Good Strategy Bad Strategy 04: Why So Much Bad Strategy? (Richard Rumelt)

Strategy requires a lot of work, part of which is to assess the competition, your own resources, the lessons of the past, and the opportunities and problems presented by change and innovation. 

In doing these things, any number of mistakes can be made, which may lead to the collapse of the strategic plan.

Rumelt excludes mistakes or miscalculation from what he calls bad strategy. He says, "Bad strategy is the active avoidance of the hard work of crafting good strategy. One common reason for choosing avoidance is the pain or difficulty of choice. When leaders are unwilling or unable to make choices among competing values and parties, bad strategy is the consequence."

He lists two other pathways that lead to bad strategy:

1. Template-style Strategy. Treating strategy as a one size fits all exercise. Defining vision, mission, strategies, etc. Instead of doing the proper assessments and reaching the proper conclusions. 

2. New Thought. The belief that all you need to succeed is a positive mental attitude. 

Let's assess these pathways in turn:

Strategy involves choice. If you just do everything that pops in your head, you have no incentive to think critically and assess your strengths and weaknesses against the competition's strengths and weaknesses. Having to make a choice forces you to think deeply. 

Secondly, you need to maintain coherence. Having to make a choice forces you to make decisions that are aligned with each other. Failing to make a choice leads to fluff, which doesn't help the organization win. 

Rumelt says that the hardest thing about creating strategy is choice itself. Good strategy is born from scarcity, which forces us to choose, since we don't have the capacity and the resources to do everything we can dream of. 

In order to be good strategy, you have to be good at saying no. You have to allocate resources towards certain objectives, and away from others. 

These choices become more difficult to make the more entrenched an organization is in the old ways of doing things. Habits are difficult to change and require a lot of willpower in the beginning. If leaders don't force this change, it may never happen. People will just go back to their familiar ways, to the comfort zone. 

The author blames the rise of charismatic leadership for this path of bad strategy. The charismatic leadership train has been boiled down to a simple formula:

1. Leader develops a vision,

2. Leader inspires people to sacrifice or change for the good of the organization, and

3. Leader empowers people to accomplish the vision.

But, according to Rumelt, strategy and leadership are not the same thing, though they are sometimes engendered in the same person. "Strategy is about figuring out which purposes are both worth pursuing and capable of being accomplished."

"To achieve great ends," he continues, "charisma and leadership must almost always be joined with a careful attention to obstacles and action. Companies need strategy, not a set of slogans."

The author quotes Jack Welch, who said, "The first step of making strategy real is figuring out the big aha to gain sustainable competitive advantage - in other words, a significant, meaningful insight about how to win. If you don't have a competitive advantage, don't compete."

He goes on to tell us that we should watch what people do instead of listening to what they say. Books lie. Ghost writers lie. Pay attention to what people do, not what they say. 

In a nutshell, the law of attraction makes for bad strategy. The law of attraction inspires people to only focus on the positive elements in order to attract positive outcomes in one's life. However, in business, if you ignore imminent threats because you don't want to attract them into your business, your business will die. Like we've been saying, good strategy involves thinking about how to overcome potential obstacles. Good strategists do not banish thoughts of failure, they embrace them and devise plans to overcome them. 

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