Tactical management involves choosing an appropriate course of action to achieve a strategic plan or objective. Therefore, tactical management comprises the set of daily operations that support long strategy delivery. It may involve risk management, regular meetings, conflict resolution, and problem-solving.
- Understanding tactical management
- Examples of tactical management tasks
- Tactical management in investing
- Difference between tactical and strategic management
- Key takeaways:
- FourWeekMBA Business Toolbox
Understanding tactical management
Monash University defines tactical management as:
“the administrative process of selecting among appropriate ways and means of achieving a strategic plan or objective. The use of tactical management in a business environment allows a manager to choose the best tactics or methods for each situation that arises, rather than following a particular standard procedure.“
In understanding tactical management, it is helpful to differentiate it from strategic management.
This is referenced in the above quote as “standard procedure”, which usually refers to creating a strategy that sets the direction for the organization as a whole.
Strategic management also defines roles, responsibilities, and the commitment of resources.
Tactical management, on the other hand, encompasses the daily operations that support long strategy delivery.
It may involve risk management, regular meetings, conflict resolution, and problem-solving.
Tactical management often necessitates that a quick decision is made using tactics that are best suited to the particular situation.
Conversely, strategic management requires thought, discussion, and planning. Or, as we saw earlier, the following of standard procedure.
Examples of tactical management tasks
Following is a look at two strategic goals and the tactical management tasks that may underpin them.
1 – Recruiting, developing, and then retaining a diverse and suitably experienced staff cohort:
- Establish a compensation benchmark based on industry salary data.
- Occupy a booth at a school or university job expo and liaise with a diverse range of student bodies.
- Regularly measure employee job satisfaction and engagement through surveying.
- Create an exit interview program to better understand the reasons for a high-performer seeking employment elsewhere.
- Provide training for managers to identify and allocate funds for employee upskilling or recertification.
2 – The implementation of flexible work arrangements:
- Start by conducting a thorough review of the industry to determine the feasibility of flexible work arrangements.
- From the list of feasible options, survey employees on which they deem is the most interesting.
- For the option to be implemented, develop a policy and procedure framework.
- Review the implementation framework annually in light of changing or extenuating circumstances.
Tactical management in investing
Using a tactical approach, investors intend to take advantage of daily market conditions using a range of acceptable percentages in each broad asset class.
On a red day, the intent is to act more defensively and reduce equity exposure. On a green day, however, the tactics pivot toward utilizing the higher end of each asset class.
Difference between tactical and strategic management
To understand the difference between tactical vs. strategic management, it’s important to emphasize the difference between strategy vs. tactics.
Whereas strategy is about long-term goals, tactics are the set of individual steps that can be taken in the short term to reach these long-term goals.
There is a key difference, though, between tactics and operations.
Whereas operations are intended to be very practical, in some cases, they might also conflict with long-term goals (take the case of a company that scales too quickly in its workforce, thus making it hard for the company to keep innovating).
Indeed, one of the most difficult aspects of a business is the alignment between short and long-term goals.
Oftentimes, to achieve the long-term vision, you got to do things that seem counterintuitive in the short term.
Take the case of a company that, when launching its operations, instead of going broad, goes narrow.
This is a powerful tactic because by narrowing down the market, it enables the company to create options to scale later on!
Take the case of Tesla; when it entered the market, it did that via a sports car called the Roadster.
In fact, once the Roadster proved successful, only there Tesla could plan to expand (gradually) the market.
It took 15 years of short-term pivots to achieve its long-term strategy (and many near-death experiences)!
One example is how Airbnb, in the early days, sold cereal boxes to finance its operations!
Any sane person would think this is not a great idea, and it doesn’t align with the business the company is in.
And yet, this simple idea enabled Airbnb to stay afloat in the short-term, in the early days, when being able to pay the bills was critical.
Even when, from a superficial look, it seems that the tactic is counter-intuitive.
Hide the Margins
If you removed AWS from Amazon, you would get a completely different Amazon, burning a lot of cash and highly unprofitable.
Yet, when Bezos and his team launched AWS, they used a trick.
Indeed, when AWS officially launched, it was priced as a utility.
Bezos wanted to avoid “Steve Jobs’ mistake” of pricing the iPhone at such high margins to attract competition quickly.
Instead, Bezos initially made AWS a low-margin business, and over time, it became a highly profitable segment.
AWS rolled out its first mass-market product, Simple Storage Service, or S3, on March 14, 2006.
That is the official date of birth of AWS!
now, if you have an incredible business unit, why do you want to hide it, especially when analysts are biting against Amazon’s lack of profitability?
Indeed, for years Amazon was the primary target of analysts complaining about Amazon’s lack of profitability.
This was a short-term tactic, which, while it didn’t help in the short-term the company’s valuation, created a behemoth that today is worth anywhere between $400-600 billion.
Amazon hid an incredible business, in the short-term, to conquer a whole market in the long run!
- Tactical management involves selecting the appropriate course of action to achieve strategic goals or objectives.
- Tactical management encompasses day-to-day operations such as conflict resolution, problem-solving, staff training, and the definition of roles, responsibilities, and procedures.
- Tactical management is also useful for stock market investors whose primary strategy is supported by managing daily market volatility.
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