Objective, Strategy, Tactics

It’s one of my favorite times of year.

The oppressive heat of summer starts to give way to the cool nights of the coming fall.

Leaves begin to change from their dull green to their reds, oranges, and yellows.

The uniform of the day transitions from t-shirts to flannels.

Pumpkin spice lattes once again hit the menu at Starbucks (the true Capitalist’s demarcation of the season).

And annual planning begins for every corporation in America.

If you haven’t had the unique pleasure of participating in an annual planning process, it’s just like it sounds. Taking time aside as a leader with your partners to set a course for success in the new year.

Regardless of whether you’re participating in your company’s official annual planning process or not, as a leader, you have the obligation to conduct one for your team.

It is so easy to get caught up in the whirlwind of daily tasks needed to keep your business and team running that it’s you can forget one of your primarily roles as a leader is to extend your thinking to greater time domains than today, this week, or even this quarter.

The more senior you are, the further in the future you should live.

Objective, Strategy, Tactics

Assuming I’ve convinced you to take your annual planning as a leader seriously, the question then becomes, “how do I do it?”

So glad you asked.

My favorite method for annual planning is the Objective, Strategy, Tactics (OST) framework.

Objective

Start with a story

While all 3 parts of the framework are important, I’ve found that moving through them sequentially is optimal, so let’s start at the top.

We’ve talked about the importance of OKRs on this program before and while the output of the Objective portion of your framework should be the highest level OKRs don’t start there.

My favorite place to begin when coming up with an objective for the following year is to begin with a story. Humans think clearly in stories and we are are natural storytellers. While it can be tempting to get down to the brass tacks of the metrics you plan to achieve in the next year, starting with a story for your desired arc of the year to come is a powerful way to energize your thinking.

It’s also good business. As legendary venture capitalist Don Valentine said, “The money flows as a function of the story.”

Intent and Endstate

Once you have your story for the year to come, it’s time to get more specific about the objective itself.

While I’ve expressed this same formula in different ways before, the best way I’ve found to talk about objectives is:

Objective = Clear Intent + Defined End State

As you communicate your objective to your team do so in a manner that clearly articulates why that objective is important (intent) and what it will look like once it is achieved (end state). If you do this you’ll create your narrative to communicate what success looks like in the year ahead as well as articulate specifically what that success looks like.

Strategy

If your objective describes why you should embark on the journey of the year ahead in the first place, your strategy is the process by which you articulate how you’ll get / stay there relative to your competition.

For understanding, “the foundations of business strategy” there is no better primer than Hamilton Helmer’s 7 Powers. While this post is not a deep dive into the book (a post for another day) there are 2 important concepts from the book worth noting as you start the strategic development of your annual plan.

1. Statics vs. Dynamics

2. The 7 powers

Statics vs. Dynamics

When coming up with your strategy for success in the year ahead it is important to first answer the question are you looking to stay somewhere and retain existing market share through defense (statics) or is your primary goal to “get somewhere” (dynamics) leveraging growth to challenge incumbents or define a new category.

This decision of whether to pursue a Static strategy vs. a Dynamic one largely comes down to whether your primary aim is to optimize your existing “power” (more on that in a moment) or whether you are looking to develop a new one such that you can unlock a new source of growth.

It’s important to note that this choice between statics and dynamics can be dictated by the size and position of your company (e.g. if you’re the market leader you remain more focused on a static strategy) but it does not have to be.

Nike famously, to this day, claims they’re, "on offense all the time."

The 7 powers

Strategy can be a hard nut to crack as it’s difficult to know where to begin. That’s why Helmer’s 7 Powers are such a useful tool, they give you a foundation to build on.

Helmer defines Power as, “the set of conditions creating the potential for persistent differential returns.” Persistent, differential returns (aka being better than your competition for the long run) are a worthy aim for any team. The 7 powers Helmer discusses provide the scaffolding for how to achieve that aim.

1. Economies of Scale

   Per unit cost declines as volume increases, think Costco or Walmart.

2. Network Economies

   Customer value increases as the number of users increases, think LinkedIn.

3. Counter Positioning

   A new business model that can’t be copied by incumbents due to cannibalization costs within the incumbents existing business, think if ChatGPT dethrones Google for search.

4. Switching Costs

   The cost to change providers outweighs the gain of switching, think Salesforce or any CRM / ERP platform.

5. Branding

   Perceived value for the same or similar product is high given the history or story a company is able to tell, think any brand owned by LVMH.

6. Cornered Resource

   A business with unique access to a resource unavailable to the rest of the market, think a local utility or energy provider with preferential access / subsidies.

7. Process Power

   A company or team with superior execution in the production of their product such that it enables higher quality, lower costs or both, think the Toyota Production System.

While some of these “Powers” are out of reach (looking at you cornered resources) for different companies and teams, leveraging them as a framework to develop your team’s strategy for the year ahead or advocate to your boss about the correct strategic course is useful.

While I will always be a Marine NCO at heart, and thus lover of small unit (team) tactics, it’s important to note that a bad idea poorly executed is still a bad idea.

A strategic approach to annual planning ensures you work in pursuit of a good idea.

Tactics

Ahhhh tactics, everyone’s favorite place to debate, implement, test and re-test. While most leaders will be concerned with the tactical execution and conduct of their team it’s important that they understand and articulate the strategy and objective to the team they lead.

I’ll spend many more posts talking about my love of tactics and execution and I have many times already but there are 2 important tactical components to keep in mind within an annual planning context.

1. The deliverables you and your team are accountable for

2. The system you’ll put in place to execute on those deliverables

The biggest mistake leaders make in annual planning is to give a tactical project a name, but not clearly define their deliverables. This comes back to the same concept we started with regarding defining your objective with a clear end state. Within the concept of tactical execution this deliverable should be the lowest atomic, measurable deliverable possible.

With respect to your system of execution, think about this as your ability as a leader to be consistent. This is an annual plan you’re creating, not a quarterly or monthly one. That means consistency > intensity. Your system for execution is the process you put in place and manage as a leader to ensure your team accomplishes their tactical deliverables.

Get to work

Objective, Strategy, Tactics - a simple, not easy framework for successfully planning your year ahead.

• Objective - Why embark on this journey in the first place?

• Strategy - What differentiates us from our competition?

• Tactics - What, specifically, do we need to do to implement our strategy?

Happy planning, see ya’ll next week.