strategy-vs-tactics

Strategy vs. Tactics

Organizations create strategies to define overarching goals and how they intend to reach them. Tactics describe the individual steps and actions that allow the strategy to be carried out.

Understanding the relationship between strategy and tactics

Strategy and tactics are military terms that have now made their way into business and professional contexts.

With that said, consider a quote from the Chinese military treatise The Art of War by Sun Tzu: “Strategy without tactics is the slowest route to victory. Tactics without strategy is the noise before defeat.

From the above, we can surmise that strategy and tactics work to reinforce each other when used in unison.

Companies develop strategies to define their long-term goals and how they intend to fulfill their vision or mission.

Tactics are the often smaller, more sequential steps the business must perform to realize its strategy.

Some planners call them initiatives, but whatever the name, tactics usually incorporate best practices, resources, or concrete plans.

To further differentiate between strategy and tactics and how they may interact, consider the following statements:

  1. Strategy is a long-term vision based on extensive research, while tactics concern more immediate, short-term actions. If a marketing strategy aims to improve social media engagement, one tactic may involve responding to every user comment. Strategies can be altered to reflect external conditions, despite assurances to the contrary. But a better way to increase the success of a strategy is to alter the tactics instead.
  2. Strategy and tactics must be aligned to ensure the company is acting in accordance with its core values. There must be organization-wide awareness of what the company is doing, why it is doing it, and how (the tactics).
  3. Strategy and tactics will never cover everything. Finite resources must be directed to the initiatives that will allow the company to achieve its goals in the most efficient manner.

Examples of strategy and tactics

Let’s conclude by taking a look at two examples of strategy and tactics in hypothetical real-world scenarios.

Education

In the first example, we have a school that is looking to improve its standardized test scores across every year level.

Strategy

To implement the smart education system in classrooms and connect and engage with the next generation of students via technology.

Tactics

  • Purchase interactive displays, interactive whiteboards, and teacher training software.
  • Onboard teachers to the technology and provide professional development for teachers to improve their delivery skills.

Local government

Local government, like all tiers of government, should be built on the cornerstones of responsiveness and accountability.

Here is the strategy and tactics for a government that wants to increase its transparency among ratepayers. 

Strategy

To meet transparency-based goals, government representatives convene and decide that a broader strategy emphasizing two-way communication is ideal.

This will enable the government to better understand ratepayer concerns, keep them informed of any developments, and provide clarity on where rates are spent.

Tactics

  • Create a local government dashboard where constituent members can stay abreast of the government’s latest projects and keep it accountable.
  • Create a marketing plan that outlines how ratepayers can communicate or interact with the government. The Hinchinbrook Shire Council, for example, developed a marketing plan that promoted council-owned services to create awareness in the community. These services, where locals can interact with council representatives, include art galleries, hireable venues, museums, and libraries.

Tactics in the Tech Business World

For years, I’ve been pondering the concept of what I like to call transitional business models.

transitional-business-models
A transitional business model is used by companies to enter a market (usually a niche) to gain initial traction and prove the idea is sound. The transitional business model helps the company secure the needed capital while having a reality check. It helps shape the long-term vision and a scalable business model.

According to this theory, there is no static business model a company sits on. 

Instead, a business model evolves with the organization’s short- and long-term goals. 

And a transitional business model works as a hook to keep the company grounded to existing market forces in the short term while it keeps evolving its business model as new market forces shape up!

That is one of the most powerful concepts of the Business Engineering Curriculum, which is worth internalizing to build successful digital/tech businesses!

A key go-to-market tactic that tech players have employed over the years to enable their long-term strategy is microniching.

microniche
A microniche is a subset of potential customers within a niche. In the era of dominating digital super-platforms, identifying a microniche can kick off the strategy of digital businesses to prevent competition against large platforms. As the microniche becomes a niche, then a market, scale becomes an option.

Take the case of a company that, when launching its operations, instead of going broad, goes narrow.

minimum-viable-audience
The minimum viable audience (MVA) represents the smallest possible audience that can sustain your business as you get it started from a microniche (the smallest subset of a market). The main aspect of the MVA is to zoom into existing markets to find those people which needs are unmet by existing players.

In business, this is known as niching down or microniching.

The premise of this tactic is that you want to narrow the existing market substantially (especially in the very early days) to create options to scale later down the road.

A classic example is how Tesla entered the EV industry by building a sports car intended to reach a few hundred people.

tesla-innovators-roadster

Tesla could have tried to build, right on, a mass-market EV car (like many existing players had done).

But due to a lack of resources, technology development, and market dynamics, Tesla went for the smallest possible option within an existing market.

The Roadstar was a critical stepping stone in developing the Tesla business model.

However, it answered a specific question: “can we build a viable EV sports car that is both performant and aesthetically appealing?”

Once Tesla could answer positively to that question by placing the first Tesla Roadsters on the market, it moved to the second stage.

