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Now that we have defined the words, how can we manage a company well so that tactics don't drive strategies, which is a very common occurrence? In many organizations tactics are interpreted as strategy so it is not a strategy that was designed but it is a strategy that evolved out of tactical decisions. This can be quite dangerous for an organization because it doesn't have the long-term view.
How could this happen? Let's understand how each of the decisions in the hierarchy of decisions is different. Both of these hierarchies are envisioned as a triangle for a reason.
For every single mission of an organization, there must be multiple goals. And for every goal, there must be multiple objectives to achieve those goals. Same thing is true for the hierarchy of decisions. In an organization you should have few policies, and those policies are there to guard that the multiple goals of an organization that are incompatible don't "threaten" each other.
For instance, we have a goal to maximize sales, and for that purpose we might give discounts. In order to ensure that discounts aren't pervasive and overwhelming and we are increasing market share at a very high price and thus losing money , there must be some policy when to give discounts and when to give credit. So a policy of credits and discounts is there to guard that one goal (market share) doesn't overwhelm another goal (profitability).
Strategies have the same role: to ensure that different objectives don't overwhelm each other in an attempt to achieve a goal. For example, a marketing goal is to penetrate the market. Another goal is customer satisfaction. Thus, we have to develop a marketing strategy on how we are going to penetrate the market without upsetting our customer base -- this penetration in new markets might threaten our existing customers. The same scenario might exist if a company had a production strategy to create vertical integration for production; it might threaten the relationship with the suppliers - and keeping a good relationship with suppliers is another objective of the company. A strategy is there to balance incompatible goals.
So if you look at the triangle, we have some policies, more strategies and a multitude of tactics.
The Time Dimension
There is another dimension that differentiates policies from strategies and from tactics: The time dimension. Since mission plays out in the long run and objectives in the short run, policies need to deal with the long run and tactics to deal with the short run. That means that the lifespan of a policy is greater than that of a strategy, and the lifespan of a strategy is longer than that of a tactic.
The lifespan and functionality of a decision defines what a decision is, whether it is a tactic, strategy or a policy. Thus there is a danger that a tactic becomes a strategy and a strategy could become a policy inadvertently or unintentionally. How could that happen? Take a tactical decision that was made for expediency at a certain point in time and it worked. It worked so well that this tactical decision does not change anymore. After two years, it is no longer a tactic; it becomes a strategy. After five years, if it does not change, it is not a strategy; it is a policy. People don't even remember how the decision was born but they have to follow it.
I have been in situations where I have asked people in a company, "Why do you do this?" The answer has been, "It is a policy." I then say, "Why is it a policy?" They reply, "We don't know. That is how we do it."
It is decision that survived; it was embedded in an organization. So the organization is not driving a decision, it is a decision driving the organization.
For example, we made a decision that the way to penetrate a market is with a new marketing promotion. It was a tactical decision to get a certain client. It worked so well the company repeats it even after the reasoning for the decision is nonexistent anymore. The tactic became a strategy -- not by design -- but by default.
What is wrong with it? Since strategies impact goals, it is now a tactic of the past that is determining de facto the goals of the company, not the management of the company.
Build in a Bomb
Many executives know from their own professional life, that they made a decision years ago, based on certain circumstances, and over time that decision has been continued and does not serve the interests of the company. Years later, the executive who made the decision and remembers why he made the decision and knows that the validity of the decision is not there because the situation has changed, will have a lot of difficulty changing his own decision. There will be a lot of resistance because that decision has roots, and those roots serve others now. So what happened? A tactic became a strategy and maybe even a policy. And after 10 years, it may not even be a policy; it is a religion. "That is how we do it around here." To avoid that notice what the military does. In the military, in order for a tactical decision not to become a policy, all decisions have a time span. The military says, "this decision is valid until April 12 at midnight." They have a "build in a bomb" to make the decision obsolete. If you don't have a way to make it obsolete, and you have no process to review it, you might find that the decision suffocates the organization years later because nobody dares to change it. They have to adhere to it or they are going to be court-martialed.
The reverse can happen too. If you have a very entrepreneurial, aggressive leader in a company that changes his or her mind frequently, that person could make what she believes are policies and say, "that is what we are going to do from now on, this is how the company should run, and it is a policy." However, that executive changes his or her mind frequently and changes the policy frequently. As a result, the company has no policies. The company has tactics camouflaged as policies because the frequency of change is so high that they are not impacting the mission. At most, they are impacting the objectives.
I recommend organizations review all decisions. If it is a policy, give it a longer time span and ensure that the policy impacts the mission of the organization and not short-term objectives. For tactics, whenever they are made, give them a short time span and make them obsolete when that time span elapses.
©
Copyright 2002 by Ichak Adizes and the Adizes Institute
LLC. Reprinted with permission by ManagementVitality.
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