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Strategy, tactic, and operations: What kind of decision are you making?

Posted on April 18 by

I am often asked the difference between strategies, tactics, and operational decisions. Differentiating between these three types of actions is very important for running a business successfully.

Strategic decisions are key to a healthy business. Conversely, strategic errors can be fatal because they deal with the direction of the business. You could be driving in a Ferrari or a Porsche, but if you are heading in the wrong direction, it does not matter what you are driving, you do not reach your destination! In addition, strategic errors take a long time to fix and usually require a lot of resources.

Tactical decisions are also key, but these give you some more breathing room. Tactical errors usually require less time to fix, but can still represent a waste of valuable time and resources.

Lastly, operational decisions are about day-to-day management. Operational errors by comparison are relatively easier to correct, and while they could be frustrating and distractive, they are sometime unavoidable. After all, no business is perfect.

When you are deciding whether to expand your business activity nationwide or continue to offer service only in one state or province—that is a strategic decision. A tactical decision, however, could be, “can I open offices in Vancouver and Montreal, or do I partner with an existing company?” An operational decision is approving a free shipment to a client to compensate for your late delivery, or promising a 10 percent discount on the next order to protect customer goodwill.

Test your understanding of strategy, tactics, and operations

Here is an interesting test I use in my strategic presentation to explain the difference between strategy, tactics, and operations.

Let us assume you are an army general in charge of an airborne division, and your mission is to drop your paratroopers behind the enemy lines in a specific strategic location. The success of the operation is expected to affect the outcome of the war. You proceed by doing reconnaissance work on the terrain and research the enemy location and firepower. Your investigation reveals that there is a river, a forest, and some open fields. Obviously, you want to avoid dropping your paratroopers in the river and in the forest. But dropping them in the open fields is going to make them visible and vulnerable to enemy fire.

What do you do?

You make a strategic decision to drop paratroopers. You then decide to do so at night and aim for the open fields. You include some extra uniforms and waterproof gear just in case some of the troops land by error in the water. You also equip the troops with extra ropes for anyone landing by mistake in the forest. You may also use some dummy paratroopers to fake landing a few kilometres away and further distract your enemy from the open fields. That sounds like a good plan considering the overall complexity and importance of the mission.

The dropping of the paratroopers is described as your strategy because it is a key action that affects the war outcome. The tactical parts are all the secondary decisions, i.e. avoiding the forest and the river, landing in the fields, choosing night time, designing the diversion tactic, etc. Lastly the operational decisions include the extra uniforms, the choice of accessories, the waterproof gear, the ropes etc.

Can you see the difference?

Recognizing strategic errors in your business

Strategy is tied to the overall direction; it represents the main "high ways" that take you to your destination. The tactics are the tools you use to carry on your strategy, and finally, the operational elements are the specific choice of the ingredients used.

Learning to differentiate between these three types of decisions is key to your success.

In particular, recognizing strategic decisions and knowing when to fix strategic errors is critical for a business. It is also not easy to do. Fixing strategic errors are similar to making a u-turn. They set you back time-wise and are not very easy to do because you must re-invent your way and change direction. When IBM missed the personal computer introduction, it took the company a long time to regain its leadership role. The same happened with Microsoft when it underestimated the importance of the search engine. They gave Google a head start and in turn, the leadership role for Internet advertising. Other companies such as Kodak and Xerox completely missed key market changes, or underestimated competitive threats that set them back significantly because of strategic errors.

You can find more on strategic and tactical tools and real life examples in my new book Maverick Leadership; a comprehensive collection of practical and proven "how to's" for running a growing and profitable business.

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