Private Business: Why The Difference Between Strategy and Tactics Matters.
Almost true story.
I was just on a boys weekend golfing with a couple of buddies. All of them are private business owners. On the way home, the topic of business came up (again) and one of the guys started talking about strategy. He had discovered the internet, and been reading everything he could on strategy.
He also had a chance to take a flyer on a large order that had nothing to do with his business.
What the rest of us thought, was that he had clearly wasted his time reading up on strategy.
And that’s likely true.
However, over the next 60 kilometers, what (sort of) became obvious was that the order he was about to consider wasn’t as non-strategic as it first sounded.
In fact, it was a tactic he’d settled on for rapidly building his company’s revenue.
And building his company’s revenue was a strategy to make his company more valuable. Making his company more valuable was important because he had settled on a goal of selling his business.
What appeared on the surface as a crazy scheme, actually had some strategic grounding. He just didn’t realize it.
It led me to a couple of thoughts.
First, I was reminded again that so many people view strategy as being irrelevant. In fact, one of the business owners in the car said “I never do strategy, it doesn’t matter”.
Second, I was reminded how confusing the notion of strategy versus tactics is.
From our friend’s perspective, taking the strange order was a strategy for building the company’s value.
Meanwhile, I was looking at it as a tactic for building revenue – I didn’t see it as a strategy at all.
Which made me wonder – really? does it matter?
The answer I came to is yes.
In this case, building revenue – at least indiscriminate revenue – would not result in an increase in our friend’s company’s value. The accountant in the car put that to rest. By glossing over the strategy decision (in fact, by completely missing it), our friend was preparing to send his company in a serious new direction on the basis of a false assumption.
Important? I really think so.
When I’d seen this scenario in the past, I had always hoped that I would find some way to simply illustrate the difference – and importance – of strategies versus tactics. But then reality would catch up and I’d never get around to it.
This time, I remained inspired to make at least a minor contribution in the hopes that somewhere, sometime it might help a business leader get the strategy decision right.
The chart in the presentation below demonstrates the difference between strategies, tactics and goals. A narrated version is available on Youtube.
It also shows how a tactic in one part of the organization can be a strategy somewhere else – which really can be confusing.
One simple piece of advice stemming from my friend’s situation: always ask why. Why are we doing this? What’s the goal for doing this? Answering the why always leads back up the strategic hierarchy to the point of being able to ask the critical question “so is this the right strategy?!”