Objective then Strategy then Tactics

howfeedtribeWhile it’s quite often that I’ll rip on the horribleness of corporate life, it’s important to acknowledge and learn from the good parts, too.

One of the most powerful things I learned during my career was how to do effective strategic planning. After many years in the trenches, I’m now very good at it and it’s become very natural for me to think strategically in nearly every aspect of my life.

If you’re thinking seriously about pursuing pretirement, or if you just simply have other financial goals (getting out of debt is a common one I hear about), approaching the problem strategically will make all the difference.

Strategy without tactics is the slowest route to victory. Tactics without strategy is the noise before defeat.
-Unknown (often falsely attributed to Sun Tzu)

The first thing we need to do is have a short primer on the difference between strategies and tactics. They are often mixed up and there can even be a little grey area between them at times. But, in general, strategy is about the plan. Tactics are about the actions. Strategy is about “how” while tactics are about “what”.

Strategy is buying a bottle of fine wine when you take a lady out for dinner. Tactics is getting her to drink it.
-Frank Muir

When undergoing strategic planning, by far the most important thing is to ensure the tactics line up under the strategy, which in turn fits under the objective. If the tactic does not meet the objective and falls outside the strategy it MUST be rejected (or the Objective or Strategy must be modified). Many, and maybe even most, companies do not maintain strict discipline on this and end up wasting resources, doing duplicate work and creating a disorganized, unfocused organization. This in turns ruins morale and makes everyone hate their jobs.

This can happen in your home life, too. We’ve all seen families that aren’t on the same page financially, don’t have a clear direction and often the married couple are at odds. It seems to them, and everyone else, that they are just “bad with money” or are “fighting about money”, but in reality they have no clear objective or shared strategy. Their tactics, then, are just a collection of haphazard, uncontrolled actions, usually buying stuff they can’t really afford with the vague idea that they’ll pay the credit cards off later “when we get some money”.

In a way, it’s understandable. We didn’t evolve to analyze things in this way. Early man wasn’t putting together a PowerPoint document on the best way to feed their tribe (“Objective: Feed tribe. Strategy: Find and kill mammoth. Tactics: Use spears to stab mammoth.”)  No, we evolved to use our instincts to figure out these challenges. The food captured was the easiest and safest food to get that would provide adequate nutrition. This led to farming and eventually society. Unfortunately in a modern world, especially one with cheap and easy credit, these instincts for the quick and easy fix lead directly to mindless purchasing. Not to mention our evolved interest in anything shiny (probably evolved to help us find fruit, fire and water), tricks us into wanting the fresh and new.

But we also evolved a brain that is able to think abstractly and can overcome these predispositions with logic, education and mindfulness. And that’s why it’s so important to use strategic thinking to our benefit. The hardest part, of course, is then resisting these urges to help us reach our goal.

Let’s say a family is $20,000 in credit card debt and is feeling depressed and hopeless. Our imaginary family might want to cheer themselves up by taking the kids to Disneyland. After all, it’s a relatively cheap trip and they’ve been promising the kids the trip for some time now.

If their Objective was “relieve temporary depression” and the strategy was “spend a little money on something fun” then the tactic might correctly be “take a trip to Disneyland”. See how identifying the correct Objective can help you build the right strategy? If they had identified their Objective as “Get out of debt as soon as possible”, there is no way they could end up with a tactic of taking this trip. Their strategy would be something like “cut all spending to the bare minimum, try to increase our income and put all additional cash toward the credit cards”. Tactics might be things like cutting out cable TV, taking on some side work, etc.

Sometimes you can reverse-engineer this approach to figure out what someone’s real objective is, which can be pretty interesting. Take for example, organized religion. While I am a confirmed atheist  I’m not here to question anyone’s faith. And I draw a bright line between faith (which I politely respect) and organized religion (that I despise). But, that aside, organized religion makes a really clear example. See, for example, religions that oppose birth control. Why would they do that? Let’s reverse-engineer it. Take Mormons, for example, who at one point famously even allowed multiple wives and even today oppose birth control. Yep, now one of the fastest growing religions. Add in their tactic of sending young people on missions around the world, and it’s clear what their objective is — massive growth.

