I define Strategy (with capital S) as a plan to achieve more of the goal. The technique called Strategy and Tactic Tree (S&T) is nothing more, but also not less, than a format where the plan can be articulated, including all the intermediate objectives (IO), the actions required to achieve them and the assumptions behind.
The need for such a format is that any Strategy has to include many elements that have certain dependencies between each other. When Marketing comes with an idea that hopefully would bring high demand the resulting question is whether Operations is able to deliver according to the market expectations. Another question is whether other sales are going to be impacted. Many other possible dependencies exist that should be considered in the planning. The format of a tree gives a better view of the map of the linkages between different IOs and their related actions than a document or even the HTML format.
See for instance the following basic tree describing a generic structure of a part of an S&T. The term DCE stands for “decisive competitive edge”, a critical element for delivering unique value to potential clients.
Within the S&T structure every function in the organization sees what is required to achieve and how to do it. At the same time every one can see what should others do in order to reach the desired objective(s). Ask yourself whether this is the current situation with your organization.
Another great insight by Goldratt is separating the intermediate objective from the actions to be taken. The above figure shows the basic tree of “strategies” (same as intermediate objectives). Within every single entry the planner has to clearly define the actions to be taken and the assumptions stating why the strategy (IO) is necessary and why the actions would achieve that strategy. We have now enough experience to testify how constructing the tree, verbalizing both the objectives and the actions and justify them through a set of assumptions, improves the completeness of the Strategy and makes the probability of achieving it higher.
However, the S&T is still just a format. The ideas, the analysis of their impact and the ability to manage the execution are not impacted by the use of S&T. It is my strong conviction that the intuitive Strategy has to be in the mind of the key people in the organization before coming to put it into the S&T format. Most certainty the key decisive competitive edge ideas have to be already clear. Discussing the various options to move the organization have to be completed by the time the detailed S&T planning starts.
I believe going to plan the gross Strategy using the S&T format yields much higher probability for success.
I’m not going to teach here the S&T. You can learn it online at www.harmonytoc.com. I advise you to go through it!
There are two different limitations of the S&T that I like to note and discuss. Before that I like to state my observation of a seemingly obstacle that I don’t think truly exist.
The perception given is that writing the S&T is a sensitive mission that requires high expertise!
This is NOT the case! I’m against being too overly careful with the verbalization and the statement of the assumptions. Personally I don’t care whether an objective is verbalized in the most effective way – as long as the key people of the company understand and agree to the underlining meaning. I think too many TOC consultants and practitioners get frightened by the difficulty. Sorry, I think that outlining the S&T is straight-forward, and even if you made a “mistake” and write an entry not in the right level, or write it in too long sentences – I don’t see the damage.
The limitations I do see:
- There is a certain ambiguity in the linkage between the low level entries and the higher one. The question is what is achieved when only some of the lower level objectives have been completed.
Suppose entry 2.1 has been successfully achieved, what is the impact on entry 1? We cannot expect to achieve the full high level objective. But, shouldn’t we gain something at the high level? The linkage does not state it. The only valid assumption is that when all three low objectives have been completed then we get the full high level objective. As every plan has to include signals for the execution phase that indicate how well, or not so well, the plan is progressing – those signals are missing from the basic S&T format. The expectations from partial completions have to be somehow attached to the S&T.
- The S&T does not include buffers!
I do not necessarily refer to time buffers. Some think that the S&T should have a due-date, or a lead-time, to be fully completed. The value of such a due-date is forcing commitment on all the key players. In itself the due-date does not mean anything. If my stated lead-time for the whole S&T is four years, then completing it in five years might mean less benefit, but then it also depends not just on the time, but also on the quality of the achievements. Generally speaking we like to achieve the plan as soon as possible.
Suppose you find out that low objective 2 proves to be too tough to achieve. Does it mean that the high level objective cannot be achieved? Does this mean the whole S&T cannot be achieved?
Sometimes all we lose is just somewhat less effect, but the Strategy is still intact. On top of that in reality we do have alternatives. The format of the S&T is not friendly to introduce alternatives like “Alternative low objective 2”, which might yield less spectacular results for the high level objective, but still keep the overall Strategy in place. Planned alternatives are buffers that protect the whole plan from being stuck.
The bottom line from my perspective:
Planning the overall Strategy, including identifying at least one DCE, is the most important mission of top management.
The S&T significantly improves the effectiveness of the Strategy and also provides superior communication of the Strategy. Understanding both the benefits and the limitations, as well as keeping an open mind, are required to support this critical mission.