Strategic vs. Tactical Decisions – Return on investment(ROI) in Writing a Business Plan (Pt. 3)

Understanding, clarifying, and assigning strategic versus tactical decision making is key in business.

There appears to be an imbalance in strategic vs. tactical thinkers: around 90% of leaders or managers are tactical and only about 10% are strategic. I believe that we can teach and be taught the difference and how to think both ways. I also know that it will take some effort, but we have to start someplace. Let’s define strategic and tactical decision making in simple terms:

  • Tactical leaders and managers are like firefighters. They seem to thrive on running around fighting the little fires that crop up in their businesses or divisions. Tactical decisions are short term, narrowly focused, and should be, but are most often not, made with the long term view in mind.
  • Strategic leaders and managers are fire preventors. They look to the future and see the implications of moves and minimizing the risk of a fire starting.  If or when a fire does start, they fight it based on the long view of the company. In some cases, they may choose not to fight a fire and just let it burn itself out. Strategic decisions are based on the ‘higher level’, ‘big picture’, and ‘long term’ views and objectives.
  • Where the Strategy and Tactics meet: Improving the organization’s capacity to survive and thrive. Strategists need to get the long view right and share that view with the tacticians. And vice-versa.
    • When the tacticians know what the long term view is, they are better able to choose which fires to fight, how to fight them, and help prevent fires in the future.
    • When the strategists listen to and understand the tacticians they get a ‘boots on the ground’ view of areas of possible flare-ups and can make decisions to prevent them. They can answer questions such as “Are we capable of handling that flare up?”

How can a business plan help with Strategies vs. Tactics?

Look at the diagram below. It is a ‘mind-map’ of decisions a business owner was struggling with. He wasn’t really trying to micro-manage, but his mind kept going to all of the things he felt he needed to attend to. I let him wander around in his head and kept notes of his path. It was a maze of thoughts and ideas, traps and blocks, creativity, and opportunities. What kept him from moving forward was that he was almost always in firefighting mode. A big part of why he was in firefighting mode was that all of these paths represent another option, another choice he had to make. And as I have said before, too many options create indecision.

What management should be focused on

What management should be focused on

When managements’ focus swings to each fire, the entire organization swings wildly and randomly

The center highlighted area is the big picture focus that management needs to focus on. The higher up the manager is in the food chain, the narrower that box gets. Notice the North arrow? That represents the direction the management is focused on. All of the little fingers reaching out? They are in alignment with and being carried along true north.

When the decision-making box is wider the map is nowhere near as neat. The wider the box of decision making, the more likely the arrow is to swing back and forth as management focuses on fire after fire – almost randomly. And that is how the entire organization will move – randomly.

I have written a series based on live work with a clients’ permission to talk in general terms about the process and the numbers. Here are links to the series of articles. I will make them ‘live’ as the posts are uploaded.

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