While 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
