Make no mistake — bad strategy can literally kill a company. In a 25-year study of 750 bankruptcies, researchers found that the No. 1 cause of bankruptcy was bad strategy. And anyone who has worked for a manager who didn’t have sound strategies knows all too well the frustration of drifting aimlessly with no strategic direction.
But the secret no one wants to talk about is, the root of most strategy challenges is simple — too many managers don’t know what strategy is. New research with 400 talent management leaders found fewer than half (44.3 percent) of organizations have a universal definition of strategy. And if people think this is a problem plaguing only new managers at lower levels of the organization, they should think again. During my work, I’ve collected dozens of so-called “strategies” from CEOs that aren’t strategies at all:
- Become the global leader in our industry.
- Use innovation to build customer-centric solutions.
- Grow our audience.
- Execute integration and capture synergies.
- Strengthen core business and reduce costs.
These examples demonstrate how frequently the terms goals, objectives, strategies and tactics are used interchangeably. The failure to distinguish among them means it is impossible to develop a workable strategy.
So, then, what’s the difference? It’s a question of what versus how. I’ve developed a simple framework called GOST (Goals Objectives Strategy Tactics) to help managers at all levels use and teach others to use these business-planning terms appropriately.
Goals and objectives are what a company is trying to achieve. A goal is what the team is trying to achieve in general (Win the national sales contest for our region), and an objective is what it is trying to achieve specifically (Achieve $25 million in sales by the end of the third quarter). Objectives tend to use the acronym S.M.A.R.T. — specific, measurable, achievable, relevant and time-bound.
Strategy and tactics are how to get there. Strategy is how the organization is going to get there generally (Focus selling efforts on expanding share of wallet with current customers); tactics are how it will get there specifically (Have district sales managers work with sales reps to schedule appointments with the top five customers for each territory; videotape three customers using two or more of our products in combination; purchase iPads so new shell sheets and videos can be use in customer presentations).
It is easy to see that a lack of clarity around these definitions can derail execution before it begins because people will be working in different directions.
So, how can businesspeople overcome the confusion and misunderstanding that surrounds strategy? Here are three tips:
Stop mixing words. Since strategy is an abstract term, it’s challenging enough to define it without combining it with other words to make it that much more confusing. Many companies use terms such as “strategic goals” and “strategic objectives.” Why? Goals and objectives are different from strategies, so cramming the words together into one term only serves to muddy the waters. To refresh, the goal is generally what the business is trying to achieve (e.g., increase sales). The objective is specifically what the business is trying to achieve (e.g., increase sales by 15 percent in the east region by Q4). The strategy is how the organization will achieve the goal/objective (e.g., develop a real-time service model to support top-tier product users). Managers must keep the plan simple by using the right word, and only the word, that they mean.
Stop making things up. Creativity is great. However, when it comes to setting strategic direction, creating new terms is inefficient and potentially harmful. Words such as goal, objective, strategy and tactic all have concrete definitions that originated in the military arena thousands of years ago. Terms like “strategic imperatives” or “business drivers” are not foundational planning terms. And, because they are not foundational concepts, they can be interpreted in a lot of different ways. This can lead to miscommunication, misunderstanding and misdirection. When planning, use real words, not made-up ones.
Stop pretending. If a leader in a company passes down a strategy that isn’t really a strategy, colleagues must stop pretending it is, and correct it! In the examples listed earlier, many of the so-called strategies are actually goals or operating initiatives. Anyone working under similar “strategies” should choose the right forum and appropriate time to talk to leadership about how to modify their statement to more accurately reflect a strategy.
While research with talent management executives has shown that strategic thinking is the most important leadership capability for senior managers, just 24 percent of organizations teach strategy skills. Moreover, research published in the Harvard Business Review showed that 67 percent of managers surveyed believed their companies are bad at developing strategy.
If managers are having trouble differentiating between strategy and tactics, they can use the “rule of touch.” If someone can reach out and physically touch it (e.g., a sell sheet, a training DVD, etc.), it’s a tactic. The concept of strategy originated, as mentioned above, in the military arena thousands of years ago. Even that far back, Chinese general and philosopher Sun Tzu said, “All the men can see the tactics I use to conquer, but what none can see is the strategy out of which great victory is evolved.”
Since one can’t see or physically reach out and touch strategy, it’s often skipped in favor of going straight to tactics. A good number of the business plans I’ve reviewed over the past 15 years list goals, objectives and tactics, skipping strategy altogether. With no strategy in place, it’s easy to fall into a game of tactical roulette, where managers continually chamber a new tactic and pull the trigger, hoping something hits the target, But, sooner or later, they’ll be looking at a dead plan.
The GOST — Goals Objectives Strategy Tactics — framework will ensure that a team has a common understanding and language for strategic thinking and planning. Only then will leaders be able to forge a path to the business results they seek. If an organization takes the steps above to create that shared understanding, it will be on the road to success.
Rich Horwath is a New York Times, Wall Street Journal and USA Today bestselling author on strategy, most recently of StrategyMan vs. The Anti-Strategy Squad: Using Strategic Thinking to Defeat Bad Strategy and Save Your Plan.
As CEO of the Strategic Thinking Institute, Horwath leads executive teams through the strategy process and has helped more than 100,000 managers around the world develop their strategic thinking skills. A former chief strategy officer and professor of strategy, he brings both real-world experience and practical expertise to help organizations create enterprise-wide capabilities in strategic thinking and planning.