Good Strategy Bad Strategy: The Difference and Why It Matters

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Clears out the mumbo jumbo and muddled thinking underlying too many strategies and provides a clear way to create and implement a powerful action-oriented strategy for the real world
Developing and implementing a strategy is the central task of a leader, whether the CEO at a Fortune 100 company, an entrepreneur, a church pastor, the head of a school, or a government official. Richard Rumelt shows that there has been a growing and ...

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Good Strategy Bad Strategy: The Difference and Why It Matters

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Clears out the mumbo jumbo and muddled thinking underlying too many strategies and provides a clear way to create and implement a powerful action-oriented strategy for the real world
Developing and implementing a strategy is the central task of a leader, whether the CEO at a Fortune 100 company, an entrepreneur, a church pastor, the head of a school, or a government official. Richard Rumelt shows that there has been a growing and unfortunate tendency to equate Mom-and-apple-pie values, fluffy packages of buzzwords, motivational slogans, and financial goals with “strategy.” He debunks these elements of “bad strategy” and awakens an understanding of the power of a “good strategy.”

A good strategy is a specific and coherent response to—and approach for overcoming—the obstacles to progress. A good strategy works by harnessing and applying power where it will have the greatest effect in challenges as varied as putting a man on the moon, fighting a war, launching a new product, responding to changing market dynamics, starting a charter school, or setting up a government program. Rumelt’s nine sources of power—ranging from using leverage to effectively focusing on growth—are eye-opening yet pragmatic tools that can be put to work on Monday morning.

Surprisingly, a good strategy is often unexpected because most organizations don’t have one. Instead, they have “visions,” mistake financial goals for strategy,
and pursue a “dog’s dinner” of conflicting policies and actions.

Rumelt argues that the heart of a good strategy is insight—into the true nature of the situation, into the hidden power in a situation, and into an appropriate response. He shows you how insight can be cultivated with a wide variety of tools for guiding your own thinking.

Good Strategy/Bad Strategy
uses fascinating examples from business, nonprofit, and military affairs to bring its original and pragmatic ideas to life. The detailed examples range from Apple to General Motors, from the two Iraq wars to Afghanistan, from a small local market to Wal-Mart, from Nvidia to Silicon Graphics, from the Getty Trust to the Los Angeles Unified School District, from Cisco Systems to Paccar, and from Global Crossing to the 2007–08 financial crisis.

Reflecting an astonishing grasp and integration of economics, finance, technology, history, and the brilliance and foibles of the human character, Good Strategy/Bad Strategy stems from Rumelt’s decades of digging beyond the superficial to address hard questions with honesty and integrity.

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Editorial Reviews

From the Publisher
"The most interesting business book of 2011." —Financial Times

“So much that’s said and written about strategy is – from my point of view – complete junk, that I get excited when I hear someone focusing on strategy in a coherent and useful way...A very good book.” —Forbes

“The year’s best and most original addition to the strategy bookshelf." —Strategy+Business

"The whole middle section, about sources of power, is valuable—particularly the explication of the limitations and nuances of competitive advantage.” —Inc

"Clearly written, thoughtful...This book is painful therapy but a necessary read nonetheless." —Washington Times

"Represents the latest thinking in strategy and is peppered with many current real world examples. Good Strategy/Bad Strategy has much to offer and has every chance of becoming a business classic.” —Management Today

"Drawing on a wealth of examples, Rumelt identifies the critical features that distinguish powerful strategies from wimpy ones—and offers a cache of advice on how to build a strategy that is actually worthy of the name.  If you're certain your company is already poised to out-perform its rivals and out-run the future, don't buy this book.  If, on the other hand, you have a sliver of doubt, pick it up pronto!”
—Gary Hamel, co-author of Competing for the Future

“..Brilliant … a milestone in both the theory and practice of strategy. … Vivid examples from the contemporary business world and global history that clearly show how to recognize the good, reject the bad, and make good strategy a living force in your organization.” —John Stopford, Chairman TLP International, Professor Emeritus, London Business School

Penetrating insights provide new and powerful ways for leaders to tackle the obstacles they face. The concepts of "the kernel" and "the proximate objective" are blockbusters. This is the new must-have book for everyone who leads an organization in business, government, or in-between.”—Robert A. Eckert, chairman and CEO of Mattel

. Richly illustrated and persuasively argued … the playbook for anybody in a leadership position who must think and act strategically. “  —Michael Useem, Professor of Management at  the Wharton School, University of Pennsylvania, and author of The Leadership Moment

 “… Rumelt writes with great verve and pulls no punches as he pinpoints such strategy "sins" as fluff, blue sky objectives, and not facing the problem.”—James Roche, former Secretary of the Air Force and president of Electronic Sensors & Systems, Northrop Grumman.

