Last Updated Jul 7, 2011 10:21 AM EDT
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."
Have you seen bad strategy in your firm or at a competitor's? Do you agree with Rumelt's diagnosis?
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