Strategy or Tactics…What’s the Difference and Why Does it Matter?

Pexels Strategy image

Strategy and tactics are often confused with one another. They are used interchangeably by executives trying to sound smart. And while many leaders believe a new strategy is what they need, it isn’t always the case. Fortunately enough has been written about this “strategy or tactics” debate to inform you organizational leaders effectively.

The point of this guide is to help you determine when your organization needs tactical improvements or a strategic overhaul.

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It is important to note that this article does not address the concept of vision statements and goals. It will be assumed that any strategy will be crafted in order to accomplish an organization’s goals and achieve its vision.

Dilbert Strategy

From a military perspective (because business people like to equate their engagements with war any chance possible), strategy is a term that comes from the Greek “strategia,” meaning “generalship.” It refers to maneuvering troops into position before the enemy is engaged.

Tactics, on the other hand, are what happen once the enemy has been engaged.

So how does this relate to business?

Like an army, your business or nonprofit organization has competitors, marketplaces, partners, and other agents that impact the transactions you execute and the results you achieve.

Coming up with a strategy involves two major components:

1.  Selecting your area to operate; or choosing a market to enter

2.  Anticipating actions of outside agents and forming plans to deal with them accordingly

Tactics are the tools, techniques, and processes used to execute on this strategy. They may be internal operations, valuable personnel, or proprietary technologies. But these, in and of themselves, can never be the same thing as strategy. A competitor can hire your best people away. Your technology’s patent will eventually end. Processes can and will be replicated.

Tactics drive efficiency within your organization, which often help to financially achieve the stated strategy.

Examples of strategy and tactics

Catherine Yochum of ClearPoint Strategy outlines the following examples to help differentiate between strategy and tactics.

Strategy is more concrete and long-term—but your tactics can change based on how successful your strategy is. If your marketing strategy is to improve your influence and performance in social media, then you tactics might be to determine what channel is best for your business and what messages work best for your audiences.

Marketing and Branding Strategy or Tactics

Source: Marketing and Branding

Strategy and tactics work together as means to an end. If your strategy is to climb a mountain, one key component of your strategy might be to decide which side of the mountain you should climb. Your tactics would be the gear you’d buy, who you’d bring with you, your complete trip plan, how long it would take to get there, what season you’d go in, and so on.

Strategy and tactics always have to be in-line with one another. You might be really enamored with a particular project (i.e. a tactic), but it’s only worth pursuing if it aligns with your long-term strategy. Thus, your strategy should inform which tactics your organization will execute or fund.

What’s your problem: strategy or tactics?

How do you know whether it’s strategy or tactics that need to be fixed? While the shortcomings of a bad strategy are usually painfully obvious (at least in retrospect), poor performance on a good strategy is a lot harder to spot.

The first question you should ask yourself is: Do you have a competitive advantage in the market you operate in or is your strategy aimed at creating one?

If the answer is no, the answer almost always is to change your strategy. No competitive advantage means commodity-like competition and the need to execute efficiently to produce viable alternative products to the competition.

But if the answer is yes, you can comfortably assume you might have a workable strategy.

Competitive Advantage PM&J

Source: PM&J

Competitive advantage is the lifeblood of a good strategy. A business needs some sort of edge to ensure returns on capital above the cost of replacement in any industry. And since strategy concerns itself with how your business interacts with all other players in the marketplace, this edge comes from two main areas:

1.    Supply – typically deals with production capabilities; the ability to produce at lower costs due to supplier relationships, proprietary technology or any other factors creates competitive advantage for a company

2.   Demand – typically deals with customer captivity; the natural or strategic ability to keep customers buying your products; this can be due to high switching costs, high costs to learn or adapt to the product, or any other factor that might prohibit customers from buying an alternative product

How to tell if you have a competitive advantage

Bruce Johnson compiled a list of 5 tests that determine whether or not you have a competitive advantage. If you can’t answer all these questions positively, then you probably need to adjust your company’s strategy.

Does This Clearly Position Us As Different From Our Competitors?
If everyone is saying the same thing (“We have great customer service”), that “competitive advantage” can’t be an advantage. Nor can being a little bit better. No customer or prospect can tell the difference between a business/product/service that’s 5% or 10% better. Who cares?
Is This Something Our Prospects Actually Value?
In other words, it’s not unusual to find a business that’s in love with their own ideas. “What do we think our customers would like?” seems like an innocent question. However, it’s usually interpreted as, “What would I like?”As the creator of something, we usually fall in love with the thing we’ve created. Widget X can do 734 different things. It has the latest whiz-bang technology.
It “slices, dices and makes thousands of Julienne fries.” but rarely are those the things that prospects value.In general, prospects value the results or benefits far more than the features. They don’t value complexity, they value simplicity. They just want something that works and solves their problem as painlessly as possible.
Is This Specific/Can it Be Quantified?
If you were listening to a pitch and someone said, “We can save you money?” and another person said, “We can save you 22.4% a year on your office supplies,” which one is more powerful? Obviously, the one that’s more specific. So, if you want to create competitive advantages that will move your prospects to take action, make sure they’re specific and quantifiable (if possible).

