Confusing Strategy and Tactics

Tom Peters

The restructuring that is besetting every nook and cranny of the
business world demands sound “strategic thinking” as never
before. Yet most companies appear to be floundering, selling off
odd bits of their portfolios and slashing payroll; in the end,
however, they remain directionless.

The crux of those firms’ problem is, indeed, associated with
strategic thinking — but in a way that is not obvious. In short,
we have confused what is strategic with what is tactical, in most
corporate functions:

MARKETING. The essence of traditional strategy in marketing is
the selection of growth markets, the rejection of dead-end
markets and the conception of clever segmentation schemes.

Yet these concerns ignore the most important strategic marketing
issues, which I contend are the achievement of superior quality
(as perceived by the customer), the attainment of enough
corporate flexibility to permit lightning-fast market creation as
soon as the slightest opportunity is sensed, the capacity to
listen constantly to customers and the constant improvement of
every product and procedure that involves the customer — including
ordering, billing and concern with supplier quality.

The execution of any strategic theme depends upon my above list
of corporate capacities. The chief’s true strategic
responsibility involves investing in and developing such
capacities, while the selection of markets and the like are the
secondary, or tactical, responsibilities.

INNOVATION. Its strategic component, greatly analogous to
marketing, historically has been the selection of major
technologies to explore and the setting of R&D budgets, for
instance.

Or is it? I propose that the truly strategic innovation
issues include: overcoming fear of failure that inhibits each
person’s willingness to try new things — from the accounting
department to the design activity; and top management’s
commitment to somewhat “crazy” new product or service champions,
who are so essential to any project’s success. Once more, the
latter sorts of factors deal with the capacity to innovate, and
are the strategic essence of innovation.

OPERATIONS. The same confusion reigns here. The traditional
strategic approach involves big decisions about capital
investment allocation — e.g. how big a plant expansion or new
computer system? The traditional tactical issue is how to train
and organize people to support new systems.

Again, what is thought strategic should be considered tactical,
and vice versa. The strategic objectives — flexibility, speed of
response, efficiency and quality from factories/operation centers –
– are determined principally by people’s commitment, energy and
organization.

LEADERSHIP. The conventional view deems the chief executive, for
instance, as supreme strategic planner. Getting out and about and
attending to the so-called “soft variables” are merely the chief’s
tactics.

Another view was proposed during a recent meeting of the
International Academy of Management in Barcelona, Spain. Dr.
Erich Mittleson Scheid, who has been a foresighted German
industrial leader for decades, concisely described the chief
executive’s role as “instilling an attitude of quality …
creating a common purpose and corporate identity.” Indeed,
leaders’ strategic concern must be instilling purpose. And a
purpose can be instilled only by example, by touching the front
line, not by remaining a prisoner in the committee rooms of the
corporation. The strategic plan is merely the short-term
tactical approach to operationalizing the purpose and spirit.

I do not oppose the idea of strategy, strategic thinking or
strategic planning. To the contrary, strategic considerations
have never been more important. Yet, I propose that most of what
has been called tactical must be elevated to strategic, and most
of what has been called strategic must be relegated to tactical
status.

Specifically, I suggest that only the last 25 percent of any
strategic plan be devoted to situation analysis — i.e., detailed
projections or scenarios about tomorrow’s market. The first 75
percent should deal with the real strategic issues, such as steps
necessary to develop business capabilities for overpowering
customers with quality, service and fast innovation via an
increasingly skilled and flexible work force that is imbued with
a common purpose.

In a recent discussion about strategic planning, one participant
criticized several big companies for not having foreseen either
the first or second OPEC oil shocks. I disagreed. I, too, fault
their strategic planning. But I don’t blame them for failing to
predict the future. I fault them for not responding rapidly after
the OPEC action in fact took place. Their strategic planning
process should have been aimed at creating the capability to
react fast to any sudden shift in the environment. The creation
of such a capability is the essence of strategy. The dusty plan
with 50 intellectually scintillating scenarios, and little or no
discussion of what to do in the face of any one of them, had best be
left on the upper shelf.