4 Signs You've Got a Bad Strategy

Last Updated Jul 7, 2011 10:21 AM EDT

Contrary to what you may think, bad bosses are not the biggest problem facing business today (numerous national surveys show workers are largely satisfied with their supervisor). The more serious threat-- one that can derail your career, as well as the company--is bad strategy.

In the new book, Good Strategy, Bad Strategy: The Difference and Why It Matters, author Richard Rumelt, a professor at UCLA Anderson School of Management and well-known management consultant, says a strong corporate strategy is razor sharp and cuts through corporate doubletalk and jargon. He notes:

"good strategy is coherent action backed up by argument, an effective mixture of thought and action with a basic underlying structure I call the kernel. A good strategy may consist of more than the kernel, but if the kernel is absent or misshapen, then there is a serious problem."
Bad strategy, Rumelt says, arises from emphasizing planning over execution, fuzzy goals over policies and action, and high-sounding words and phrases over concrete directions and tasks. He pinpoints four signs of a flawed strategy:

1. Fluff: Strategy built on fluff has the quality of a puff pastry--appealing at first bite, but empty within. Rumelt quotes a strategy memo from a major retail bank: "our fundamental strategy is one of customer-centric intermediation." In this bank's case, the only intermediation it provided operationally was taking deposits from one customer and lending to another. "Pull off the fluffy covering and you have the superficial statement 'our fundamental strategy is being a bank,'" Rumelt writes. Academia and info tech are particularly vulnerable to the fluff factor.
2. Failure to face the problem: Rumelt cites as an example how one company, International Harvester, wrote byzantine strategies for their truck, turbine, and farm equipment business but never addressed their biggest problem--a grossly inefficient work organization governed by union work rules that allowed those with seniority to transfer jobs at will, forcing reorganizations of teams and processes at any time.
3. Mistaking goals for strategy: Rumelt cites a CEO who defined his company's strategy as "setting your sights high," "reaching for the impossible to do the impossible," and "pushing until we get there." For Rumelt, a leader may justly ask for "one last push," but the leader's job is more than that: "The job of the leader--the strategist--is also to create the conditions that will make the push effective, to have a strategy worthy of the effort called upon."

    4. Fuzzy or overly complex strategic objectives: Objectives should spell out the specific steps necessary to accomplish a strategy. Rumelt says the most common problem he see is overload, execs who compile a long list of things to do with lofty language. If you've been ever participated in an offsite, where dozens of goals and ideas are cobbled into a document that would take a decade to accomplish, you've seen how bad objectives are born. Rumelt cites the mayor of a city in the Pacific Northwest, whose planning committee's strategic plan contained 47 strategies and 178 action items. Action item number 122 was 'create a strategic plan.' Another weak objective is the "blue sky" goal that rewords a nice thing to do or have (increase market share), and "skips over the annoying fact that no one has a clue as to how to get there."

    Have you seen bad strategy in your firm or at a competitor's? Do you agree with Rumelt's diagnosis?

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    Herb Schaffner is president of Schaffner Media Partners, a consultancy specializing in business, finance, and public affairs publishing expertise, and is found on Facebook. He has been a publisher and editor-in-chief at McGraw-Hill, and a senior editor at HarperCollins. Follow him on Twitter.
    Photo by Mustafa.
    • Herb Schaffner

      Herb Schaffner is the president of Schaffner Media Partners, which develops business book and media projects. He is the former Publisher of Business and Finance at McGraw-Hill Professional, and Senior Editor at HarperCollins/HarperBusiness. Books that Schaffner edited, developed, and supervised during his years in publishing won best book awards from The Economist, 800-CEO Read, BusinessWeek, The Financial Times/Goldman Sachs, Strategy+Business Magazine, and the Toronto Globe & Mail. He has acquired and edited dozens of bestselling books including Secrets of the Millionaire Mind, Always On, Make or Break, Freedom from Oil, and many others. During his career Schaffner also worked as director of speechwriting and public affairs to a governor, as a communications director at two universities, and for the highly influential Center on Budget and Policy Priorities in Washington, DC. He also coauthored leading reference works on labor and the workforce.