A real strategy requires problem diagnosis, guiding policy, and coherent action
Richard Rumelt · Good Strategy, Bad Strategy | Richard Rumelt · Jan 21, 2024 · at 14:13
Richard Rumelt outlines the foundational 'strategy kernel' from his book Good Strategy/Bad Strategy.
0:00 / 0:51exact quote · 51.1s
▶ Watch the full episode on YouTube → 720p mp4 · rendered on demand · StarZero watermark
“All three elements have to be there. You have to be an understanding of the situation. There has to be a guiding policy. How are we going to deal with it? And that can be a long-term sense of how we compete. I mean, you don't have to change your strategy every five minutes or every five years. You're If you're making Almond Joy candy bars or something, you totally change your strategy. If you're in the tech business, of course, you're, you have a shorter time horizon. And then the coherence in action is critical. And so these are the three, what I call basic elements, the coin, that if anyone in three is missing something wrong, It's not really a strategy. It's something else.”
quote is from the automated transcript, cleaned for reading: filler sounds and stutters are removed, nothing is rephrased. names can be misheard (the analysis reads context, assessments check outside sources). how →
More from Richard Rumelt
Simultaneously pursuing high growth and higher profit margins is inherently contradictory
“Growth and profit are, they battle each other. Let's say we define profit as return on equity. Well, if you're going to increase growth and increase return on equity, how do you do that? Because you're basically going to invest less to get your return on equit…”
Abstract performance goals, profit targets, and wish lists are not strategy
“Bad strategy the standard bad strategy for a corporation is a set of profit goals or performance goals. A set of goals. Now goals are the engineering of how companies work to some extent, but abstract high level goals, they're not a strategy. They're something…”
Breakthroughs like ChatGPT only offer a temporary one-to-two-year talent hiring advantage
“Yeah, so if you're, if you've invented ChatGBT, you can bring in the smartest AI people for a year or two. Because, you know, everybody wants, oh, oh, the smart AI people want to work at the cutting edge with the current winner. Then they'll start arguing with…”
Senior executives do not need external consulting firms to formulate their strategy
“My experience working with companies is that the senior executives have to do this. And my experience is that the senior executives know pretty much everything you need to know to do this. That you don't need, you know, consulting firms to come in and analyze …”
Business analysis frameworks and two-by-two matrices are analytical tools, not strategy
“These are analytical tools for analyzing the problem, for thinking about things, for looking at competition, but they're not strategy.”
Acquiring a portfolio of companies is strategic assembly without actual synthesis
“There are companies that say, well, our future is, let's say, something that's not in a software business. That's an industry portfolio. We're going to have, we're investing in the future of robotics and AI and again, computer vision and all that. That's going…”