Richard Rumelt describes the differences between good and bad strategies. He also expands on the ways good strategies can be supported by an organization.
Good strategy has 3 key elements
- A diagnosis of the situation and the challenges
- A guiding policy to deal with the challenge
- A coherent set of actions to carry out the policy
Bad strategies are not just the opposite of a good strategy, but they disguise themselves in language that seems like they could be strategies. Bad Strategies:
- Are goals that are presented as strategies. ie. Growth for the sake of growth. Growing any metric is a desired outcome. It defines the
what, it doesn't get at the
howthat's needed with a strategy.
- Are wrapped in motivation and hyperbole. Trying harder, working faster, caring more about the customer aren't complete strategies. At best, they are part of a strategy, but are missing the diagnosis of the situation, and actions that highlight how these principles will make it successful.
- Values aren't strategies. Being honest, transparent, innovative are ways of behaving.
- Given the situation with
- We will do
- We will start with
- Look at how resource is allocated to determine what the strategy is currently.
- Miscalculations aren't bad strategy.
- To have a strategy, you have to be willing to choose. A segment to focus on, and clear opportunities to ignore. The opportunities should be valid for someone else to pick as a viable option.
Do not compete on superlatives and adjectives. Compete on choices:
- We’ll spend more, we’ll have more features, we’ll move faster, we’ll have happier customers vs. we’ll do x, but not Y to make our customers happy; a set of valid trade offs would be reasonable for another company
- ie. In a battle, different fighters have different styles because of their skills, shape; what shape is the company? What skills does it have? How is it an advantage? How do the advantages compound?