Why must companies reveal "strategies" consisting of empty platitudes
By R.L.G.
JOHNSON often takes a curious rather than a judgmental view of language use: where many fuss and fret that the language is falling to pieces, your columnist often finds that examining the messy use of language in the real world is more fun than finger-wagging. But that doesn’t mean that Johnson doesn’t think that words can be used badly. And one word that corporate bosses need to look up in their nearest dictionary, with haste, is “strategy”.
Last week I attended two companies’ annual results meetings. In the first, a manufacturing firm proudly displayed a slide of its strategy, which included,
Profitable growth; strengthening global leadership. Strengthening the balance sheet…to generate more and better business.
(I’ve omitted the company’s name; we’re here to enlighten, not to shame.)
The first thing wrong with this is of course the jaw-slackening obviousness. Every company on earth wants to be profitable; most want to grow; all of them need strong balance sheets. But the second problem is the underlying misunderstanding of “strategy”. Simply put, this word does not mean “goal” or “ambition”. It means how you get there.
Strategy is a word corporate bosses borrow from the military. What if military leaders used “strategy” the way today’s chief executives do? Imagine Eisenhower announcing such a strategy for defeating Nazi Germany: he would stand before his staff and announce, with a serious mien, that the strategy was to win as many major battles as possible, defeat enemy units and capture territory until Germany surrendered.
Then at a second results conference, a bank boss announced his strategy:
being the most trusted financial partner for our customers, measured by two parameters: customer satisfaction and earning.
Contentlessness so brash deserves some kind of prize. Happy customers and profits, really? That’s the strategy?
In his defence, the banking boss went on to focus on customer service, admitting that in some of his markets, customers were not especially happy with his bank, something the bank would be working on. But this brings up another frequent misunderstanding of strategy: its confusion with tactics.
Roughly, tactics is how you win battles, strategy is how you win the war. Strategy might be “invade Italy through Sicily, then launch a second major front at Normandy.” Tactics is how combatant leaders use infantry and tanks. Tactical decisions can be made at the highest levels—an army chief of staff could decide to focus more training on close urban warfare, hoping to get the best out of future battles in cities. This would be a kind of tactical decision. And that is a bit like what our bank CEO was announcing: he would put more focus (and money) into gaining or keeping individual customers happy through better services. But this is not grand strategy.
Strategy, for a bank, might mean get into this national market, get out of that one, cut a business unit, pursue mergers or pursue “organic” growth, that kind of thing. For a manufacturer, it’s introducing this product, cutting that one, pricing strategy (high-end or volume?), targeting a specific rival, and the like.
But the problem is that such plans are exactly what a chief executive is not going to reveal to journalists from the podium of an annual-results press conference. Closely guarded strategy is an element of competition. So why talk “strategy” at all? Because the word has cachet. Everyone wants to be a strategist. The best “strategy consultants” are handsomely paid for their advice. Companies now fashionably have “chief strategy officers”: according to a Google search of millions of English-language books, this title hardly ever appeared before the mid-1990s, when it took off like a strategic intercontinental missile.
Managers are well-advised to take strategy seriously, and professionalise strategic thinking. But no journalist should be fooled even for a moment that a canny boss is going to give the strategic game away in an annual report or a press conference. A strategy consisting of “be the best” is no strategy at all.
