What You Think You Know About Strategy is Wrong

The London-based consultancy Thoughters50 has been identifying, ranking, and sharing the best management ideas, and creating lists of the most influential managers for more than 20 years. Stuart Trainer and Des Dearlove have just launched a list of 10 books that every manager should read.

This is to say that any future listing may want to consider RichardRumelt‘s work. His Bad Strategy was widely hailed as the “most interesting business book of 201” or “the best and most innovative addition to the strategy bookshelf of the year” — in part because it dispelled many of the myths perpetuated by others. Rumelt claimed that leaders were too focused on achieving performance goals and not the tools that would allow them to succeed.

He is now back with the Crux. It’s subtitled “How Leaders Become Strategy-Makers”, and aims to cut through the weak aspirations of many businesses that are disguised as strategies. Rumelt’s love for rock climbing and the seemingly impossible obstacles they face on their climbs to the summits inspired him to create the crux. It is a result of three parts of strategic skills. He writes that the first part is a judgment about which issues are most important and which ones are less important. The second part deals with the challenges of dealing these issues. The third is the ability focus and not to try to tackle everything simultaneously. This will allow you to focus on the crux.

This approach is very different from the traditional focus on long-term goals. He suggests, however, that it is important to identify the problem and then come up with a solution. He doesn’t believe that saying things like “we are constantly increasing sales and cutting cost” or “our company will beat all other paint companies because our customer focus” is a good strategy. He writes that to convince someone to believe in you and trust you with your strategy, you must have logic, argument, and evidence as to how you deal with the challenges.

An oddly timely example, considering Netflix’s recent decline in subscription numbers, is the Netflix example. Rumelt pointed out that Netflix’s problems are not a new phenomenon. They have been there for a while. It was hailed as a disruptive company that could beat Blockbuster but it still paid a steep price for its popularity. Its cash costs had exceeded its revenue per subscriber by the end 2017 This was before content suppliers started charging more for programming or started their own streaming service. And before Apple with its vast reserves entered the market. Netflix is now competing with its suppliers, having blazed the way for streaming. This means that Reed Hastings, the founder of Netflix, and his team need to ask tough questions about where their future growth will come from. Rumelt suggests one way forward. However, he points out that they should not pick a strategy. Instead of doing so, the team and any other managers need to do a detailed analysis of their current situation and determine their best course of action. Only then can they come up with a cohesive plan.

The book covers both the successes and failures of military strategy in different conflicts, as well as corporate successes and setbacks. There are some practical aspects, such as a section that shows how employees can come together to create a strategy. However, Rumelt seems to be hesitant to challenge assumptions about strategy. He isn’t providing answers, but rather pointing out ways that more thoughtful leaders can come up with better strategies for their organizations and themselves in an environment that is constantly changing.

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