Good Strategy, Bad Strategy | Richard Rumelt

Jan 21, 2024 1h 49m 19 insights Episode Page ↗
Richard Rumelt, author of *Good Strategy, Bad Strategy* and *The Crux*, discusses the concrete elements of good strategy, why to call them "action agendas," and how every great strategy starts with a clear diagnosis of the biggest challenge. He emphasizes focus, power, and overcoming organizational dynamics.
Actionable Insights

1. Diagnose the Core Challenge

Begin strategy formulation by deeply diagnosing the specific, high-stakes challenge you face, focusing on “what makes it hard” to understand the nature of the problem.

2. Apply Strategy Kernel

A good strategy consists of three core elements: a clear diagnosis of the situation, a guiding policy for how to deal with it, and coherent actions that implement the policy and don’t contradict each other.

3. Use “Action Agenda” Term

Instead of calling it a “strategy,” refer to it as an “action agenda” to emphasize concrete steps for addressing a problem, rather than abstract concepts or long-term missions.

4. Prioritize Addressable Challenges

When selecting challenges to tackle, prioritize those that are both important (close to your ambitions) and genuinely addressable, meaning you can actually make progress on them.

5. Leverage Asymmetry & Power

To create a winning strategy, identify and exploit an asymmetry or unique source of power (e.g., reputation, relationships, specialized knowledge, network effects) and focus that power on an achievable target.

6. Concentrate on Few Priorities

To maintain focus and effectiveness, limit your priorities to a few key items, understanding that “priority” means “the first” and trying to do too many things diffuses effort.

7. Avoid Bad Strategy Pitfalls

Avoid strategies that are merely a list of abstract goals or ambitions, contain “fluff” or word salad, or propose incoherent actions that contradict each other, as these are signs of a bad or non-existent strategy.

8. Immerse for Strategic Insight

Develop strategic insight by deeply immersing yourself in the nature of the problem, as this dedicated study often leads to breakthroughs in understanding how to deal with complex situations.

9. Learn from History’s Analogies

Read widely in history, biographies, and business history to gain a rich understanding of past human experiences, which provides valuable analogies for strategic thinking in current complex situations.

10. Practice “Think Again”

After forming an initial diagnosis or understanding, actively challenge it by asking if there’s another way to look at the situation, fostering deeper and more accurate insights.

11. Address Organizational Inertia

Recognize that organizational dynamics, diverse interests, and fear of change are major hindrances to strategy execution, requiring a clear decision-maker to align efforts and overcome resistance.

12. Embrace Decisive Leadership

A leader must ultimately make clear decisions, stating “it’s going to be this way” and assigning responsibilities, as a hierarchy of power is necessary to coalesce around an action agenda and overcome conflicting interests.

13. Startup: Adapt & Search

For startups, be prepared to quickly adapt your product-market solution based on new information, continuously searching and pivoting until you find what resonates and enables growth.

14. Startup: Conviction & Flexibility

As a founder, cultivate the dual skill of unwavering commitment to your vision while also maintaining the flexibility to pivot and change direction when initial assumptions or approaches prove ineffective.

15. Identify “Value Denied”

Look for “value denied” opportunities by identifying products or services that should exist or function perfectly but currently don’t, then explore how to design or deliver them.

16. Design “Perfect X”

Engage in design thinking by imagining the “perfect” version of an everyday object or service, listing its ideal attributes, and then considering how those improvements could be engineered.

17. Ask “What Was Hard?”

When interviewing or assessing strategic thinking, ask individuals about a difficult accomplishment they are proud of, focusing on the nature of the challenge and their process for overcoming it.

18. “More Than Ever” Motto

When asked by a partner if you still love them, the correct and impactful response is “more than ever,” a simple yet profound affirmation of enduring affection.

19. Create Writing Tension

To make writing more engaging and emotionally resonant, intentionally create tension by highlighting difficulties, dilemmas, or contrasting elements within the narrative.