Good Strategy, Bad Strategy

Summary

Richard Rumelt describes the differences between good and bad strategies. He also expands on the ways good strategies can be supported by an organization.

Takeaways

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 how that'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.

Application

  • Given the situation with x
  • We will do y
  • We will start with z1, z2, and z3

Observations

  • 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?