Good Strategy, Bad Strategy

Good Strategy, Bad Strategy

Updated 5 days ago

The difference and why it matters

by Richard P. Rumelt

A good strategy has an essential logical structure called the Kernel.

The kernel of a strategy contains three elements:

  1. a diagnosis,
  2. a guiding policy,
  3. a coherent action.
  • The guiding policy specifies the approach to dealing with the obstacles called out in the diagnosis. It does not define the details, but serves like a sign-post for directions
  • Coherent actions are feasible coordinated policies, resource commitments, and actions designed to carry out the guiding policy
The most basic idea of strategy is the application of strength against weakness or strength applied against most promising opportunity

The standard modern treatment of strategy has expanded this idea into a rich discussion of potential strengths, called advantages.

  • advantages due to being a first mover: scale, scope, network effects, reputation, patents, brands, and hundreds more

In my understadning this means/its like: Meta applying its strengths of software development and VR headsets, into promising blockchain enabled opportunities to generate even more Metaverse hype today. (Strength + Promising opportunity = Strategy)

That is a midlevel framework which misses two huge, incredibly important natural sources of strength

  1. Coherent strategy - one that coordinates policies and actions. A good strategy doesnt just draw on existing strength. It creates strength through the coherence of its design (same feel). Most organizations dont do this. Rather, they pursue multiple disconnected objectives, or worse, ones that conflict each other.
  2. Creation of new strengths through subtle shifts in viewpoint (re-image products with digital first mindset, Quantiphi). An insightful reframing of a competitive situation can create whole new patterns of advantage and weakness. (e.g The victory of David's apparent weakness over Goliath's apparent strength)
Having conflicting goals, dedicating resources to unconnected targets and accomodating incompatible interests are luxuries of the rich

I believe this description the author uses may apply to large corporations as well. Internally teams may have conflicting goals in forcing an specific approach to working-style or strategy. Good strategy requires leaders to say no to a wide variety of actions and interests.

Strategy is at least as much about what an organization does not do as it is about what it does.
A small favor

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