BOOK REVIEW "Good Strategy / Bad Strategy" by Richard Rumelt (2011)

Summary

John Kay, one of Britain’s leading economists, declared that this is “the first book on strategy that I have found difficult to put down.” He is not the only one. It is an excellent read and gives a very thoughful insight into the strategic choices that companies must face. This has to be one of the best books on strategy that I have read this year.

Key words

Strategy, understanding strategy, market leader, sustainable competitive advantage.

Richard Rumelt: Simply being ambitious is not a strategy

Like many books on strategy it looks at why some companies have succeeded and why other have failed. So far, so good. Most authors though (and particularly in litigation crazy USA) are worried about offending someone. This means that they limit their criticism to high profile failures (World.com, Enron, Lehman Brother etc.) or just talk about some nameless company that they have consulted for and would like to consult for again. Not so, Mr. Rumelt. As an acclaimed professor at UCLA he has clearly got to the age where he is happy to speak his mind. And this gives a very forthright description of how good and bad strategy comes to be formulated. It makes the book a fantastic read.

The key to good strategy, says Mr. Rumelt, is execution and the key to that is understanding the hidden forces that make up the corporate culture. Again, a lot of books would stop here at the macro level. Too often people complain about the culture within their organization forgetting that they themselves are part of the problem. The book addresses this by giving some clear advice at an individual level on how to think strategically and implement policies.

What is remarkable about Jobs’ turnaround strategy for Apple is how much it was “Business 101” and yet how much of it was unanticipated

For any student wanting to do a presentation on the strategy of the following companies this book is a must (ask you professor if he has read the book before claiming that it is your own personal analysis!)

Interesting quotes from the book:

Simply being ambitious is not a strategy.

A good strategy has an essential logical structure that I call the kernel. The kernel of a strategy contains three elements: a diagnosis, a guiding policy, and coherent action.

 What is remarkable about Jobs’ turnaround strategy for Apple is how much it was “Business 101” and yet how much of it was unanticipated.

“WalMart is a store; it is a network of 150 stores.” says UCLA professor Mr. Rumelt

 Mass merchandisers began to use bar-code scanners checkout stations in the early 1980’s. Most retailers saw the bar-code scanner as a way of eliminating the cost of constantly changing the price stickers on items. But Wal-Mart went further, developing its own satellite-based information systems. It isn’t the store; it is the network of 150 stores.

Ken Olsen, CEO of DEC made the mistake of asking the group to reach a consensus

 In early 1992, I sat in on a strategy discussion among senior executives at the Digital Equipment Corporation (DEC) that concerned the future direction of the company. DEC’s chief executive, Ken Olsen, had made the mistake of asking the group to reach a consensus.

 All analysis starts with the consideration of what may happen, including unwelcome events.

 A great deal of strategy work is trying to figure out what is going on. Not just deciding what to do, but the more fundamental problem of comprehending the situation. A good strategic diagnosis does more than explain a situation – it also defines a domain of action.

Strategy is about action, about doing something. The kernel of a strategy must contain action.  Strategy is primarily about deciding what is truly important and focusing resources and action on that objective. It is a hard discipline because focusing on one thing slights another.

Many writers on strategy seem to suggest that the more dynamic the situation, the farther ahead a leader must look. This is illogical. Therefore, the more uncertain and dynamic the situation, the more proximate a strategic objective must be.

One way to find fresh undefended high ground is by creating I yourself through pure innovation. Dramatic technical inventions, such as Gore-Tex, or business model innovations, such as FedEx’s overnight delivery system.

Interview with Richard Rumelt

Good Strategy  Richard Rumelt Business School  Grenoble EM  International Affairs   Higher Education   Blog  Global Ed   Graduate Business School    Mark Thomas

See also:

    

Other Book Reviews

BOOK REVIEW: ‘Good Strategy/Bad Strategy’

The Washington Times: “What is so upsetting about “Good Strategy/Bad Strategy” is that it leaves the reader with the painful realization that none of our would-be leaders has the least notion what really ails this once-great nation, let alone any clear strategy for leading us back.”

Book review: Good Strategy/Bad Strategy, by Richard Rumelt

Management Today: “In terms of what strategy actually is, Professor Rumelt offers a simple definition. A good strategy does more than just urge us forward … it honestly acknowledges the challenges being faced and provides an approach to overcoming them.”

Business book review: Good Strategy / Bad Strategy

Business Traveller: “Lots of business books contain useful advice, but this is in a different league. Rumelt is a respected strategist, and one who writes wonderfully and cuts through the normal corporate speak.”

    

Related Blog Articles

Strategy Land – Richard Rumelt´s Blog

“Richard Rumelt’s Web Journal on Good and Bad Strategy in Business, Politics, and Economics”

Peter Lorange’s Blog

“Blog of Professor Dr. Peter Lorange , one of the world’s foremost business school academics.”

Good Strategy/Bad Strategy and Higher Education

Higher Education Management: “I think universities can move in new directions; they can identify new opportunities and shift resources accordingly. But they don’t have much practice. For last several decades, universities have had the luxury of not needing to make especially tough decisions.”    
   

The story of the ups and downs of Starbucks and why Howard Schultz decided to return as CEO.	600 pages and excellent from start to finish. Learn about the man and his strategy.	Nobel Prize winner and one of the best sellers this year. A must read for any business student.

 

Classic book that gives the ins and outs of creating new markets.	An excellent outline of some of the fundamental issues in strategic management. The book is short and generally to the point.	Discussion on some of the key issues in strategic management. The book requires some background knowledge of the subject.