I observe that people and organisations often confuse strategy and tactics. One might well ask, “Does it matter?” I believe it does.
To explain why, let me begin with definitions of strategy and tactics which are not prevalent in business textbooks and dictionaries.
Typically, the definition of strategy reads something like, “Long-term action plan for achieving a goal.” The emphasis is on long term, actions and goal.
The definition of tactics reads something like, “A planned action for a particular purpose”. The emphasis is on actions and purpose.
I prefer to think of strategy as a set of principles that considers how to use all of the reinforcing and opposing influences in a particular environment to achieve an outcome. It is the outcome and the consideration of all the influences which are the most important.
I prefer to think of a tactic as a set of actions or tasks to achieve a single goal, with no consideration of a wider set of consequences.
A carefully considered strategy is less likely to have unintended consequences. A tactic may well have unintended consequences.
To further illustrate let us consider a sales strategy. The strategy to increase sales by 35% in two years (outcome) is a lowest cost strategy (strategic intent). Not a customer service strategy or a customer value strategy or a market share strategy, but a lowest cost strategy.
The goal and the strategic intent make it clear, the reinforcing and opposing influences (principles) to consider.
They include, but are not limited to:
- High volume will lower fixed costs per unit
- The lowest prices for the same quality will increase relative market share
- High advertising costs will increase fixed costs
- Low advertising levels will reduce sales
- A wide range of models will increase costs
- A narrow range of models may reduce sales volume
- Long supply chains will increase costs
- Delivering exactly what solves consumer problems without over-servicing or under-servicing will result in the most appropriate cost
- High labour prices will increase fixed and variable costs
- High levels of automation will increase investment and fixed costs
- Satisfied staff will be productive
- It may cost more money to have satisfied staff
Working out what combination of these principles works to deliver the appropriate outcome of the least cost amongst competitors, is a strategy.
The strategy may well be comprised of a series of tactics, each designed to reach a particular goal. For instance:
- Manufacturing of components which are readily available in the marketplace is outsourced
- A direct model of distribution is used
- Each product is to recover its fixed and variable costs and make a 30% margin within two years or be removed from the product portfolio
- Sales people are put on a 40% salary, 60% bonus incentive scheme
Understanding the difference between strategy and tactics is important because people are indoctrinated over their working life to believe that strategy is long term. People are reluctant to change strategy. Organisational inertia sets in around strategy. Mostly, this is for a good reason. No-one wants to change strategy often.
However, when strategy and tactics get confused and people see a tactic as a strategy they are equally reluctant to change it.
In our above example, if we see outsourcing of common components as a strategy and do not change this tactic when we find that although the costs are low, the quality is also low we may lose sales volume. Our strategy was to increase sales volume by having low costs. It was not to lose sales volume by having poor quality as a result of outsourcing.
I have seen organisations where this very debate has been had. Outsourcing was seen as the strategy rather than a tactic to get a quality product that exactly solves the customer’s problems at the lowest cost.
When environments change, people and organisations which are stuck at the tactical level also usually miss the opportunities the changed business environment produces.
A good way of determining whether you are stuck at the tactical level with what you believe is a strategy is to do some “what if” testing using a PESTLE analysis. A robust strategy will withstand significant changes in the external business environment. A collection of tactics will not.