Rumelt is not short of examples of ‘bad strategy’ in his book about what has gone wrong for most businesses. But he also offers extremely straightforward advice for getting strategy right, or ‘good’, such that one wonders how so many get it so wrong.
He discusses three simple elements of ‘good’ strategy: 1) identify the business challenge, 2) establish a guiding policy for operating that produces an advantage, and 3) defining a set of coordinated actions that will deliver results, realising the business’ objectives.
- First, you need an objective diagnosis that defines the nature of the challenge. “A good diagnosis simplifies the often overwhelming complexity of reality by identifying certain aspects of the situation as critical.”
- Second, your guiding policy defines how you’ll deal with the challenge. “This is an overall approach chosen to cope with or overcome the obstacles identified in the diagnosis.”
- Finally, you create a set of coherent actions to implement the guiding policy. “These are steps that are coordinated with one another to work together in accomplishing the guiding policy”
Although the book is positioned primarily around considering significant strategies, appropriate for the most complex business operations, the lessons are equally applicable to every business endeavour. So, as business psychologists, we could be using these lessons to focus our clients and ensure the objectives of our interventions are understood, useful and realised.
Rumelt is extremely credible; he holds a chair at UCLA’s Anderson School of Management when he is not consulting on strategy for the likes of Shell International, the U.S. Department of Defence and a substantial list of top-tier multinational corporations and nonprofits.
If you enjoy anecdotes and case studies, then this book will delight you. On the other hand, if you like to cut to the chase, you’ll probably find yourself skimming or skipping half the pages.