Quite often, people confuse strategy and tactics and think the two terms are interchangeable in strategic planning, but they’re not. According to strategy guru Michael Porter, “Competitive strategy is about being different. It means deliberately choosing a different set of activities to deliver a unique mix of value.”
Strategy is the “what” part of the equation and helps you answer the question, “What are we trying to accomplish?” Yet your business design may not be sustainable; you may have trade-offs for how you position your business with customers and competitors.
Every business has limited resources and deals with a competitive landscape. The more it does of one thing, the less it can do of another. This concept leads to tactics, or the “how” part of the equation. Your tactics help you answer the question, “How are we going to accomplish our goal?”
Ultimately, a good way to think about the difference between the two is that strategy acts as a guide to a set of actions that various departments or teams will undertake. The following figure further illustrates the difference between strategy and tactics.
Keep this thought in mind: What you’re not going to do is sometimes just as important as what you are going to do. For example, a company decides it’s going to target the baby boomer group, so it makes a decision to not target another generation.
Businesses use three levels of strategies in the planning process to help them grow and become sustainable. The next figure visually explains the following three levels:
Corporate level strategy: This level answers the foundational question of what you want to achieve. Is it growth, stability, or retrenchment?
Business unit level strategy: This level focuses on how you’re going to compete. Will it be through customer intimacy, product or service leadership, or lowest total cost? What’s the differentiation based on?
Market level strategy: This strategy level focuses on how you’re going to grow. Will it be through market penetration, market development, product or service development, or diversification?
