Trust me, I know I get too worked up about the misuse of the word “strategy”. I can’t help it.
I wrote yesterday about a Bloomberg article describing Tesla’s “strategy” of setting unrealistically ambitious deadlines. The idea is that Elon Musk uses these deadlines to push his team to achieve things they otherwise thought impossible.
Okay. That’s great. It’s a well-known idea. James Collins and Jerry Porras wrote about a very similar concept, which they called the Big Hairy Audacious Goal, in their book Built to Last. It’s a powerful concept, using a specific, measurable goal to motivate collective action across a company.
But that doesn’t make it a strategy. Far from it, in fact. Here are the two misuses of the word “strategy” that bother me most:
- Strategy = goal
- Strategy = any action meant to increase the chance of achieving a goal
These two misuses are similar, but not identical. In the first case, you can think of something like, “Our strategy is to increase revenue by 15%.” That’s a goal. We already have a word for it. We don’t need to force fit “strategy” when “goal” works just fine.
The second case is less obvious, but more pervasive. Tesla’s deadline tactic is a good example. You could say Tesla’s “strategy” is to set aggressive deadlines to extract the most effort from its employees.
Again, that’s not a strategy. It might be a smart tactic to employ. It might improve the odds of Tesla hitting its manufacturing targets. But it’s not a strategy.
Almost any action a company takes is intended to help it succeed. If we define strategy in this way, we’re implying that every action is a strategic action. If we want the word “strategy” to mean anything, then clearly this is a useless definition of “strategy”. There has to be something more to it.
In my post about Bank of America’s ridiculous “strategy”, I shared Richard Rummelt’s definition of strategy. Here’s what I wrote:
Whenever I hear someone talk about corporate strategy, I think of Richard Rummelt’s book, Good Strategy Bad Strategy. It’s great. He talks about the underlying structure of a strategy, which he calls a kernel. It has three parts:
- A diagnosis, or the challenge the company faces;
- A guiding policy, or a high-level approach the company intends to follow when addressing the challenge; and
- A set of coherent actions, or the actual tactics the company uses to implement its guiding policy
That’s a useful way to think about strategy. A strategy includes a definition of the challenge at hand, a guiding policy for overcoming that challenge, and a set of coordinated actions to support the policy.
Could aggressive deadlines be one action, amongst a coordinated set, that comprises a strategy? Certainly.
Let’s say that Tesla defines its central challenge as its inability to manufacture enough cars. It’s guiding policy might be to eliminate all internal distractions, and align the efforts of all of its teams around maximizing its manufacturing capacity.
What might some coordinated actions be? Setting aggressive deadlines is one. Implementing LEAN training for all employees involved in manufacturing might be another. When evaluating potential designs, favoring ease of manufacturing over total cost might be another. The possibilities go on and on.
The point is that any single action a company can take can certainly be part of a broader strategy. But the single action, by itself, is not a strategy. It’s a tactic.
Why do I make a big deal about this? Because we’re devaluing the word “strategy” when we misuse it. We’re blinding ourselves to the power of a real strategy, when we conflate a strategy with an individual tactic.
Words matter. Precise word choice correlates with precise thinking. In the world of business, we have too much sloppy thinking and speaking. A little discipline can make a big difference. That’s why I’m such a nut about this stuff.