Richard Rumelt states that a successful company almost always has a simple and obvious strategy. A talented leader has identified one or two critical issues, then focuses and concentrates action and resources on them. That company has identified a good strategy and so can you. With the help of Richard Rumelt, we’ll be able to find the difference between Good Strategy and Bad Strategy.
Bad Strategy is Vague and Ambiguous:
Bad strategy skips over those annoying details such as the actual problem. It ignores the need to focus on the best option and tries to accommodate a multitude of conflicting demands and interests.
For many people in business, education, and government, the word “strategy” has become a grammatical appendage. Business speech has transformed marketing into “marketing strategy,” data processing into “IT strategy,” and making acquisitions into a “growth strategy.” When you describe the strategy in such a way, you create a wide gap between your “strategy” and actually implementing it.
Bad Strategy is Fluffy:
Rumelt defines fluff as a form of gibberish masquerading as strategic concepts or arguments. Fluff is a statement of the obvious combined with a generous sprinkling of buzzwords. Fluff is vague words disguised as expertise, thought, and analysis. Here’s an example from a bank: “Our fundamental strategy is one of customer-centric intermediation.” Take away the fluff and they are basically saying: “Our bank’s fundamental strategy is being a bank.”
Good Strategy is Innovative and Ambitious:
Rumelt has a few core ideas about what makes up a good strategy:
- A good strategy is being responsive to innovation and ambition.
- A good strategy recognizes the challenges being faced and provides an approach to overcoming them.
- A good strategy doesn’t just draw on existing strength; it creates strength through the coherence of its design.
- Good strategy requires leaders who are willing and able to say no to a wide variety of actions and interests.
Leverage: I’ve got the power:
A good strategy draws power from focusing minds, energy, and action. That focus, channeled at the right moment onto a pivotal objective, can produce a cascade of favorable outcomes. Rumelt calls this “power leverage”.
To achieve leverage, the strategist must have insight into a pivot point that will magnify the effects of focused energy and resources. A pivot point is a natural or created imbalance in a situation, a place where a relatively small adjustment can unleash much larger pent-up forces. In business, the pivot point may be an imbalance between a rival’s position and their underlying capabilities, between vision and reality.
Find a Proximate Objective:
One of a leader’s most powerful tools is the creation of a good proximate objective—one that is close enough at hand to be feasible.
President Kennedy’s call for the United States to place a man on the moon by the end of the 1960s is often held out as a bold push into the unknown. In reality, landing on the moon was a carefully chosen proximate strategic objective. Seemingly audacious to the layman, the goal was proximate. It was a matter of marshaling resources and political will.
A good proximate objective’s feasibility will improve the energy and focus of your organization. The more uncertain and dynamic the situation, the more proximate a strategic objective must be. The proximate objective is guided by forecasts of the future: the more uncertain the future, the more its essential logic is that of “taking a strong position and creating options,” not of looking far ahead.