Good Strategy/Bad Strategy: The Difference and Why It Matters

I thought I remembered my friend Art Petty saying that he liked Good Strategy Bad Strategy: The Difference and Why It Matters by Richard Rumelt. So, I emailed him and asked if that was true. Here’s his reply.“Like is an understatement. Rumelt’s kernel of Strategy is the most powerful, supple approach for creating clarity and coherence on strategy I’ve yet encountered.”Art’s no novice. He’s been an effective executive and an effective consultant for decades. He works with clients on strategy. And, guess what? The book lived up to Art’s recommendation and then some.The kernel of Strategy that Art referred to is a great reason to read the book, even if that’s all you get out of it. Here’s Rumelt’s description of the kernel.“A good strategy has an essential logical structure that I call the kernel. The kernel of a strategy contains three elements: a diagnosis, a guiding policy, and coherent action. The guiding policy specifies the approach to dealing with the obstacles called out in the diagnosis. It is like a signpost, marking the direction forward but not defining the details of the trip. Coherent actions are feasible coordinated policies, resource commitments, and actions designed to carry out the guiding policy”.The kernel isn’t a magic formula. It’s a guide to the most important hard work you will do to create a strategy. If you’re a consultant, it’s a quick way to help you figure out if your client has a strategy or not. As Rumelt points out in the book, a lot of things masquerade as strategy. Plans and slogans and goals can look like strategy until you analyze them with a tool like the kernel.What makes creating a great strategy hard is that it involves choices, and we don’t like choices. We also don’t like hard work, so we skip the hard parts and just do the parts that are fun.In my experience, an awful lot of companies spend a day or so developing their strategy. They substitute discussion for diagnosis. Talk replaces analysis. Then they trot out some fine-sounding generalities instead of taking time to craft guiding principles. Biz-speak often replaces clear language here. There’s a lot of talk about what to do, but precious little about how to coordinate activities.Most of those companies spend most of their time on what they’re going to do, after skipping the hard parts of diagnosis and guiding principles. Art says that, since reading Rumelt, he spends more time on the strategy process. He spends half of the time on diagnosis, another 40 percent on what Rumelt calls the guiding philosophy, and 10 percent on coherent actions. It’s much harder to do it that way than it is to go off to an offsite and whip up some generalities that sound good but don’t have much impact on day-to-day work life.Here’s what it comes down to. The kernel is the way you develop a good strategy. The kernel is also the way that you identify bad strategy, whether it’s yours or someone else’s. Now that I’ve read this book, I won’t think about doing strategy the same way ever again. Rumelt has helped me know some danger signals to watch for. And he’s given me a language for guiding the process of creating and evaluating a strategy.The kernel is reason enough to buy and read this book, but there are lots of other goodies here, too. There’s analysis of many business situations that I found both absorbing and compelling.There’s one other thing you can take away from this book. Even when you do the work to create and execute a good strategy, you can still not succeed. You can make bad choices, even with a good process. Luck still plays a role. Unforeseen events play a role. The competition plays a role.This book was written in 2006. Rumelt makes several predictions about how some things will play out in the years ahead. He gets some of them right, some of them wrong, and some of them a mix of both. That’s a good thing because it demonstrates what’s true in real life. There are times when you can do everything wrong and have things turn out right. And there are times when you can do everything right and still go down in flames.One of my favorite quotes about life is from the American writer and horseplayer, Damon Runyon. It goes like this: “The race may not always be to the swift, nor victory to the strong, but that’s the way you bet.” Developing a good strategy is the hard work of figuring out how to bet.In A NutshellGood Strategy Bad Strategy: The Difference and Why It Matters by Richard Rumelt gives you a roadmap that will help you develop better strategy. Ironically, that will make your work harder. Thankfully, it will also increase your odds of success.

Why you should read this book: This book demystifies strategy.For example, just setting an ambitious goal is not a strategy.This simple truth explained my confusion listening to leaders present their “strategies” over the years.Without a plan, a goal stands alone and is likely unattainable.A good strategy thinks through a plan to achieve that goal and gives a motivation for pursuing that goal.The author, Richard Rumelt, illustrates this and many other points with real stories presented in quick, easily consumable chunks.The 7 page story about Howard Schultz and the origin story of Starbucks was so well written that I shared it with my 15 year old. She said she’d never think about Starbucks the same again. Now that’s approachable writing.(And I love the iterative and discovery oriented approach that Schultz used to morph his original Italian themed cafe into what is now the Starbucks we know.)To Rumelt, real strategy is flexible, not rigid. He calls strategy a hypothesis that needs testing, testing, testing. The parallels to Product Discovery come through again and again in this book.The author structures a good strategy with:1) a diagnosis (akin to a “problem”)2) a guiding policy (a “solution”)3) coherent action (a series of “steps to achieve the solution”)A bad strategy lacks one or more of those items. A bad strategy is often just “positive thinking.” A bad strategy has a lack of focus and tries to please everyone. A bad strategy is full of “fluff” (a Rumelt formal term). Bad strategy just sets goals or makes a simple statement of direction for the company and stops there.This book will help you analyze existing strategy and create your own.What’s unique about this book: The juxtaposition of good and bad strategy examples makes the author’s points much better than just advocating for good strategy.The heavy use anecdotes and stories sets it above the average business book.It’s also unique because it breaks down one of the largest, most mysterious business concepts (strategy) into something any of us can do.My Advice: Try to reflect on one way you can influence your strategy for each of the techniques he covers in Part II: Sources of Power.Audience: Anybody who manages people, a budget or both. If you need to make decisions and set goals, this book will help you separate the fluffy thinkers from the serious thinkers.Style: The book often starts with a snippet of theory and then supports it with stories from companies that the author worked with. Then to mix it up, the author will start with a story and then work in the theory as he goes. The latter style is intriguing since it keeps the reader engaged by making you guess which direction the advice will go.

Excelente livro, presente para minha neta,

Great book for strategy. It has very good applicable advises and interesting stories to explain the concepts. Sometimes there are more examples than necessary, and the stories can get sometimes too long, but it is a great book overall.

Very happy with the product and the seller was very communicative and helpful

This book has made me put things in perspective. This book itself does not make you a good strategist, but it sure gives you a lot you can work on.

Excelent!!!! No one should start a strategy planning meeting without having read this book!!! Very deep views and analysis.Great work!!! Hi