Strategy vs. Tactics: A Simple Definition
Many times people confuse strategy and tactics and use one word to mean the other and vice versa. To make the matters worse, a good number of small business owners do not spend enough time planning how they are going to succeed in business.
A big chunk of their time is spent in running the business. As a result, strategies and tactics are just words used to mean an overall plan. Let’s take a look at the real meaning behind each of these words and find out if they can be used to help improve business.
WHAT IS STRATEGY REALLY
Strategy can be defined as the plan of action that seeks to achieve an overall goal. It defines the approach that will be taken in achieving this specific goal. In simple terms, a strategy shows what you are trying to accomplish as a company and can be considered as the general direction that you intend to take with the goal.
Businesses normally have to deal with five types of strategy. Let’s discuss each of them and how they help in moving the business forward.
In every industry there is competition. To survive, companies have to ensure that their products and services are appealing to the consumers despite the wide range of options available in the market. This means that they have to regularly produce new products that are better than what is available in a bid to attract consumers to buy them. The product strategy is what is used here. An example is Microsoft and Apple. Both companies make money from the sale of software, but each one has its own different product strategy.
Microsoft works with computer manufacturers to design computers around their operating system and even sell some of them with this operating system preinstalled. After consumers buy the computers, Microsoft then sells them software to run on the operating system.
Apple on the other hand makes its own brand of computers and they all come with Apple’s operating system.
This one covers the overall operation of the business. The primary goal is to come up with a plan that enables the business to maximize profits while minimizing operational costs.
It could involve outsourcing some operations to avoid paying benefits to many employees, moving facilities closer to consumers to reduce shipping charges, choosing a more affordable working environment or a combination of two or more of these solutions.
This one is about the different pricing points that you can sell your product at to emerge at the top of your industry. It’s important to note that this does not necessarily mean selling at the lowest price in your industry like many businesses do.
There are businesses whose pricing strategy involves selling at higher prices because they have been able to convince buyers that the products come with a higher quality. Another pricing strategy would be offering a service as a paid membership over a period of time instead of a one-time payment.
Learn about the 3 pricing strategies you should know.
This one defines the overall marketing goal that the company will be trying to achieve. The goal here is to come up with a method that works for the company’s products, and the customers they are trying to attract. Depending on the customers’ demographic and their unique needs, companies will need to apply different marketing approaches to market their products.
Once again, let’s look at Microsoft and Apple. Microsoft focused their marketing on business tools like spreadsheet, database and email applications. Apple on the other hand was primarily concerned with graphic designers and people who produced graphic media. Unlike Microsoft that sought to maximize productivity, Apple was after enhancing creativity.
They donated products to schools to ensure that children learned computing using Apple products, hence they were comfortable on the platform which means that it was difficult for them to take up a different platform later.
Everybody constantly has more needs than the resources available. The same applies to business hence they have to come up with a strategy to make the best use of the available resources no matter how limited they are.
It may involve borrowing money, managing accounts receivable or even finding investors for different projects within the business. It could also involve a combination of the above.
DIFFERENCE BETWEEN STRATEGY AND TACTICS
Now that we know what a strategy is, let’s take a look at tactics. Tactics follow after you have defined your strategy. No business has all the resources necessary to operate optimally. This means that decisions will have to be made on what gets priority at any given time. This is where tactics come into play. They define how the business is going to prioritize different milestones in carrying out a specific strategy.
Unlike the strategy that is usually general, tactics are more detailed on the ways that the business will carry out the plan. This means that the specific actions that will be taken in implementing the strategy. You can employ several tactics involving a number of departments and individuals as part of a common strategy.
While both of these words in a broad way are used to mean the way things are done, there is a clear distinction between the two. In the business world, strategy is generally used to refer to bigger plans that will be used to reach a goal while tactics are more detailed in telling how the plan is going to be implemented.
Let’s look at an example. Say a company has just started producing snowmobiles. The overall strategy might be increasing availability and awareness about their snowmobiles and their features to consumers internationally.
One tactic would be a partnership with a motoring show like Top Gear to do an episode highlighting what these snowmobiles can do. Another one would be sponsoring a team in specific snowmobile races every year and having them use the company’s snowmobiles.
BENEFITS OF STRATEGIC PLANNING
Somebody once said that if you don’t know where you are headed, any road you take will get you there. A good business strategy ensures that you don’t fall in this mess by providing you with a clear vision of where you are going.
With this, it is easy to track the progress that you have achieved at any one time so that you can make any necessary adjustments to get back on track if find that you have gone astray.
Let’s look at benefits that you will get by having a strategic planning tradition in your business.
Establish your company’s direction
Strategic planning gives your company a uniform vision and goal that is shared by all members. It clearly defines the reason for the company’s existence and ensures that realistic goals are in place to achieve the company’s mission.
This means that it will be possible to measure progress and identify and reward any productive efforts made by employees.
Give you control
There are companies that are proactive and others that are reactive. The reactive ones allow things to happen to them and then they react to the occurrences. Proactive companies on the other hand are the ones that make things happen.
A good will-implemented strategy will make a company proactive, hence it will be one step ahead of the rest.