Is This a Deal Closer?

This is one of the best decision criteria for a competitive advantage. If you suggest that something is a competitive advantage and it doesn’t close the deal, then it’s not a real competitive advantage. On the other hand, when Zyrtec started using the ad campaign that Zyrtec works two hours faster than Claritin, it was a deal closer.

First, because it caused prospects to doubt Claritin’s efficacy and secondly, because it promised to solve an allergy sufferers most pressing problem faster (by two hours over the market leader). If you’ve ever suffered from an allergy attack you know that two hours matters!

That’s when you know you have a great competitive advantage—when it moves someone to choose you and your products and/or services over others in your market space.

So, when you look at your current list of competitive advantages, does each one move prospects to say, “I choose you!” If not, go back and rework each one so that each advantage you list actually moves your prospects to take action.

Is this Difficult for Our Competitors to Duplicate?
One of the great cries of the competitive advantage movement is, “Is this sustainable?” meaning, is this a competitive advantage that will last for some time vs. something that will be easy for others to replicate. For example, the TD Bank competitive advantage is difficult to replicate. Not because it’s hard to expand hours, but because few banks are willing to spend the money to pay for extended hours and hire additional staff.

The cost related to those extra hours is a strategic choice very few are willing to make—which is why few have even tried to replicate it since TD Banks started doing it years ago.

Competitive Advantage the Mod Media

Source: The Mod Media

To ensure your business is delivering on its competitive advantage it is important to:

–  Develop functional strategies that deliver on this advantage.

–   Maintain cross-functional alignment and communication around the differentiator.

–   Align with the marketplace and constantly validate the strategy.

“Strategy without tactics is the slowest route to victory. Tactics without strategy is the noise before defeat.” – Sun Tzu

Right strategy, wrong tactics

If you’ve gone through the previous section and believe you have a competitive advantage (or are building toward one), then there should be certain indicators available. There should be favorable operating margin comparisons against competitors, favorable market share, or favorable growth characteristics in a specific market.

If these data seem to support your strategy, but you find them slipping year-over-year, you probably have an execution problem…you need to adjust your tactics.

Tactics Image UNMCOC

Source: UNMCOC

Take an example of a hypothetical company selling a software program. After a large up-front R&D investment it is able to scale its sales due to low marginal variable costs and spread its unit costs over greater and greater sales. This fixed-cost model creates economies of scale while the nature of the software program creates customer captivity due to high learning and switching costs.

Now assume that customer service is a key function performed by the company. Because the learning curve for the software is so high, service reps are invaluable to keeping customers satisfied and buying more.

While the strategy might be solid (participating in a profitable market with substantial competitive advantage with no immediate threats to profitability), profit margins may be sliding due to loosening hold over customers. A thorough analysis of the company’s operations might show customer service levels slipping.

By neglecting to excel in this particular operation, part of the company’s competitive advantage may begin to fade, opening the door for potential competitors who may have the resources to produce its own products, educate the public, and create economies of scale of its own. This would be a tactical adjustment that the company needs to make to improve its customer service operations.

Erica Olsen elaborates on strategy implementation and outlines some of the major pitfalls most companies face who fail to prioritize execution.

The strategic plan addresses the what and why of activities, but implementation addresses the who, where, when, and how. The fact is that both pieces are critical to success. In fact, companies can gain competitive advantage through implementation if done effectively. In the following sections, you’ll discover how to get support for your complete implementation plan and how to avoid some common mistakes.

Because you want your plan to succeed, heed the advice here and stay away from the pitfalls of implementing your strategic plan.

Lean Methods Strategy Model

Source: Lean Methods Group

Here are the most common reasons strategic plans fail:

Lack of ownership: The most common reason a plan fails is lack of ownership. If people don’t have a stake and responsibility in the plan, it’ll be business as usual for all but a frustrated few.

Lack of communication: The plan doesn’t get communicated to employees, and they don’t understand how they contribute.

