. This consists of hundreds, perhaps thousands or even millions of instructions that cover all contingencies that will enable a computer program to perform its intended purpose. It will use conditionals (i. e., if this, do that... or do something else) as a switching mechanism to allow alternative possibilities to be built into the program. It will use logic gates (i. e., if this is true and that is true do this; if that is false and that is true do this) for decision making - using tests for true or false to determine alternative sequences of instructions to carry out. It will use repeat loops to keep repeating a sequence of operations until some criterion is met. This is the basis of all computer programming and the fundamental structure of all algorithms and structured plans.

Business plans also fall into this same category. They are a set of specific procedures that will contain conditionals, logic gates and repeat loops. They will be able to deal with predictable forms of uncertainty by providing alternatives and contingency plans. This allow estimates and predicted events to be included in the algorithms.

The main characteristic of algorithmic plans, is that one way or another there is a specified goal and a specified route to reach that goal however tortuous or complex. Specific instructions can be written down, progress monitored and checked. Everyone involved can be given a fixed role and a specific task to carry out. The efficiency by which people do their job, or the way in which the algorithm performs, can be assessed and measured.

Most conventional business will prefer algorithmic plans because they are based upon tangible specifications that bring some form of order and control to a project or enterprise in a form that everyone involved can understand and agree upon. For the purposes of this book we shall refer to all algorithmic type strategies as plans - procedural plans, that are worked out in advanced based upon anticipated or predicted events and circumstances. These are the type of strategies that are fully covered by all conventional management books.

Unfortunately, algorithmic type planning is not appropriate for the fast changing, uncertain world of e-business. There is too much uncertainty and too many unknowns for any preconceived plan to have any reasonable degree of reliability. Contrary to the view that any plan is better than no plan at all, structured planning in the world of e-business can often be a handicap. Thus, in place of conventional planning, we have to use the Game Theory concept of heuristic strategies.