What is tactical management?

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.

Aspect	Explanation
Definition of Tactical Management	Tactical Management is a level of management that focuses on the implementation of strategic plans and the day-to-day operations of an organization. It bridges the gap between strategic planning and operational execution. Tactical management involves setting specific goals, allocating resources, and making decisions to achieve short to medium-term objectives. It often includes departments or teams responsible for various functions such as marketing, production, finance, and human resources. Tactical managers translate the strategic vision of top-level management into actionable plans and ensure that these plans are carried out efficiently and effectively. Tactical management plays a vital role in driving organizational success by aligning activities with strategic goals and adapting to changing circumstances and market conditions.
Key Concepts	Several key concepts define Tactical Management:
– Goal Alignment	Tactical managers are responsible for ensuring that the goals and initiatives of their departments or teams align with the broader strategic objectives of the organization. They translate high-level strategy into specific, achievable targets. Goal alignment links daily activities to strategic outcomes.
– Resource Allocation	Tactical management involves the allocation of resources, including human resources, budget, time, and materials, to support the achievement of tactical objectives. Effective resource allocation is essential for meeting goals efficiently. Resource allocation optimizes the use of available resources.
– Decision-Making	Tactical managers make decisions related to their areas of responsibility, including prioritizing projects, resolving operational issues, and adapting to changes in the business environment. These decisions should align with the organization’s overall strategy. Decision-making ensures tactical plans stay on track and adapt to evolving conditions.
– Performance Measurement	Tactical management involves monitoring and measuring the performance of departments or teams against established goals and key performance indicators (KPIs). Regular performance assessments help identify areas for improvement. Performance measurement guides adjustments and improvements.
Characteristics	Tactical Management is characterized by the following attributes:
– Short to Medium-Term Focus	Tactical management addresses objectives that are typically short to medium-term in nature, ranging from several months to a few years. It seeks to achieve results within a defined timeframe. Short to medium-term focus ensures alignment with changing market dynamics.
– Operational Efficiency	Tactical managers emphasize operational efficiency to achieve goals. They optimize processes, workflows, and resource utilization to deliver results as effectively as possible. Operational efficiency drives goal attainment.
– Adaptability	Tactical management is adaptable and responsive to changing circumstances. Managers must be prepared to adjust plans and strategies as market conditions, customer preferences, and internal factors evolve. Adaptability ensures agility in achieving objectives.
– Cross-Functional Collaboration	Collaboration among different departments or teams is common in tactical management. Effective cross-functional cooperation is essential to achieve goals that require input or support from multiple areas of the organization. Cross-functional collaboration promotes holistic goal achievement.
Revenue Models	Tactical management does not inherently generate revenue but plays a critical role in supporting revenue-generating activities. It aligns operational functions with strategic goals, which indirectly impacts revenue through the following revenue models:
– Sales and Marketing	Tactical management in sales and marketing ensures that sales teams are focused on target markets and promotional strategies that align with revenue goals. Effective marketing campaigns and sales tactics can directly impact revenue generation.
– Production and Operations	Tactical management in production and operations aims to optimize manufacturing processes, minimize production costs, and improve product quality. These efforts can impact the cost structure and quality of products or services, which, in turn, affects revenue.
– Customer Service	Tactical management in customer service focuses on delivering high-quality customer experiences and resolving issues promptly. Satisfied customers are more likely to make repeat purchases and recommend products or services to others, contributing to revenue growth.
– Cost Management	Effective cost management through tactical efforts can increase profit margins. Reducing operational inefficiencies, streamlining processes, and controlling expenses directly impact profitability and, by extension, revenue.
Advantages	Tactical Management offers several advantages:
– Goal Achievement	Tactical management ensures that specific, measurable goals are set and achieved within defined timeframes. It drives the accomplishment of short to medium-term objectives that contribute to the organization’s overall success.
– Operational Efficiency	By optimizing processes and resource utilization, tactical management enhances operational efficiency. This efficiency translates into cost savings and improved productivity.
– Adaptability and Responsiveness	Tactical managers are well-positioned to adapt to changing market conditions and respond to emerging opportunities or threats promptly. This adaptability helps organizations stay competitive and agile.
– Alignment with Strategy	Tactical management ensures that departmental or team activities align with the overarching strategic direction of the organization. It strengthens the connection between daily operations and the achievement of long-term goals.

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.

Table of Contents

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

Tactical management is also prevalent in investing. Despite the differences between business strategy and investment strategy, tactical management is used in a similar way.

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.

In the same way tactical management supports business strategy, similar day-to-day management of the stock market helps supports the broader, long-term strategy of the investor.

Difference between tactical and strategic management

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.

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).

