Richard Rumelt writes about strategy like how Stephen Ambrose conveys American military history. He names the organisations involved (though not shaming individuals). In a literary sense, I thought he rips those organisations with poorly articulated strategies a new proverbial hole behind.
Enough real-world cases to make his points extremely compelling (of good and bad strategy): CISCO; Starbucks, Nvidia; IBM; Ford; TiVo. Not just well-known names but also relatively unheard of individuals.
P2. That strategy is not to be equated with ambition, “vision”, planning, or economic logic of competition.
Sums up leadership’s role in strategy formulation: P2 “a leader’s most important responsibility is to identify the biggest challenges to forward progress and devising a coherent approach to overcoming them”.
P4/5 a good strategy is more than just urging people forward towards a goal or vision. It is about honestly acknowledge the challenges/ problems, provides an approach to overcoming them. Then coordinating efforts in implementing that approach.
Says that good strategy is the exception and not the rule. And is a growing problem.
P6 (what is strategy?) A coherent set of analysis, concepts, policies, arguments and actions to a problem/ challenge.
There is an articulation and framing (involving perspectives) of a problem, expressed as a diagnosis. Then setting guidelines as a way to determine choice (its important to choose; choice implies having to decide on a limited scope). Then a set of specific and ‘coherent’ plans.
P7 strategy involves specifying action on how to resolve a challenge/ problem. a leader can set goals and leave others to achieve it. But that’s not strategy; that’s goal setting.
P7 “kernel” of a strategy contains three elements:
- a diagnosis (defines/ explains the nature of the challenge)
- a guiding policy (an overall approach that is *chosen* to cope or overcome the obstacles identified in the diagnosis)
- coherent action (to carry out the guiding policies; coordinated steps that work with one another rather than in isolation of activities)
The guiding policies are signs posts to guide the direction but leaves out details; the coherent action have “feasible coordinated policies”, resource commitments and actions made to carry out the guiding policies.
P8 “a bad strategy tries to cover all the bases rather than focus resources and actions”. Stating multiple goals and initiatives (that seem like progress), but that has no coherent approach, is not strategy.
On Apple; 1991 Gulf War
How executives he once interviewed all tend to say that the competition succeeded because they could react fast and and correctly (not necessarily the first). But when asked of their strategy it was merely a laundry list of initiatives and nothing about being able to identify new opportunities and being able to act fast in response.
David & Goliath analogy of “insights”; Walmart’s success as not on breaking conventional wisdom of the sustainability of a discount store’s customer base but on what is a “store” (the network was the store).
P31 that “insight”. It’s not about doing more. It’s about doing what is purposeful in dealing with a problem.
P32 bad strategy has: fluff, failure to address the challenge, mistakes goals for strategy, bad strategic objectives (I.e. do not address problems or are impractical).
P36 “bad strategy is long on goals and short on policy or action.”
P55 explains why the “strategy” adopted by the Los Angeles Unified School District was ‘bad’.
P58/59 why there is so much bad strategy. Suggests that one issue is that leaders are not willing to choose or make tough internal decisions; formulating strategies by completing templates; “new age” visioning that is pseudo-science.
Strategy involves making choices; focus on some goals and setting aside others. “When this hard work is not done, weak amorphous strategy is the result.”
P64 “universal buy-in usually signals the absence of choice”.
P65 reliance on a “transformational/ charismatic leader”, where a leader develops a vision, inspires people to sacrifice or make change, and then empower people. Author argues that leadership is not the same thing as strategy. A good leader helps people cope better with change. But strategy is figuring out what is worth changing and is worth pursuing.
P67 cites Ghandi has both possessing charismatic leadership and at the same time, implements good strategy (diagnosis, guiding policies, coherent actions).
P68- 70. He rips apart the stated mission, vision and strategies of some real world organisations.
P71 – 74 on “new thought” leadership; evolving from religious doctrines, then to quasi-science (he includes ‘positive thinking’ in this category) and eventually espoused as management concepts.
P85 the heart in a strategy is the organisation (competitive) advantage. ‘Advantage’ acts as the lever/ multiplier.
P94 on when to have high degree of coordination: When gains are very large; coordination and high degree of coupling has high costs.
P108 using proximate objectives to deal with ambiguity; cites 1960s moon landing where designers of the lunar lander had no clue of the moons surface. One director made her best guess and told the engineers what it would look like, and they were able to get to work. It was an educated guess, called for by circumstances.
P111 “take a strong point and create options”
P117 being able to identify “limiting factors” and those that can or cannot be fixed. E.g. Noise from a high way will always affect property prices, no matter how nice the home.
P125 fascinating story of Hannibal defeating the Romans; cites Hannibal as the father of strategy.
P127 strategy in its purest form: premeditation, anticipation of others’ behaviour, purposeful design.
P129 on Hannibal’s strategy akin to a design of the battlefield. Likens strategy formulation as a process as much as a design.
P142-150 chapter 10; on Focus as a straetgy; walks through how he conducted an MBA class using Crown Cork & Steel as a case study to investigate and discover its strategy. The company supplied cans for beer companies. In such an industry beer-can manufacturers are “captive producers” to the beer company (the large scale can suppliers were beholden to the demands of the beer company). CCS was able to change the rules of the industry by being a supplier of much smaller runs for smaller beer companies and was able to negotiate better deals since it had more clout. CCS wasn’t the largest manufacturer but it was the more profitable and had highest ROE.
P156/ 159 on mergers and acquisitions as a “strategy” fir growth; growth of a business is not something that can be engineered. It’s a reward for successful innovation, cleverness, efficiency, creativity.
P169 increasing value of a business requires a strategy for at least one of these fronts: deepening advantages; broadening the extent of the advantages; creating higher demand for advantaged products; strengthening the isolating mechanisms that block easy imitation by competition.
P243 strategy can be likened to science; a set of hypotheses that is refined and aimed to be proven.