Good Strategy Bad Strategy 17: Using Your Head (Richard Rumelt)

Basic strategy questions from Richard Rumelt's first field interview for his Harvard case study:

1. What are you trying to accomplish here? What's the purpose of this initiative?

2. What are the core skills/competencies required for this to work?

3. How about the competition, strengths, weaknesses, key opportunities, etc.?

4. What about your strengths and weaknesses?

5. What are the most difficult challenges you face? 

Rumelt tells a story about a consultant who was paid $10 000 by Andrew Carnegie in 1890. Why did Carnegie pay such a massive sum? Because the consultant had advised Carnegie to make a list of his 10 most important things he can do for his business, and then start doing them from number 1. 

Duh. Everybody makes a list these days. What's so special about that? What makes it worth $10 000 in 1890? 

Rumelt suggests that Carnegie didn't make a list of random everyday errands. He guesses that Carnegie gained real value from actually thinking about his most important objectives and getting them done. It was remembering what was important and urgent that resulted in value for him. 

Remember we said strategy is not just about thinking and planning, it's also about execution. Execution is where the magic happens. Execution is the thing that gives you results. 

There are many elements that come together to form a strategy. And how you direct your focus will determine the eventual outcome. For example, will you focus on improving the product, better terms from suppliers, exploring new markets? Each of these will result in a different guiding policy and different actions.

But then, who says you only have to thing about one avenue? Who says you only have to think about one approach? Why settle for the first insight that pops into your mind? This right here is the value of thinking about your own thinking. This is where you need to weigh the potential consequences of each approach and make a judgment about how to proceed. You can't determine which is the best way if you've only thought about one way. Let's look at alternatives - let's compare - and then choose what we think is best.

Rumelt says, "you must develop the ability to question your own judgment. If your reasoning cannot withstand a vigorous attack, your strategy cannot be expected to stand in the face of competition." Ask yourself, what is wrong with this approach? What could yield better results if done differently?

To strengthen your strategic prowess, always remember that a strategy is incomplete without the kernel discussed in earlier chapters (diagnosis, guiding policy and coherent action). It's often best to start with the problem and then working your way towards a solution. You can't invent a solution unless there is a problem that needs to be addressed. 

Judgment begins with knowing yourself, your abilities and biases, then it extends outwards.