Getting mired in the day-to-day: Owners and managers, consumed by daily operating problems, lose sight of long-term goals.

Out of the ordinary: The plan is treated as something separate and removed from the management process.

An overwhelming plan: The goals and actions generated in the strategic planning session are too numerous because the team failed to make tough choices to eliminate non-critical actions. Employees don’t know where to begin.

A meaningless plan: The vision, mission, and value statements are viewed as fluff and not supported by actions or don’t have employee buy-in.

Annual strategy: Strategy is only discussed at yearly weekend retreats.

Not considering implementation: Implementation isn’t discussed in the strategic planning process. The planning document is seen as an end in itself.

No progress report: There’s no method to track progress, and the plan only measures what’s easy, not what’s important. No one feels any forward momentum.

No accountability: Accountability and high visibility help drive change. This means that each measure, objective, data source, and initiative must have an owner.

Lack of empowerment: Although accountability may provide strong motivation for improving performance, employees must also have the authority, responsibility, and tools necessary to impact relevant measures. Otherwise, they may resist involvement and ownership.

It’s easier to avoid pitfalls when they’re clearly identified. Now that you know what they are, you’re more likely to jump right over them!

Right tactics, wrong strategy

Now maybe there are instances where your company is executing flawlessly but it is struggling to maintain competitive margins. You are likely not operating with a competitive advantage, so your priority should be refocusing on your strengths and opportunities and recrafting your strategy.

Determine your company’s strengths and opportunities. Enough has been written and said about SWOT analyses. By understanding these big-picture characteristics of your business you have the information you need to make key business decisions now and in the future.

The importance of strengths and opportunities is obvious. Maybe over time, what you thought were your company’s strong traits, have actually slipped over time, creating a competitive environment that doesn’t favor your business. This could be resulting in poor financial performance and lack of competitive advantage.

Or maybe what once was an opportunity—let’s say for example, selling products online—has now become the standard across all industries.

A reassessment of where you company stands today is the first step in adjusting your strategy. Lisa Furgison outlines a series of questions you should ask yourself to find your company’s strengths:

Starter questions:
–  What do you do well?
–  What do you do that your competition can’t?
–  Why do customers come to you?
Financial:
–  What kind of financial resources do you have?
–  Is your revenue diversified?
–  What kind investments do you have for the future?
Physical:
–  What kind of assets do you have?
–  What are the benefits of your company’s space and building?
–  What kind of equipment do you own?
Intellectual:
–  What kind of intellectual property do you have in your business? List trademarks, patents, etc.
Human resources:
–  What kind of human resources do you have?
–  Are there vital players in your company’s hierarchy?
–  What kind of programs do you have that improve your business and employees?
Company workflow:
–  What kind of processes do you have in place that makes your company efficient?
Company culture:
–  What kind of working culture has your company created in the workplace?
Thrive Global Company Culture
Company reputation:
–  How does your clientele or community view your company?
–  How did you achieve your reputation?
Market position:
–  Does your company have an edge in the marketplace that your competitor doesn’t?
–  What plans do you have in place to improve your market position?
Growth potential:
–  What plans do you have for growth?
–  Do you have potential to grow in certain sectors where your competitors don’t?
–  What’s the main reason you’re able to grow?

Understanding your strengths is a good place to start when evaluating where to move next as a business. The main point of a strategy is to understand where you want to operate and how you plan on dealing with external parties.

The first part, knowing where to operate, is partly based on your strengths—obviously it makes more sense to operate in the transportation industry if you have a fleet of trucks than if you don’t.

It’s also based on opportunities. It may not make sense to enter the transportation business if there are already two dominant competitors who have a stranglehold on the market.

Business Opportunities image

Source: Brand Pro Blog

Here are some questions to ask yourself to help find your company’s opportunities:

Economic trends:
–  Is the economy in your area looking up?
–  Will the economy enable your audience to make more purchases?
–  Are economic shifts happening that impact your target audience?
Market trends:
–  How is your market changing?
–  What new trends could your company take advantage of?
–  What kind of timeframe surrounds these new trends? Could it be a long-term opportunity?
Funding changes:
–  Do you expect an increase in grant funding or donations this year?
–  How will funding changes help your business?
Political support:
–  Do you anticipate a shift in political support this year?
–  What opportunities could be created with new political partnerships?
Government regulations:
–  Are any regulations shifting that could lead to a positive change?
Changing relationships:
–  Are there positive changes happening within any of your outside business relationships?
–  Are vendors changing or expanding?
–  Has your partner decided to move on, creating an opportunity to work with someone new?
Target audience shift:
–  How is your demographic shifting?
–  What opportunities can you think of that can move with these changing demographics?
–  Is your audience expanding? If so, how can you capitalize on this increase?

