Good Strategy Bad Strategy

I don’t love management bestsellers. True, there are some I have found real value in. It usually gets distilled down to a few key lessons or metaphors that stay with me through the years. But there are even less that I have truly enjoyed reading. I don’t mean “enjoyed reading” in the narrative, storytelling sense. If I want that kind of enjoyment, I’ll find something from the fiction aisles of Amazon.

No, I mean the type of enjoyment that has me smiling to myself and uttering “yes!” as I read. Why? Because the author has expressed what I have felt and learned over many years but have failed to put so eloquently into words. And more than that, he or she has built upon that knowledge a guidance that, now discovered and clearly described, will stay with me as a core part of my outlook.

Richard Rumelt’s Good Strategy Bad Strategy: The Difference and Why it Matters is one such book. Part of the reason it suits me so well is, no doubt, the fact that I have an analytical personality. Rumelt’s logical, academic assessment of business strategy practices just works for me. But part of it is also the way I can apply his thought to my own experiences as a Chief Strategy Officer, a CEO and President. I can see very clearly how my successes (and failures) fit within the construct of his ideas.

The Kernel of Good Strategy

One crucial part of Rumelt’s thought is the concept of the kernel of good strategy. It is simple, clear and consists of three elements.

The first is a diagnosis that correctly identifies the challenge which an organization is facing. A good diagnosis eliminates the complexity that distracts us and answers the question, “what, exactly, is the problem?” In doing so, it forces us to accept a simpler assessment of the scenario. It also prompts us to confront some basic truths that may be hidden in the noise of daily operations.

The second aspect of the kernel is the guiding policy, which outlines an agreed upon approach to addressing the challenges of the diagnosis. It is not so much a strategy as it is a decision-making tool. It’s used to channel current and future efforts in certain directions, without the burden of first defining everything that must be done. It enables leaders in different parts of the organization to develop actions on the fly that are aligned with one another.

Which brings us to the third part of the kernel: coherent action. Understanding the diagnosis and adopting a guiding policy are not enough. Effective strategy must unite thought with action. And those actions, whether they are capital investments, the adoption of new policies or the deployment of resources, should be coordinated across functions. They should start by aligning with the guiding policy, then coordinate with other initiatives. And do so in a coherent manner that considers dependencies, timelines, and resource constraints.

How Does Your Strategy Compare?

The kernel, or core of a good strategy, must include all three elements: a proper diagnosis of the challenge ahead, a guiding policy on how to overcome that challenge, and a set of coherent actions that align with that policy and complement one another. It’s a simple concept that clarifies and enables effective action. Moreover, it’s equally effective for non-profit, public and for-profit organizations.

Think about this model and consider some of your past (or current) strategic initiatives. Did they start with a diagnosis? So many companies approach strategy like a wish list of things they would like to do, without ever assessing the root of their problems. If you’re developing a strategic plan anytime soon or wondering why yours isn’t as effective as you might like, I invite you to read Rumelt’s work. Or reach out to me, I’d love to talk strategy and get to the heart of the matter with you.

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