Good Strategy Bad Strategy by Richard Rumelt

The kernel of strategy

• A good strategy must identify the challenge to be overcome, and design a way to overcome it. To do that, the kernel of a good strategy contains three elements: a diagnosis, a guiding policy, and coherent action.
• Diagnosis - What’s holding you back from reaching your goals? A good diagnosis simplifies the often overwhelming complexity of reality down to a simpler story by identifying certain aspects of the situation as critical. A good diagnosis often uses a metaphor, analogy, or an existing accepted framework to make it simple and understandable
• A guiding policy - is an overall approach chosen to cope with or overcome the obstacles identified in the diagnosis. Like the guardrails on a highway, the guiding policy directs and constrains action in certain directions without defining exactly what shall be done.
• A coherent action - dictate how the guiding policy will be carried out. The actions should be coherent, meaning the use of resources, policies, and maneuvers that are undertaken should be coordinated and support each other (not fight each other, or be independent from one another).

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Good strategy is design, and design is about fitting various pieces together so they work as a coherent whole.

If you fail to identify and analyze the obstacles, you don’t have a strategy. Instead, you have either a stretch goal, a budget, or a list of things you wish would happen.

A great deal of strategy work is trying to figure out what is going on. Not just deciding what to do, but the more fundamental problem of comprehending the situation.

The core of strategy work is always the same: discovering the critical factors in a situation and designing a way of coordinating and focusing actions to deal with those factors.

Good strategy is not just “what” you are trying to do. It is also “why” and “how” you are doing it.

Good strategy almost always looks simple and obvious and does not take a thick deck of Powerpoint slides to explain. It does not pop out of some “strategic management” tool, matrix, chart, triangle, or fill-in-the-blanks scheme. Instead, a talented leader identifies the one or two critical issues in the situation — and then focuses and concentrates action and resources on them.

A good strategy honestly acknowledges the challenges being faced and provides an approach to overcoming them. And the greater the challenge, the more a strategy focuses and coordinates efforts to achieve a powerful competitive punch or problem-solving effect.

The most basic idea of strategy is the application of strength against weakness. Or, if you prefer, strength applied to the most promising opportunity.

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Good strategy

• Good strategy is simple and obvious.
• Good strategy identifies the key challenge to overcome.
• Good strategy includes actions to take to overcome the challenge. Actions are not “implementation” details; they are the punch in the strategy. Strategy is about how an organization will move forward.
• Good strategy is designed to be coherent – all the actions an organization takes should reinforce and support each other. Leaders must do this deliberately and coordinate action across department
• Good strategy is about focusing and coordinating efforts to achieve an outcome, which necessarily means saying “No” to some goals, initiatives, and people.
• The reason good strategy looks so simple is because it takes a lot of effort to maintain the coherence of its design by saying “No” to people.
• Good strategy leverages sources of power to overcome an obstacle. It brings relative strength to bear against relative weakness

Bad strategy

• Bad strategy fails to identify the nature of the challenge. If you don’t know what the problem is, you can’t evaluate alternative guiding policies or actions to take, and you can’t adjust your strategy as you learn more over time
• Bad strategy lacks actions to take
• Bad strategy mistakes goals, ambition, vision, values, and effort for strategy (these things are important, but on their own are not strategy).
• Bad strategy is just a list of “priorities” that don’t support each other, at best, or actively conflict with each other, undermine each other, and fight for resources, at worst. The rich and powerful can get away with this, but it makes for bad strategy.
  • A long list of to do's
• Bad strategy is the result of a leader who’s unwilling or unable to say “No.”

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How to identify bad strategy

Four Major Hallmarks of Bad Strategy

• Fluff: A strategy written in gibberish masking as strategic concepts is classic bad strategy. It uses abstruse and inflated words to create the illusion of high-level thinking.
• Failure to face the challenge: A strategy that does not define the challenge to overcome makes it impossible to evaluate, and impossible to improve.
• Mistaking goals for strategy: Many bad strategies are just statements of desire rather than plans for overcoming obstacles.
• Bad strategic objectives: A strategic objective is a means to overcoming an obstacle. Strategic objectives are “bad” when they fail to address critical issues or when they are impracticable.

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