It launched the Model S, which was supposed to answer another question:

“Can we scale EV manufacturing to a market segment that is interested in EVs beyond performance?”

tesla-early-adopters

Once it achieved the first level of scale, Tesla launched a new model, the Tesla Model 3, the main goal was to gain mass manufacturing!

It took 15 years of short-term pivots to achieve its long-term strategy.

Yet, at this stage, the question underlying the Tesla business model also radically changed.

The core question is, “can we mass-manufacture EVs to distribute them globally?”

tesla-production-numbers-by-year

In other words, the underlying question of the transitional business model has changed over the years, as follows:

  • Tesla Transitional Business Model 2003-2008: Can we build a viable, performant, aesthetically appealing EV?
  • Tesla Transitional Business Model 2008-2017: Can we build a model which is appealing to a larger audience while scaling up manufacturing?
  • Tesla Transitional Business Model 2017-2020: Can we scale up manufacturing?
  • Tesla Transitional Business Model 2020-forward: Can we manufacture at mass scale?

Key takeaways:

  • Organizations create strategies to define overarching goals and how they intend to reach them, while tactics describe the individual steps and actions that determine how the strategy will be accomplished.
  • Strategy is a long-term vision based on extensive research, while tactics concern more immediate, short-term actions. While strategies can be altered to reflect external conditions, it tends to be easier and more cost-effective to alter the tactics within a strategy instead.
  • A school that wants to improve student test scores may develop a strategy that calls for smart technology implementation in classrooms. Tactics that support this strategy include teacher training, professional development, and the purchasing of interactive displays and whiteboards.

What is the difference between strategy and tactics with example?

Whereas a strategy looks at the long-term. A tactic looks at the short-term. Sometimes, a tactic can be aligned with the long-term strategy (a linear tactic). In other cases, a tactic might seem misaligned with the long-term strategy (which we can define as a counter-intuitive tactic). Take the example of a tactic called microniching. To enter a market, a company can substantially narrow down the market – on purpose – so it can restrict the commercial use case, thus creating, over time, options to scale and achieve its long-term strategy.

What comes first strategy or tactics?

Usually, a strategy comes first, as it defines the organization’s long-term goal. Instead, tactics are short-term steps a company can take to get closer to its strategy. Indeed, tactics might be easily implemented quickly (days or months). A strategy to be fully executed and rolled out might take years, if not decades.

What is the difference between strategic and tactical thinking?

Whereas strategic thinking focuses on aligning the organization to its long-term goals. Tactical thinking helps the organization to be successful in the short term. To successfully roll out a business strategy, tactical thinking can be the short-term engine that gives the company the needed burst to survive and thrive in the short term to get closer to its longer-term vision.

Key Components of a Business Model

Value Proposition

unique-value-proposition
Your UVP is the exclusive feature or benefit you offer to your customers. It could be anything at all. If you offer a service, it could be “100% pay after satisfaction”. It could be a time factor offers. Say you provide a service that reviews CV. Your UVP could be “Get a revamped résumé in 24 hours”. This makes you stand out from every other person offering that service, as your unique offering is the ability to deliver in 24 hours. Your slogan could also be your UVP, as it automatically gives your audience what to expect from you.

Cost Structure

cost-structure-business-model
The cost structure is one of the building blocks of a business model. It represents how companies spend most of their resources to keep generating demand for their products and services. The cost structure together with revenue streams, help assess the operational scalability of an organization.

Pricing Strategies

pricing-strategies
A pricing strategy or model helps companies find the pricing formula in fits with their business models. Thus aligning the customer needs with the product type while trying to enable profitability for the company. A good pricing strategy aligns the customer with the company’s long-term financial sustainability to build a solid business model.

Financial Structure

financial-structure
In corporate finance, the financial structure is how corporations finance their assets (usually either through debt or equity). For the sake of reverse engineering businesses, we want to look at three critical elements to determine the model used to sustain its assets: cost structure, profitability, and cash flow generation.

Technological Modeling

technological-modeling
Technological modeling is a discipline to provide the basis for companies to sustain innovation, thus developing incremental products. While also looking at breakthrough innovative products that can pave the way for long-term success. In a sort of Barbell Strategy, technological modeling suggests having a two-sided approach, on the one hand, to keep sustaining continuous innovation as a core part of the business model. On the other hand, it places bets on future developments that have the potential to break through and take a leap forward.

Distribution Channels

distribution-channels
A distribution channel is the set of steps it takes for a product to get in the hands of the key customer or consumer. Distribution channels can be direct or indirect. Distribution can also be physical or digital, depending on the kind of business and industry.

Marketing Channels

marketing-channels
A marketing channel represents the set of activities necessary to create a distribution for a product and make sure that the product is delivered in the hands of the right people and that the potential customer is satisfied with it. The marketing channel also needs to be aligned with the brand message of the company.

Other related business frameworks:

Additional resources:

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