A full SWOT analysis would give you even more insight into decisions your business should make, but this is a good start.

Focus on your company’s strengths and any current opportunities to decide where you want to operate. From there it is critical to have plans in place to deal with potential competitors, market to customers, manage relationships with suppliers, and manage changing environmental and governmental factors.

When you’ve considered all these things, you can come up with a reasonable plan that creates a competitive advantage for your business. Remember, the main ways to capture competitive advantage are through customer captivity (the demand side) and production prowess (the supply side). If your strategy leads you down one of these paths, it’s a great start.

Conclusion

The great military theorist Carl von Clausewitz said: “Tactics is the art of using troops in battle; strategy is the art of using battles to win the war.”

Hopefully this article provided some insight into solving your company’s strategic or tactical problems. By properly understanding which ones to focus on, you either pinpoint improvement areas or completely pivot your strategy altogether.

Never assume your company’s problems are strategic in nature. Follow the advice here and you potentially save yourself from scrapping a completely workable strategy.

Middlesex County Coworking Space

In October 2017, the Middlesex County Chamber of Commerce announced plans to move ahead on an innovative entrepreneurial concept that would bring a coworking space to downtown Middletown.

What is cowork space?

Cowork is a style of work that involves shared workplace and independent activity. Employees are typically not a part of the same organization, but merely share in the office space and other equipment shared at a location.

Coworking is especially attractive for work-at-home professionals, independent contractors, and workers who travel frequently.

A major benefit of coworking is the possibility of knowledge share. Because people from all different organizations and backgrounds congregate at these locations, it is possible to share ideas, discuss concepts, and fine-tune theories without being limited to coworkers of the same business. Sense of community is a large, and essential, part of the coworking process.

Planning stages

Middletown Entrepreneurs Work Space (or MEWS+) is being led by the chamber’s VP Jeff Pugliese.

“Support from the city of Middletown can be a catalyst for additional funds coming into the community,” Pugliese said. “If we are fortunate enough to secure the city’s support, we will then apply for additional support through a statewide network of entrepreneurs, mentors, service providers and others involved in helping Connecticut’s most promising startups succeed and grow.

“We’re essentially looking to take money pledged by Wesleyan, Middlesex Hospital and Liberty Bank to get the city’s support to really make that initiative sustainable — for a couple years at least,” Pugliese said.

Source: Middletown Press

Partners

MEWS+ partners image

Purpose

The MEWS+ is an exciting concept that will serve as a key component to economic development initiatives underway in Middletown. It will also act as a bridge to the manufacturing and engineering industries in Middlesex County.

Working with local property owners, the program aims to find “cool” and accessible locations for business meet-ups. Prioritized locations will have the requisite layout and logistical capacity to be co-working spaces.

Connecting to local manufacturers and engineering firms will be a critical part of this initiative. We hope to work with Pratt & Whitney suppliers and vendors. The Middletown Engine Center is critical to the economic health of Middlesex County, and we hope to strengthen our already strong relationship with Pratt & Whitney through this important initiative.

The MEWS+ will also work to foster local health care innovation by collaborating with Middlesex Hospital, which works in partnership with Mayo Clinic by sharing the latest lifesaving research with Mayo Clinic Specialists, and Community Health Center, which is building a world class primary healthcare system by serving more than 145,000 patients since its inception.

Source: MEWS+ pres release

Will it work?

Coworking is growing in popularity. As of 2016, New York led all cities in the U.S. with 330 coworking centers. Los Angeles had 263, San Francisco 180, and Chicago 123.

Though Connecticut is in the earlier stages of exploring this concept, but hopefully Middletown can provide a replicable and scalable model for other cities in the state.

See the following infographic for more statistics on coworking and the potential it could offer the state.

Cowokring infographic image
Source: OfficeVibe

Immediate next steps

Middletown Entrepreneurs Work Space will open thanks to $70,000 in funding provided by the common council, Wesleyan University, Middlesex Hospital and Liberty Bank. The Middlesex Chamber is currently outfitting a portion of its second floor that can provide a work place for 10 to 15 people.

The Chamber will serve as the headquarters for MEWS, which will also offer networking events and other services to provide resources for small businesses outside of the office setting.

It will be interesting to follow the progress of this program and see if it gains scalable traction in a state that certainly needs to reinvest in industry.

More information

See the Middlesex County Chamber of Commerce for more info here.

Visit MEWS+ directly here.