OK, now that I’ve offended half my readers, let’s talk pretirement. If pretirement (investments cover expenses) is the Objective, then the strategy is likely one of lowering monthly expenses and building up the pretirement fund. From there, it’s all tactics. Where and how to save, what to invest in, how to increase income, and so on. Having a shared Objective with your mate and agreeing on the Strategy is one of the keys to a long and happy relationship and life. And we’re not just talking about money.

What are your Objectives, Strategies and Tactics for reaching Pretirement? 

Caveman image courtesy FreeDigitalPhotos.net
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14 Thoughts on “Objective then Strategy then Tactics

  1. Would save as much as I can count as a plan? 🙂
    Cat recently posted…Enjoying a Responsible Gaming Environment on a budgetMy Profile

  2. I often find people don’t have goals to get to their dream, or don’t even have a strategy to begin with. It’s hard for me to understand because I’m a planner. If I say I want to do x, I figure out how to do x, and I do it.
    Savvy Financial Latina recently posted…Carnival Cruise on the Western CaribbeanMy Profile

    • Pretired Nick on May 24, 2013 at 5:29 pm said:

      Yeah, not everyone is a planner by nature and that’s fine. But we all have goals. People who have trouble with planning should stop and follow my prescription of breaking things down in order and they’ll find things get a lot easier for them.

  3. Nick, this is exactly what I am battling with myself… eliminate credit card debt, save in emergency account, save for my retirement and save to take kids to Disneyland. Can you imagine everyday whining that I have promised to take them to Disneyland and I am always promising and then nothing. Later I learned saying nothing so it is not considered a promise.
    Martin recently posted…An ultimate dividend payerMy Profile

    • Pretired Nick on May 24, 2013 at 7:34 pm said:

      Yeah, good call. Best to not get their hopes up. Anyone who has ANY credit card debt has no business going to Disneyland.

  4. It is rare to find a person who has mastered both strategic and tactical approaches. The ones I personally know who have this blend are successful executives or entrepreneurs.

    At work, I get feedback that I’m more tactical than strategic, so I’ve been building up my skills in the latter. Your post has reinforced my initial thought of trying to run our household as if it were a Fortune 500 company. Why is it that we get all these awesome skills at work but we don’t immediately apply them to improve our own personal lives?
    Mrs. Bookworm recently posted…Mrs. Bookworm’s Financial JourneyMy Profile

    • Pretired Nick on May 25, 2013 at 6:58 am said:

      The vast majority of people are largely tactical (good at the task they’re doing), but often forget why they’re doing it. It’s definitely good to use those skills from work at home, although I don’t know if you want to run your household like a business. At least not given the amount of misery I’ve seen at large companies over the years!

  5. Jenotwo on May 25, 2013 at 6:20 am said:

    Oh, man. I hate to go defending Mormons. Unfortunately, being raised in it and still related to a gaggle of Mormons, I find there is a lot of misinformation out there. Mormons do not oppose birth control. They actually just believe you should have lots of children. You got that part right. My family members (all with 3-8 children) all practice birth control. The difference between us and them is they just plan to have a lot more. I think you are thinking of Catholics. Even lds.com website clarifies the position that birth control is a couples choice – http://www.lds.org/ldsorg/v/index.jsp?locale=0&sourceId=579639b439c98010VgnVCM1000004d82620a____&vgnextoid=bbd508f54922d010VgnVCM1000004d82620aRCRD

    Other than the minor correction, I’m enjoying your blog.

    • Pretired Nick on May 25, 2013 at 6:55 am said:

      Oh, I love my Mormons. Wonderful people! But you’re defending truth, not Mormons, technically. (: Sounds like it’s more of a societal pressure vs. a tenant. Good to know. Thanks for the correction!

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