Takeaways: Good Strategy / Bad Strategy (Rumelt), Part 3

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In my continuation of takeaways from Good Strategy / Bad Strategy, we’re diving deeper into why bad strategy is so… bad. This read was useful because it gave my “bad strategy” sensors a boost while deepening my diagnostic toolkit. Here we go!

  • Takeaway #1: “Bad strategy flourishes because in choice there is pain or difficulty.”

The willingness to choose a path and invest in it, while forgoing other potentially-valid paths, seems to be the thematic lesson of this book. If your team is focusing on one or few things, I can see why your company might end up with a ton of middle management. Team topology and resource investment are in tension with one another.

You could spin up a product team of 6 engineers. Their sole strategic focus could be “deliver a comprehensive reporting dashboard” to customers by EOQ. You’d probably get a good product, and your customers would be happy, and the code would be in decent shape.

Now could you create more “focus” with more teams? What if you split them into 2 teams of 3? Now you can work on “Onboarding v2” in the same quarter. Of course, with fewer resources per team, you would need to compensate to get the same output.

Perhaps you’ve fostered a culture of discipline and a have strong process to make sure you get a high quality result in the same time frame. No wasted cycles.

Can you push it further with 3 teams of 2? I’d reckon that you shouldn’t unless you have a team of all-star seasoned software engineers who have been working on features like these for a decade. In that case, you’d be better off buying $GME.

Something something startup analogy about arrows + wood.

  • Takeaway #2: “Weak amorphous strategy is bad strategy”

Rumelt spins a story about an internal struggle at DEC, a computer equipment company founded in the 1960s, and acquired by Compaq in the 90s. In short, the CEO instructs a team with competing proposals to “find a consensus”, which couches the group in a political battle rather vs. an objective analysis. “There was no basis in logic or hierarchy to reject a subgroup’s passionately-held positions…” as there was no strategic direction for them to feed into. They could not agree on what deserved focus and what got the chopping block.

In order to preserve feelings, and because there was no logical context, they held a vote. They were unable to make the hard decision to set aside their individual desires because there was nothing to guide them.

It’s a key distinction Rumelt makes about bad strategy. It’s the unwillingness or inability to make the hard choice. Keep that in mind when you’re judging.

  • Takeaway #3: “Universal buy-in usually signals an absence of choice.”

  • Takeaway #4: “Sometimes people persevere with a bad strategy because they can afford to. Essentially, they pay not to make hard choices.”

  • Takeaway #5: “The longer an activity is maintained, the harder it will be to deviate from that pattern in the future”

That last one is a doozy. Things at at their most malleable when they’re in their infancy. This is why companies create “innovation labs” or “investment” arms. Start or buy fresh-faced groups who aren’t couched in a dozen years of “we’ve always done it this way.” Take Liberty Mutual. Founded in 1912. After 109 years, they employ 45,000 people globally. They need to think 5 years ahead just to keep from stagnating. 15 years ahead to grow revenue by the billion. Have you checked out their innovation lab? Their investment arm? They’re creating pathways to their future.

  • Takeaway #6: “Charisma and leadership must always be joined with careful attention to obstacles and action.”

Think Ghandi in India (success) vs. one of our recent presidents (not a success by most standards).

  • Takeaway #7: “Your strategy should provide guidance.”

Rumelt calls out the DoD’s strategy of “Deter conflict—but should deterrence fail, to fight and win the nation’s wars”. Hard to argue, but how does it help the DoD? It’s like a pool company saying “we guarantee everyone who swims in water will get wet!”.

His reference was better.

  • Takeaway #8: “The first step to making a strategy real is finding the AHA! to gain sustainable competitive advantage”

  • Takeaway #9: “If you don’t have a competitive advantage, don’t compete”- Jack Welch

⭐️ These takeaways boosted a few so-so goals from our recent strategic planning session. For example one (admittedly banal) goal was to “establish a technical platform team”. This was inspired by an ownership vacuum around our cloud infra, bottlenecks in deployment, and myriad other friction. There is no guidance here around competitive advantage. When I think about how the platform could make our offering better than our competitors, the answer came easily! I’m in healthcare IT, so compliance, security, risk management, audit-ability are hard-to-copy achievements that platform could impact. On top of that, there are hundreds of medical record vendors out there. How could be make it easy to interop’ with any of them? Strategic guidance and competitive advantage is born.

  • Takeaway #10: “The idea that you ‘get what you think about’, a la The Secret, is total BS”

This is less of a takeaway and more of a breath of relief. How many people have you seen lean into this “new thinking” positivity to create an aura of success around their ideas? Rumelt cuts deep. “I would not care to fly in an aircraft designed by people who focused only on an image of a flying plane, and never considered modes of failure”. Amen to that.

🔖 Bookmark! next chapter, “The Kernel of Good Strategy”

The book again is Good Strategy / Bad Strategy: The Difference and Why it Matters by Richard Rumelt, and Thank you for reading Takeaways!

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