Monday, April 29, 2013

3 things I liked in Richard Rumelt's “Good strategy, Bad strategy”

I have known Prof. Richard Rumelt of UCLA primarily through his interviews and carry a lot respect for his perspectives on strategy. I have found his metaphors like predatory leap and strategy as surfing a wave useful. It is no surprise that I enjoyed reading Rumelt’s “Good strategy, bad strategy (GSBS)”. In this book, Rumelt has condensed his wisdom of five decades and made it accessible to people like us.

In an earlier article I have written about the 3 challenges in implementing strategy that was based on the “bad strategy” part of GSBS. Here I want to focus more on the “good strategy” part and present what I liked about it, a few things I thought are missing and finally a few places where GSBS intersects with our book “8 steps to innovation”.

These are the 3 things I liked about GSBS in my first reading. I hope to visit the book again to discover more nuggets of wisdom.

1.     “Challenge” emphasis: I like the way Rumelt emphasizes the importance of “challenge”. He says – A good strategy honestly acknowledges the challenge being faced and provides an approach in overcoming them. This may look like an obvious statement. But ask yourself the question to state the topmost challenge you or your team is facing today and you will realize the difficulty. It involves a choice – a focus among tens or hundreds of problems you are facing and that is not easy. I liked the emphasis on stating the challenge because it can become a first checklist item to see if there is indeed a strategy. Is there a clearly identified challenge?

2.     Proximate objectives: Strategic goals can easily become blue-sky objectives (“We want to become number one player in our chosen market”) or Dog’s dinner list (“Our strategic plan has 7 strategies, 20 tactics and 234 action items”). None of them is helpful. To avoid this trap Rumelt suggests that the strategic goal should have a proximate objective – a feasible goal you are going after right now. If your objective is to send a spacecraft on the moon which can do soft-landing, your proximate goals could be to design something that will do soft-landing on the earth first. Similarly, for Indian Railways, to turn profitable was a distant goal in 2004. Instead, the slogan “heavier, faster and longer” provided more feasible goals in each of the three categories. Rumelt calls these categories – domains of action. This idea is so important according to Rumelt that he contemplated titling this book "The Proximate Objective"

3.     Strategy as a hypothesis: I was glad to see Rumelt acknowledge the role of experimentation in strategy – even if it meant waiting till “chapter 16”. He says – A new strategy , in the language of science, a hypothesis and its implementation is an experiment. This creates a new set of questions typically not found in the strategy textbooks – how do you design a good experiment? How to sequence experiments? How to build experimentation capacity? I believe that the language of experiment can add a rich set of vocabulary to strategy lingo dominated by “rollout” and “balanced score card”.

There are two things conspicuously missing in the book: (1) role of communication and (2) role of bright spots.

Role of communication: Rumelt rightly emphasizes the role of “coherent action” in a good strategy. However, he doesn’t mention the role metaphors and stories can play in generating coherent action. I feel that there is a lot of good work done in this area by people like Chip & Dan Heath in designing a good communication (e.g. Make to stick) that strategy world can use.

Role of bright spots: What is already working well perhaps in pockets may provide a good starting point. It is not so much about finding your strength as finding the situation that is working to your advantage. For example, when Intel was at crossroads and getting beaten in the memory business, microprocessors was a bright spot waiting to be spotlighted. We don’t know if in tough situations, every organization can find its bright-spot. However, I feel it is one of the most important techniques for designing culture-friendly approaches.

“8 steps to innovation” is not about strategy. However, it complements GSBS in many places like step-2 (challenge book), step-4, 6 and 7 (design of experiment and sandbox) and step-8 (create a margin of safety).

I feel “Good strategy, bad strategy” spanning close to fifty years of work in strategy is a must read for anyone interested in developing strategic thinking and implementing it.

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