Tactics are in alignment with the strategy. In short, tactics are short-term actions that serve to align with a long-term strategy.

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.

Microniching

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

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

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.

The Tesla Roadster was a way for the company to showcase the technology while financing the business in the short-term, making it survive, and from there, creating options to scale!

In fact, once the Roadster proved successful, only there Tesla could plan to expand (gradually) the market.

Today, after fifteen years of rolling out this long-term strategy via short-term tactics, Tesla is finally ready for its final stage of rolling out mass manufacturing!

It took 15 years of short-term pivots to achieve its long-term strategy (and many near-death experiences)!

Hook Product

Another strategy is a hook product, which aim is to finance the short-term operations of the business, thus keeping it alive and making it possible to achieve its long-term mission.

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.

In other words, short-term tactics and tactical management are critical to pivot the business in the short-term and move it toward the long-term vision.

Even when from a superficial look, it seems that the tactic is counter-intuitive.

Hide the Margins

amazon-aws-business-model — Amazon AWS follows a platform business model, that gains traction by tapping into network effects. Born as an infrastructure built on top of Amazon’s infrastructure, AWS has become a company offering cloud services to thousands of clients from the enterprise level, to startups. And its marketplace enables companies to connect to other service providers to build integrated solutions for their organizations.

Today AWS is a key tenet of Amazon’s business model.

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!

However, AWS was born in the early 2000s. As Amazon went through the dot-com bubble, the company had to redefine its business model.

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!

Market Expansion & Transitional Business Modeling

Another counterintuitive tactic is the transitional business model.

In other words, imagine that you’re Netflix in the early 2000s; you know that the DVD market will get replaced by something else, something much much larger.

In Netflix’s case, that would deliver content straight on the Internet (what we would later call streaming).

What do you do? On the one hand, you keep expanding on the current business model (DVDs), while you keep looking into the viability of delivering the content over the Internet.

That is what Netflix did. When streaming suddenly became viable in the 2010s, Netflix had successfully transitioned from DVD to a streaming platform.

market-expansion-strategy — In a tech-driven business world, companies can move toward market expansion by creating options to scale via niches. Thus leveraging transitional business models to scale further and take advantage of non-linear competition, where today’s niches become tomorrow’s legacy players.

Thus, you start from a transitional business model, which serves as the hook into the current market’s landscape, and you keep experimenting with a business model which might be viable at broader and broader scales.

An interesting fact, still today Netflix carries less than one percent of revenues still come from DVDs!

netflix-business-model — Netflix is a subscription-based business model making money with three simple plans: basic, standard, and premium, giving access to stream series, movies, and shows. Leveraging on a streaming platform, Netflix generated over $29.6 billion in 2021, with an operating income of over $6 billion and a net income of over $5 billion.

Key Highlights

Tactical Management: Tactical management involves selecting suitable actions to achieve strategic goals or objectives. It encompasses day-to-day operations, risk management, conflict resolution, problem-solving, and supporting long-term strategy delivery.
Monash University’s Definition: Monash University defines tactical management as the process of choosing the best tactics or methods for each situation to achieve a strategic plan or objective. It emphasizes adapting to specific situations rather than following standardized procedures.
Difference from Strategic Management: Tactical management is distinct from strategic management. While strategy defines long-term goals and resource allocation, tactics focus on immediate actions to implement the strategy effectively.
Examples of Tactical Management Tasks:
- Recruiting and Retaining Diverse Staff: Set compensation benchmarks, participate in job expos, measure employee satisfaction, conduct exit interviews, provide training.
- Implementing Flexible Work Arrangements: Review industry feasibility, survey employees, create policies, review implementation, sustain change.
Tactical Management in Investing: Tactical management applies to investing as well. Investors use a tactical approach to adjust their portfolios based on daily market conditions. It involves adjusting asset class percentages to take advantage of market movements.
Difference Between Strategy and Tactics: Strategy focuses on long-term goals, while tactics involve short-term actions to achieve those goals. Tactics are aligned with the overall strategy and can include counterintuitive approaches.
Microniching: Short-term tactics like microniching involve narrowing down the market focus initially to create options for scaling later. For example, Tesla’s initial launch with the Roadster paved the way for broader expansion.
Hook Product: Tactics like using a hook product to finance short-term operations can keep a business alive while working toward its long-term mission. For instance, Airbnb sold cereal boxes in its early days to generate revenue.
Amazon AWS: Amazon initially priced AWS as a low-margin business to attract adoption and competition slowly. This short-term tactic led to the eventual success and profitability of AWS, a crucial part of Amazon’s business model.
Transitional Business Modeling: Companies like Netflix used transitional business models to expand into new markets while sustaining their existing business. By experimenting with new models, they transitioned successfully into emerging markets like streaming.