How to use Strategy and Tactics to Win in Business

The power that comes from using both…

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“Strategy without tactics is the slowest route to victory, tactics without strategy is the noise before defeat.”

Sun Tzu

I stumbled across this quote only recently and its simplicity really resonated with me. It also made me think back to an article I had recently written that gave consideration to the argument that was Strategy vs Tactics.

I had set out to write about business strategy and to my surprise, I had found that this phrase, Strategy vs Tactics, was a keyword phrase that attracted more interest than the other combinations of the same words.

Further research and a consideration of my own experiences gave me the motivation to make the argument that the insertion of the word versus was completely the wrong way to think about strategy and tactics.

But back to the quote. It gave me something that I hadn’t had in my previous article and it inspired me to sit down and write, so, let me explain…

Strategy and Tactics are not the same things

When I promoted the article on Strategy vs Tactics, I was challenged by an entrepreneur who questioned my argument that some business owners do not know the difference. Her view that she couldn’t believe that people were that stupid, especially if they are running a business.

At first glance, it’s easy to understand the point she was making after all these are two well-known words that are used frequently within the business world. I don’t think that people are stupid, but there are significant differences in the meaning, and therefore the behaviours they generate.

Strategy: What’s going on here?

In Richard Rumelt’s book, Good Strategy/ Bad Strategy: The difference and why it matters, Richard discusses with a colleague how to teach students about strategy and his colleague describes the starting point of strategy with a wonderfully simple question.

What’s going on here?

At the heart of any good strategy that simple question should be easily answered. It forms the foundation that the strategy is built on and it firmly defines the goal that the business is trying to achieve.

I will look at this in more detail later, but I think it is important to also clarify that strategy isn’t a set of actions, it’s an overarching view of the whole plan. It should define what’s going on, what you want to achieve and the actions you are going to take to get there.

Tactics, the action in the strategy

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Tactics are actions.

The use of the word strategy in the dictionary meaning of the word tactics is a red herring.

Make no mistake, tactics are the actions that describe how you will achieve your objective.

It sounds simple, but the tactics that form the actions in your strategic plan are often the hardest to put together, but they are critical to achieving your strategic plan. Many strategies die because business leaders think it’s just enough to define their goals and maybe give a top-level summary of how they will do it.

But as Sun Tzu’s quote suggests a strategy without tactics is just a very slow path to victory. It’s understandable to see why businesses get strategy so wrong.

The perfect combination of Strategy and Tactics

For those of you that haven’t read Richard Rumelt’s book, Good Strategy/ Bad Strategy: The difference and why it matters, I strongly recommend it.

In the book, Richard Rumelt sets out three steps in the building a business strategy, these being a diagnosis, guiding policy and a set of coherent actions. Let’s look at each of these in more detail.

Diagnosis

Richards colleague sums up the definition of the diagnosis wonderfully well with a very insightful question. What’s going on here?

In order to commence building a business strategy, Richard explains the need to consider everything that is going on in and around the business at the highest level. This means looking thoroughly at the marketplace, customers and your own business as well. A diagnosis is a judgement on that view. It should enable you to make sense of the situation and give you an area to focus on.

I described 3 business strategy examples recently and, in each example, you can identify a diagnosis that was clearly formed at the starting point of each strategy that was implemented.

In the instance of Apple, the diagnosis was that Windows/Intel was dominating the marketplace and by Apple trying to compete with them was putting the business at risk of collapsing.

In the Dollar Shave Club, the diagnosis was that consumers were paying too much for razors.

The diagnosis in these examples is clear for all to see.

The Guiding Policy

The guiding policy outlines the overall approach or policy that will be used to overcome the obstacles highlighted by the diagnosis. It is a guiding policy because it isn’t definitive, or even a prescribed list of actions, but a guide as to the direction of focus.

I think this is an important point to look at in more detail. We are not the complete masters we think we are, especially when it comes to predicting the future!

The guiding policy defines the areas the actions need to take place. For example, looking back at Apple and the diagnosis I mentioned above, you can that a guiding policy would have been along the very simple lines of reducing cost. Without further analysis, he wouldn’t know what costs to cut, but the guiding policy gave him that focus.

There is one other point to consider when it comes to creating a guiding policy and that is one of advantage. Overcoming the obstacles defined in diagnosis should be about exploiting or developing an advantage you already have. An advantage is a unique strength within your business. It could be financial stability or proprietary knowledge that you have. Whatever it is, using it could be the catapult you need to overcome the obstacles you face.

Coherent Actions

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A coherent action or tactic is the missing piece in many crafted strategies and as I have already alluded to, its why they fail.

To take a step back for a second, a fundamental part of a business strategy should be action, it’s the definition of how something will be done.

A lot of strategies focus on the outcome, the long-term aim or goal that the business wants to achieve, not the actions they need to take to deliver that goal.

With that focus on action though comes another critical part that Richard addresses in his book, and that is making them coherent. I think this is as equally important as utilising advantage to leveraging success which I have just mentioned in the guiding policy section. Coherent actions are logical, joined-up steps that work together to overcome the obstacles identified in the diagnosis.

When they are coherent the effect is significant as Walmart showed in the early 1980s. Each action, from installing barcode scanners to all the tills, creating a data hub, giving better data to suppliers, building a distribution hub and focusing on the size of the network that could access the distribution hub rather than the town size enabled Walmart to grow significantly.

Any one of those steps in isolation wouldn’t have worked, as Walmart’s competitors showed. By making them coherent the effect was stunning and enabled Walmart to become the world’s biggest grocery retailer.

Strategy and Tactics, think 3 steps instead

Back at the start of this article, I stated that I had felt compelled to write this article after I found the quote from Sun Tzu. The quote made me realise that businesses fail because of the fact that they don’t understand strategy or tactics and the part they play together.

I wanted to explain how they should and do fit together, and in Richard Rumelt’s book, his 3 step process demonstrates a practical way of achieving this.

The power of building a strategy using the three steps, a diagnosis, a guiding policy and coherent actions means that there is a logical path to follow.

Each step is a logical follow on from the previous one.

For me, apart from the ultimate test of whether the strategy delivers or not, a good strategy should make a great story, and the 3-step structure gives the framework for that story to flow. If you don’t have a story, maybe you don’t have a strategy…

How do you use Strategy and Tactics in business?

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I’m curious about decisions, strategy, and how to live my best life. Follow me as I write to figure it out and share some wisdom along the way.

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