Better understanding of the company’s position
Any given business needs to understand its position in respect to its goals if it is going to make any progress. A strategy enables the management to better understand its current standing so that they can work out how best to get to the desired destination. This also means that employees have more commitment to the organization’s goals.
Identification of new opportunities
Regular reviewing of the business strategy requires a lot of creative thinking. This is because of the need to come up with solutions to new challenges that could have come up affecting the implementation of the original strategy.
As you try to find solutions to these problems, it’s common to find new ideas and opportunities that you can take advantage of to diversify your company’s portfolio.
Improved business performance
Businesses that have a strategy have better understanding of what they are trying to achieve both in the short and long term. This means progress can be tracked easily and as a result, it’s easier to plan to consistently move forward.
With a strategy, you will be focused hence chances of being distracted by other seemingly good opportunities are minimal. The result is better results that are delivered faster.
Promotes good communication within the organization
In order to arrive at a specific strategy for the organization, company executives have to weigh the options and evaluate the different approaches that the company can possibly take.
This is usually done in a series of discussions and debates where several people sit and talk about the direction that the company should take. Once a strategy has been formulated, there will still be regular sessions to track the progress and make any necessary changes.
As a result of these discussions, managers and executives develop good communication skills that ensure that a good flow of information in the company.
Better coordination within the company
Since the company’s priorities are clearly set, all departments will have to work towards achieving the same common goals. With this in place, departments tend to forge better working relationships because every one of them understands its duty towards the achievement of the company’s overall goal.
Faster and better decision-making
A good strategy makes managing a company easier because there are clearly defined goals that provide guidance for decision makers. Instead of making decisions that they think will be good for the company from their own judgments, decision-makers will have an end in mind when making the decisions.
As a result, they will pick the best way to achieve the end.
FORMULATING GOOD TACTICS FOR YOUR COMPANY STRATEGY
Tactics can make or break a company and its goals. With that in mind, it is important to ensure that you exercise caution when choosing the tactics to work with. This calls for tactical planning, which involves taking the company’s strategic plan and coming up with detailed action plans that usually define how the company will achieve smaller milestones usually divided by department.
A company’s tactics are implemented for the most part by lower level managers. Executives come up with the strategic plan, then the lower level managers formulate and implement the tactics. These managers are better placed for this because they have a better understanding of the company’s day-to-day activities as opposed to executives who only have a bird’s eye view of the company.
The following are the four main characteristics of a successful tactical plan:
- Flexibility. In the business world unanticipated events are unavoidable. As such, successful tactical plans are those that are flexible enough to accommodate and unexpected occurrences. When such an event occurs, will you go back to the drawing board or will you adjust the plan to cater for the change?
- It should be measurable. Once the plan is in place, are there ways to track its adoption? Good tactical plans have quantifiable ways of monitoring progress. An example would be choosing a shipping company instead of having an internal shipping department. This tactic is good because it is measurable. It’s possible to tell the percentage of shipments that arrive on time and those that don’t. It’s also possible to establish the costs incurred.
- Timing. Tactical plans should not just be vehicles for securing a budget. In reality, these plans are the road map that you will use to implement your strategy. They should have a timing by which the goals should have been achieved. Don’t be a victim of Parkinson’s Law. Your results will also take the length of time allotted to them. If you don’t have a specific timeline for each milestone, don’t be surprised when it takes longer. Make this law work for you by giving each milestone just enough time.
- Insight. A good tactical plan should be rooted in true insight. You need to be sure that you develop insights based on industry facts. You need to know what your customers feel about whatever you are seeking to achieve in your goals before you can decide on the path to follow.
REASONS WHY SOME TACTICS AND STRATEGIES FAIL
Having mentioned the importance of having strategies and tactics in your business, let’s finish with the common reasons why some fail.
- Partial commitment. Having a strategy so that you can look devoted is likely to end in chaos. The strategy and all the tactics in it need to have full support of the management to be able to produce tangible results. If you don’t intend to give the plan full support, then there is no need to spend time formulating it.
- Resistance to change. If you decide to come up with a company strategy, then you need to be ready to embrace any changes that may be required to implement it. If you formulate a strategy but still want to do things the old way, then be prepared for terrible results on the implementation.
- Impatience. No matter how desperate we are, execution will usually take time. With this in mind, it’s wise to allow your plans some time before you can see any results. This doesn’t mean that you should not measure your progress. Measuring is recommended, the problem comes when you expect results overnight.
- Expecting different results from same actions. When formulating a business strategy, many businesses choose the easy route of doing what every other competitor is doing and expecting to be the best. To formulate a good strategy, you will need to take a step back and examine the entire value chain and tailor it in a manner that gives you a competitive edge.
- Lack of proper enforcement. Once a strategy has been formulated, resources should be committed and the plan enforced accordingly. This is to mean that there should be consequences for anybody who chooses to take a different approach. On that note, it’s also important to note that enforcement without review could potentially lead the business to trouble. It’s vital to ensure constant review of the strategy to ensure that adjustments are made where necessary.
Your strategy and tactics are critical in the success of every business. Despite the fact that there are a good number of businesses that operate without them, you will need to prioritize them for faster results. Strategic and tactical planning is similar having to satellite navigation when you are on a road trip. While you may eventually get to the destination without it, the trip will be faster, cheaper and easier if you choose to use GPS navigation.