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by Richard Rumelt
Most people give up very close to the
finish line - Ross Perot
Book Review
Good Strategy Bad Strategy
What is strategy
Must define many plausible and immediate
actions
What an organization does + does not do
Heart of strateg...
Identifying bad strategy
●Skipping over problem details
●Ignoring the power of choice and focus
●Conflicting goals
● Laund...
Identifying bad strategy - 2
●High sounding sentiments
●Plan to spend more to get better
●Template style strategy with mis...
Identifying bad strategy - 3
●Non coherent strategies - conflict with one
another + pursuit of unrelated challenges
Good strategy
●Existing strength + strength through coherence
●Power of Steve Jobs strategy
●Power of Walmart strategy
● N...
Good strategy - 2
●Focus energy & resources on one or a very
few pivotal objectives whose
accomplishment will lead to casc...
Good strategy - 3
●Good strategy + Good organization =
Specialization at the right activities +
Essential amount of coordi...
Good strategy - 4
●Threshold effect (critical level of effort
required to affect the system) - limit
objectives to those t...
Good strategy - 5
●What is the one single objective, when
accomplished, would make a big difference?
●Very successful = Sp...
Good Strategy - 6
●Action is needed. Impediment to action =
Hope that painful choices can be avoided +
long list of priori...
Good Strategy - 7
●Ride the wave of change to get to high
ground. Needs intimate feel for its dynamics.
●Competitive advan...
Good Strategy - 8
●Power of NVIDIA strategy
o Sharp change in focus after first failure, from multimedia to 3D
graphics, a...
Roadblocks to Good Strategy
●Easy to take the first idea that comes to your
mind, full analysis of every issue needs time
...
Removing Roadblocks
●Have tools to fight your own myopia
●Question your own judgement
●Make recorded judgements to improve...
Removing Roadblocks - 2
●Have a panel of experts in mind that you are
familiar with. Use internal mental dialog
●Identify ...
Good Strategy Kernel
Diagnosis Guiding Policy Coherent Action
Signpost for
approach to deal with
obstacles
But
Not defined...
Leader's responsibility
1.Decide which pathways will be most fruitful
2.Design a way to marshal the organization's
knowled...
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Book summary: Good strategy bad strategy

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A book by Richard Rummelt.

Published in: Business

Book summary: Good strategy bad strategy

  1. 1. by Richard Rumelt Most people give up very close to the finish line - Ross Perot Book Review Good Strategy Bad Strategy
  2. 2. What is strategy Must define many plausible and immediate actions What an organization does + does not do Heart of strategy = Advantage
  3. 3. Identifying bad strategy ●Skipping over problem details ●Ignoring the power of choice and focus ●Conflicting goals ● Laundry list of desirable outcomes ● Ignoring genuine competence ● unfocused resources
  4. 4. Identifying bad strategy - 2 ●High sounding sentiments ●Plan to spend more to get better ●Template style strategy with mission, vision & objectives ●Belief that only positive attitude is enough ●Pursuit of unrelated challenges
  5. 5. Identifying bad strategy - 3 ●Non coherent strategies - conflict with one another + pursuit of unrelated challenges
  6. 6. Good strategy ●Existing strength + strength through coherence ●Power of Steve Jobs strategy ●Power of Walmart strategy ● No ambitious revenue & profit goals ● Redesign of whole business logic around a simplified product line ● Large store + low inventories ● Barcode + integrated logistics + frequent just- in-time deliveries
  7. 7. Good strategy - 2 ●Focus energy & resources on one or a very few pivotal objectives whose accomplishment will lead to cascade of favorable outcomes ●Find the theory of failure to create a better strategy ●Push resource to some end away from something else
  8. 8. Good strategy - 3 ●Good strategy + Good organization = Specialization at the right activities + Essential amount of coordination ●Strategic leverage = Insight into what is pivotal + Concentrated application of effort ●Pivotal points magnify the effect of focussed energy & resources ●Concentration = focus on limited objectives
  9. 9. Good strategy - 4 ●Threshold effect (critical level of effort required to affect the system) - limit objectives to those that can be affected ●Better to turn around small objectives than incrementally affect many big objectives ●Find proximate objectives - close enough at hand to be feasible - to achieve or overwhelm target
  10. 10. Good strategy - 5 ●What is the one single objective, when accomplished, would make a big difference? ●Very successful = Special skill or insight at removing limiting factors ●Going step by step and refocus on one goal at a time ●Concentration - invest in resources where it will make the large visible difference
  11. 11. Good Strategy - 6 ●Action is needed. Impediment to action = Hope that painful choices can be avoided + long list of priorities that can be achieved ●Going step by step and focus on one goal at a time ●Press where you have advantage. Side step where you don't ●Extensions based on proprietary know how
  12. 12. Good Strategy - 7 ●Ride the wave of change to get to high ground. Needs intimate feel for its dynamics. ●Competitive advantage - If you can see 10% more in the fog than other can see ●Introduce simplification to break inertia ●Check coherence daily, monthly or yearly to avoid being lost
  13. 13. Good Strategy - 8 ●Power of NVIDIA strategy o Sharp change in focus after first failure, from multimedia to 3D graphics, adoption of SGI triangle o Limitless demand was anticipated in 3D graphics ●Creating strategy - Take viewpoint of others (rival, customers etc.), not your own thinking! ●Intense attention to data and what works! ●Analyze Insights (ideas that pop in the head)
  14. 14. Roadblocks to Good Strategy ●Easy to take the first idea that comes to your mind, full analysis of every issue needs time & energy. ●Complex situation: too many variables, ill structured > makes people uncomfortable ●Beyond the edge of our vision there may be better ideas!
  15. 15. Removing Roadblocks ●Have tools to fight your own myopia ●Question your own judgement ●Make recorded judgements to improve in future ●Welcome different ideas rather than tweaking the initial one slightly ●Try hard to destroy existing alternatives
  16. 16. Removing Roadblocks - 2 ●Have a panel of experts in mind that you are familiar with. Use internal mental dialog ●Identify substitution of popular slogan for insight ●Carefully and independently assess the situation
  17. 17. Good Strategy Kernel Diagnosis Guiding Policy Coherent Action Signpost for approach to deal with obstacles But Not defined details of the trip Coordinated policy Resource commitments Actions to carry out guiding policy Judgement about the meaning of facts: ● Classify situation ● Link facts to patterns ● Find issues to put more attention to
  18. 18. Leader's responsibility 1.Decide which pathways will be most fruitful 2.Design a way to marshal the organization's knowledge, resources and energy to that end 3.Overcome ambiguities about specific obstacles

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