Good Strategy / Bad Strategy by Richard P. Rumelt is a comprehensive look into what makes a good strategy. Here are my notes, hightlights and quotes:
What does good strategy look like?
Good strategy is almost always simple - it won't take a thick deck of slides to explain. It acknowledges the challenges being faced and provides an approach to overcome them.
At its core a good strategy will include:
- Guiding policy
- Set of coherent actions
Good strategy is hard work. You need to try and comprehend the current situation. A good diagnosis will replace complexity of reality with a simpler story.
Your own thinking is better than any tool or framework - cultivate three habits: have a variety of tools for guiding your attention, develop the ability to question your own judgement and record your judgements so that you can improve.
What does bad strategy look like?
A combination of not acknowledging the challenges, mistaking goals for strategy and bad strategic objectives.
How to take action
Begin your analysis with considering what may happen including unwelcome events. You need to identify one or two critical issues which have potential to multiply effectiveness of effort then concentrate action and resources on them.
You'll need to identify strengths and weaknesses, assess opportunities and risks, then building on those strengths.
A guiding policy tackles obstacles by drawing upon sources of advantage.
Create objectives which are close enough to be feasible.
I've created a checklist from common themes and important points from the book.
- Does the diagnosis define a domain of action?
- Does the strategy acknowledge challenges faced?
- Does it contain 'The Kernel' (Diagnosis, guiding policy, coherent action)?
- Does it identify strengths, weaknesses, opportunities and risks
- Does it picked one or two attractive opportunities to focus on?
- Is this a strategy or a strategic goal?
- What one single feasible objective, when accomplished, would make the biggest difference?
- Does it include a set of strategic objectives (sub-goals)?
- Does the guiding policy consider the why as well as the what?
- What are the limiting factors?
- What works? What doesn't? Why?
- Does it provide a variety of feasible actions to overcome the challenges faced?
- Does it pass your virtual panel of experts?
- Does it say what we are not going to do?
- Is it simple to explain?
"If you fail to identify and analyse the obstacles, you don’t have a strategy. Instead, you have either a stretch goal, a budget, or a list of things you wish would happen."
"The end result will be a strategy that is aimed at channelling energy into what seem to be one or two of the most attractive opportunities, where it looks like you can make major inroads or breakthroughs."
"Winging it is not a strategy."
"If you are serious about strategy work, you must always do your own analysis."
"The ultimate worth of a strategy is determined by its success, not its acceptability to a council of philosophers or a board of editors."
On chain link systems: "If you are in charge of one link of the chain, there is no point in investing resources in making your link better if other link managers are not."
"A good strategy creates advantage by magnifying the effects of resources and actions."
"A new strategy is, in the language of science, a hypothesis, and its implementation is an experiment."
"Inertia by proxy disappears when the organization decides that adapting to changed circumstances is more important than hanging on to old profit streams."
"Focus has two meanings - First, it denotes the coordination of policies that produces extra power through their interacting and overlapping effects. Second, it denotes the application of that power to the right target."
"Growth is the outcome of a successful strategy and attempts to engineer growth are exercises in magical thinking."
"Leaders often generate ideas and strategies without paying attention to their internal process of creation and testing."
"An engineer starts with complexity and crafts certainty."
"There can be times when results are fine, when no new opportunities seem to have developed and no new risks have appeared. Then, the logical answer to the strategy question is simply “Keep it up, do more of the same.”
"Shift your attention from what is being done to why it is being done, from the directions chosen to the problems that these choices address."
"Trying to destroy your own ideas is not easy or pleasant. It takes mental toughness to pick apart one’s own insights. In my own case, I rely on outside help — I invoke a virtual panel of experts that I carry around in my mind."
"Judgment begins with knowing yourself, your abilities and biases. Then it extends to knowing other individuals."