Over the last few decades while consulting as a business and marketing strategist and working with business owners, CEOs, corporate board members, and executives, I’ve frequently witnessed the difficulty executives have understanding the difference between strategy and tactics.
More often than not it seems business people think they have a strategy rather than actually having one. What they truly have are some short-term, task-based “plans” to deal with a few situations.
Understanding distinction is crucial so an organization thrives and doesn’t become irrelevant – irrelevance equals extinction.
A company without a strategy is like a ship without a rudder, compass, sails, a GPS system or maps. No wind blows in favor of a ship so ill-equipped to be sea-worthy.
With that in mind, it’s perplexing why so many companies spend so little time developing their strategy.
Far too many executives spend a couple of days a year at an off-site retreat/strategy session only to lose sight of any progress they made, and fall right back into their old habits of “putting out fires” and reacting to what’s happening around their company.
Losing sight of an organization’s primary purpose results in the failure to formulate and emphasize the compelling vision, which over time, makes that organization considerably less strategic.
This tendency is prevalent in companies with complacent executives who are fine with the status quo.
Conversely, it’s just as prevalent in companies in industry niches that are rapidly growing, where undisciplined executives develop “shiny object syndrome” – get distracted, and chase after some of the numerous tactical ‘opportunities’ of which they’ve recently become aware – the outcome of this type of overreaction is tactics in search of a strategy and causes organizations to veer off course.
Comparisons Between Military Strategy and Business Strategy
During the 5th Century BC, the Chinese general, military strategist, and philosopher, Sun Tzu authored, “The Art of War” – writings that have greatly influenced military strategy and impacted military thinking for centuries. In addition, the foundational concepts have been applied to competition between companies in the business world for decades, and even made their way into pop culture.
You may remember the fictitious character, corporate raider Gordon Gekko in the 1987 film, “Wall Street” when he told his young pupil, Bud Fox, “I don’t throw darts at a board. I bet on sure things. Read Sun Tzu, The Art of War. Every battle is won before it is ever fought.”
Sun Tzu wrote, “Strategy without tactics is the slowest route to victory. Tactics without strategy is the noise before defeat.”
Strategy and tactics go hand-in-hand in order for organizations to achieve their goals – one won’t work without the other.
Strategy is the game plan on what the company’s defined objectives are and how those objectives are going to be achieved. This is where the company plans to go and what path will be taken to get there.
Tactics are the specific actions that will be taken across the entire organization to reach milestones along the way to the end result, or to reach the desired outcomes – the defined objectives. These are the actual steps that will be taken on that path.
Developing a strategy is difficult. Perpetuating that strategy is even more difficult.
You may already be thinking about the significant opportunity costs associated with confusing strategy with tactics, and how bogged down companies become trying to implement one or the other due to the fact they don’t grasp they are two completely different things.
Think about the tremendous waste of time, money, resources, and energy that occurs within organizations when their tactics are mistakenly thought of as strategy.
Unfortunately for the confused company, this happens more often than one may expect as they proceed in the wrong direction.
On the other hand, competing against these types of companies can be advantageous for other players in the industry niche that have a clearly defined and sound strategy, and tactics laid out to be executed upon adroitly.
Michael Porter on Strategy
While earning my MBA, the most rigorous and intellectually stimulating course I was required to take was professor Michael Porter’s Harvard Business School course, “Microeconomics of Corporate Strategy and Competitiveness.” Since the death of the great business thinker, Peter Drucker in 2005, Michael Porter has emerged as the predominant expert on strategy. In fact, when it comes to business writings about strategy, Porter is cited 5-times more frequently than the next closest thought leader.
Porter contends that failures of leadership result in the majority of problems companies experience – companies are often run by managers rather than actual leaders – the difference between the two is considerable.
In his course, Porter teaches how strategies are frequently undermined from within companies due to the self-inflicted pain brought on by their executives who cause the strategies to fail. This is often due to internal processes that are so rigid they actually inhibit strategic thinking and execution.
Porter asserts that when it comes to competing the most flagrant of all blunders is when a company goes down the exact same path as the other companies in the niche that are all striving to be the best and think that by some means, the results they achieve will be better than their competitor’s results.
This level of confirmation bias is perplexing, yet prevalent.
Other confirmation biases stem from having a focus that’s too inward-looking, which is extremely common – the overestimation of the company’s strengths. Many executives mistakenly think of operational effectiveness as a strategy.
What Companies are Good at Isn’t Their Competitive Advantage
It’s natural for a company to build on their strengths. Although, with companies overestimating their strengths in mind, attempting to build a strategy around those perceived strengths is a mistake.
The actual strength regarding strategy formulation must pertain to things a company can do better than their competitors. Just because a company is good at something doesn’t mean their competitors aren’t just as good at it – they may be better – or even much better. This goes back to making the conscious decisions that pertain to conveying value by performing activities that are different than competitors or performing comparable activities in dissimilar ways.
Marketing is Not a Strategy
Firstly, as a long-time business and marketing strategist, please understand this isn’t meant to be the least bit critical of the complex applied science known as marketing – I’m a big proponent of utilizing best practices in all aspects of marketing.
Marketing is often misunderstood, under-valued, and under-utilized. However, excellent marketing is vital for business success.
That said, even world-class marketing must have a strategy that revolves around both how “purpose-built” value is conveyed to customers, and the exclusive formation of actions and events that will most effectively provide that value to customers.
While absolutely vital, there’s nothing intuitive about this component of strategy, as establishing a competitive advantage requires providing unique value via a unique value chain. That can mean either performing activities that are different than competitors or performing comparable activities in dissimilar ways.
It’s always better to be market-driven than sales-driven.
Yet, if a company is purely market-driven, has precise insights into what customers want, need, and value; is consummate at capturing the attention of potential customers, and generating levels of interest that lead to desire and purchase intent, how can the company be successful without the ability to actually deliver unique value?
Slaying the Myth That Bigger is Better
There’s danger in the ‘bigger is better’ way of thinking because it sounds very good, and mistakenly becomes the basis of the strategy without considering the company’s economics to defend the whimsical rationale. Porter explains that no systematic evidence exists to serve as an indicator that leaders in any given industry are the most profitable or successful corporations in their industry.
Similarly, strategy is confused with growth-related goals like hitting X billion dollars in top-line revenue, or being acquired by a certain date on a calendar. On their own, objectives are not a strategy.
To formulate a good strategy that increases profitability, companies must contemplate the intentional cohesive decisions that specify what they must do to attain performance superior to that of their competitors, and define how they’re going to achieve that exceptional level of performance.
In conclusion, remember that strategy describes the goals and how they’ll be attained, and tactics describe specific actions that will be carried out along the way and what will be needed to execute on the strategy.
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