The word “strategic” appears in all sorts of analytical writing, but people seem to be confused about what it actually means. I share a simple definition, along with a test you can use for whether what you’re describing is truly strategic or not.
There’s plenty of room for confusion here. When I started my 20-year career as an analyst, all my colleagues were talking about which of the advice and actions we were recommending for companies were “strategic,” and I was too embarrassed to admit I wasn’t clear on exactly what they meant. I now see the same confusion in other organizations. I’ve seen hundreds of memos and analyses that talk about strategic actions, but when pressed, some of the writers of those documents admit they don’t really have a clear definition for what “strategic” means.
A clear definition for “strategic”
A strategic action is one that prepares a company, an organization, or an individual to be better positioned for an imagined future that is different from the present.
Let’s look at some examples:
- Corporate: When Disney bought the rights to the Fox studio content for $71 billion, that was a strategic choice. The company believed that the competitive battles for the future would be fought on the basis of streaming content, and decided that spending cash and taking on debt now to bulk up on movie and TV show rights would better position it for that that future.
- Political: When Republicans in Georgia passed a law putting restrictions on voting, that was a strategic move. They endured lots of criticism in the short term, but felt that the law would better position them to win elections in Georgia in 2022 and beyond.
- Geopolitical: When China expends massive amounts of capital in third-world countries to build infrastructure — the so called “Belt-and-Road Initiative” — it does so in the belief that it in future decades it will have more global influence in those regions as compared to rivals.
- Personal: If you have a groundbreaking idea and take two years to work on a book about it, that is a strategic choice. It is lots of effort in the short term, but you believe that the publication of that book will improve your reputation, attract clients, generate a speaking career, or otherwise benefit you in the long term.
In each case, the actions we describe as strategic have a short-term cost but pay off in a future that is six months, a year, several years, or even a decade in the future, providing a lasting benefit to whomever is taking the action.
In this formulation, the opposite of “strategic” is “tactical.” A tactical action is one that pays off quickly. If a retailer runs a sale to clear out inventory, that is a tactical action. The benefit is immediate, but its primary purpose is not to better position the retailer for future years.
Is it strategic? A simple test.
If you want to describe a recommendation as strategic — or to determine if someone else’s description of a strategic action is valid — ask these four questions:
- Is the cost of the action short-term, but the primary benefit long-term?
- Is there a predicted version of the future for which the action is intended, with the goal of improving the organization or individual’s position?
- Can you describe how the action will better improve that position?
- Can the organization or individual actually execute the action?
Unless you can answer all four of these questions yes, the action is not strategic.
- If a sports team acquires a player in midseason primarily to make the playoffs, that action is not strategic. It fails the first test. It is a tactical decision.
- If a company buys a competitor just because its rival bought another competitor, but cannot describe a version of the future in which that acquisition will pay off, that acquisition is not strategic. It fails the second test.
- If you go back to graduate school because you’re bored with your job, but have no plan for how your graduate degree will qualify you for a better job, then your choice is not strategic. It fails the third test.
- If you decide to write a book but have no actual competence at research, writing, or book promotion, that action is not strategic. You cannot execute your plan. It fails the fourth test.
Whether an action is strategic is independent of whether it is successful. If your vision of the future is flawed, or your plan for succeeding in that future fails to work, you have still taken a strategic action. A poor strategy is still a strategy. You just didn’t make the right choice. Good strategic planning considers multiple scenarios, evaluates their relative likelihood, and identifies what actions would be best for each.
When I see people misuse “strategic,” it’s mostly because of a muddiness about the future — a failure of criterion 2 in my test. People describe actions as “strategic” because they want to imply that something that doesn’t pay off immediately is still worth doing based on some other justification, such as that it goes along with a company value or feels like the right thing to do. Unless you can articulate the future for which the action is intended to prepare the organization, your description of the action as strategic is questionable — and your use of “strategic” qualifies as a weasel word.
What is strategy, and how does it relate to “strategic”?
Strategy is complicated. That’s one reason why people get confused — in contrast to “strategic,” whether something is a strategy is subject to endless arguments.
Michael Porter, for example, said that strategy is a company’s distinctive approach to competing and the competitive advantages on which it will be based. He also states that strategy is based as much on what you don’t do as on what you choose to do. In other words, strategy is a plan and a series of related actions that determines how the company will operate. Implicit in these ideas is that the strategy contemplates a specific future in which the company is better able to compete.
Certainly, that is one kind of strategy. And an action based on that strategy qualifies as strategic, according to my definition. But it is not the only way to act strategically.
While developing a corporate strategy is complex, acting strategically isn’t necessarily complicated. I could be as simple as “Advertising is becoming less effective, so let’s develop a competence at content marketing, which is going to become more and more relevant.” That’s thinking strategically, even though there is no grand strategy at work.
If you want to be more strategic, learn to think analytically about the future and how you and your organization can prepare for it. Then you can speak confidently about which actions would be strategic and why. If somebody calls you on it, you’ll be able to describe the future scenario you envision and how the action will position you better for that future. You’ll develop a reputation as a strategic thinker — which is way better than just throwing around words like “strategic” to make your ideas sound magically more powerful.