Good Strategy Bad Strategy 05: The Kernel of Good Strategy (Richard Rumelt)

The professor gives us several examples of how this plays out in the real world.

One example is that of a doctor who diagnoses an ailment based on the patient's symptoms. "The therapeutic approach chosen is the doctor's guiding policy. The doctor's specific prescriptions for diet, therapy and medication are the coherent set of actions to be taken."

Let's explore each element individually. 

Simply, the diagnosis asks the question: "What's going on here?" What are the patterns? How or why is this happening? Where should we focus our attention and resources?

Based on these responses, you can look into precedents and build your guiding policy around those (or use them as your starting point). 

A diagnosis is not a probable scientific fact. It's a best judgment based on experience and observation. What's happening? What does it mean? What should we do?

A diagnosis helps you analyze your strengths and weaknesses versus your competitors' strengths and weaknesses, versus the environment in which you operate, and decide how you will win.

"The guiding policy channels action in certain directions without defining exactly what will be done."

The diagnosis is the what. The guiding policy is the how. He says "Good strategy is not just what you are trying to do. It is also why and how you are doing it."

The whole point of strategy is creating maximum advantage for yourself and maximum disadvantage for the competition. 

How do you do this?

- anticipate actions and reactions of others

- clearly articulate the challenge 

- concentrate action and resources 

- take actions that build on each other, instead of clashng with each other.

Without a good guiding policy, the actions you take will be incoherent, unfocused and probably lead to bigger problems.

Strategy must stipulate actions to be taken. Obviously, circumstances will change and strategy will need to be updated. No one expects the strategy to be a perfect plan of action. But there must be enough clarity about the challenges we're facing and the actions we plan to take to overcome these challenges. 

Strategy requires choice. Most leaders fail because they try to do everything instead of making the hard choices. Without making the hard choices, you can't properly allocate your resources and effort. Fear of conflict can lead to bad strategy. The author says, "Strategy is primarily deciding what is truly important and focusing resources and action on that objective. "

Next, you want to make sure that the actions you take support each other - that they're not in conflict. You don't want to spread your resources and your people too thin. 

 This concept is almost similar to what we learned in Great By Choice. Fire Bullets, Then Cannonballs. First test on a small scale, and then ramp up the ideas with the most promising outcomes. 

But the only problem is that testing takes time and resources. What if you don't have the time or the resources, or even both?

How do you know that your diagnosis is accurate?

Seems like you have another choice to make. Do you make decisions slowly, based on empirical evidence, like Jim Collins suggests, or do you choose speed?