“This is the first book on strategy I have read that I have found difficult to put down.—John Kay, London Business School

Library Journal
Award-winning author and sought-after consultant Rumelt (Harry and Elsa Kunin Chair in Business and Society, UCLA Anderson Sch. of Management) provides keen insights on how to recognize effective approaches to promoting economic performance. Drawing from his rich experience, he offers numerous examples to help business leaders craft effective strategies. The book contains three essential components. First, it covers how to diagnose a challenge and formulate policy and action plans to address it. Then, it shows how good strategies can build upon the strengths, weaknesses, and sources of power unique to an organization. Finally, it shows the importance of business leaders sharpening their sensitivity to the challenges of an organization by viewing them from the customers' perspective. VERDICT Readers accustomed to managerial terminology should be able to cut through Rumelt's thin shroud of consultant hype to get to his practical insights. Although his candid comments and colorful examples convey his passion for counseling readers interested in strategy, the effective application of these concepts requires considerable experience and stamina.—Jerry P. Miller. Cambridge, MA
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Product Details

  • ISBN-13: 9780307886231
  • Publisher: Crown Religion/Business/Forum
  • Publication date: 7/19/2011
  • Pages: 336
  • Sales rank: 119,546
  • Product dimensions: 6.60 (w) x 9.40 (h) x 1.00 (d)

Meet the Author

RICHARD P. RUMELT is one of the world’s most influential thinkers on strategy and management. The Economist profiled him as one of twenty-five living persons who have had the most influence on management concepts and corporate practice. McKinsey
Quarterly described him as being “strategy’s strategist” and as “a giant in the field of strategy.” Throughout his career he has defined the cutting edge of strategy, initiating the systematic economic study of strategy, developing the idea that companies that focus on core skills perform best, and that superior performance is not a matter of being in the right industry but comes from a firm’s individual excellence. He is one of the founders of the resource-based view of strategy, a perspective that breaks with the market-power tradition, explaining performance in terms of unique specialized resources. Richard Rumelt received his doctoral degree from Harvard Business School, holds the Harry and Elsa Kunin Chair at the UCLA Anderson School of Management, and is a consultant to small firms such as the Samuel Goldwyn Company and giants such as Shell International, as well as to organizations in the educational and not-for-profit worlds.

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Table of Contents

Introduction: Overwhelming Obstacles 1

Part I Good and Bad Strategy 9

Chapter 1 Good Strategy is Unexpected 11

How Steve Jobs saved Apple

Business 101 is surprising

General Schwarzkopf's strategy in Desert Storm

Why "Plan A" remains a surprise

Chapter 2 Discovering Power 21

David and Goliath is a basic strategy story

Discovering Wal-Mart's secret

Marshall and Roche's strategy for competing with the Soviet Union

Chapter 3 Bad Strategy 32

Is U.S. national security strategy just slogans?

How to recognize fluff

Why not facing the problem creates bad strategy

Chad Logan's 20/20 plan mistakes goals for strategy

What's wrong with a dog's dinner of objectives?

How blue-sky objectives miss the mark

Chapter 4 Why So Much Bad Strategy? 58

Strategy involves choice, and DEC's managers can't choose

The path from charisma to transformational leadership to fill-in-the-blanks template-style strategy

New Thought from Emerson to today and how it makes strategy seem superfluous

Chapter 5 The Kernel of Good Strategy 77

The mixture of argument and action lying behind any good strategy

Diagnosing Starbucks, K-12 schools, the Soviet challenge, and IBM

Guiding policies at Wells Fargo, IBM, and Stephanie's market

The president of the European Business Group hesitates to act

Incoherent action at Ford

Centralization, decentralization, and Roosevelt's strategy in WWII

Part II Sources of Power 95

Chapter 6 Using Leverage 97

Anticipation by Toyota and insurgents in Iraq

How Pierre Wack anticipated the oil crisis and oil prices

Pivot points at 7-Eleven and the Brandenburg Gate

Harold Williams uses concentration to make the Gettya world presence in art

Chapter 7 Proximate Objectives 106

Why Kennedy's goal of landing on the moon was a proximate and strategic objective

Phyllis Buwalda resolves the ambiguity about the surface of the moon

A regional business school generates proximate objectives

A helicopter pilot explains hierarchies of skills

Why what is proximate for one organization is distant for another

Chapter 8 Chain-Link Systems 116

Challenger's O-ring and chain-link systems

Stuck systems at GM and underdeveloped countries

Marco Tinelli explains how to get a chain-link system unstuck

IKEA shows how excellence is the flip side of being stuck

Chapter 9 Using Design 124

Hannibal defeats the Roman army in 216 B.C. using anticipation and a coordinated design of action in time and space

How a design-type strategy is like a BMW

Designing the Voyager spacecraft at JPL

The trade-off between resources and tight configuration

How success leads to potent resources that, in turn, induce laxity and decline

Design shows itself as order imposed on chaos-the example of Paccar's heavy-truck business

Chapter 10 Focus 142

A class struggles to identify Crown Cork & Seal's strategy

Working back from policies to strategy

The particular pattern of policy and segmentation called "focus"

Why the strategy worked

Chapter 11 Growth 151

The all-out pursuit of size almost sinks Crown

A noxious adviser at Telecom Italia

Healthy growth

Chapter 12 Using Advantage

Advantage in Afghanistan and in business

Stewart and Lynda Resnick serial entrepreneurship

What makes a business "interesting"

The puzzle of the silver machine

Why you cannot get richer by simply owning a competitive advantage

What bricklaying teaches us about deepening advantage

Broadening the Disney brand

The red tide of pomegranate juice

Oil fields, isolating mechanisms, and being a moving target

Chapter 13 Using Dynamics 178

Capturing the high ground by riding a wave of change

Jean-Bernard Lévy opens my eyes to tectonic shifts

The microprocessor changes everything

Why software is king and the rise of Cisco Systems

How Cisco rode three interlinked waves of change

Guideposts to strategy in transitions

Attractor states and the future of the New York Times

Chapter 14 Inertia and Entropy 202

The smothering effect of obsolete routine at Continental Airlines

Inertia at AT&T and the process of renewal

Inertia by proxy at PSFS and the DSL business

Applying hump charts to reveal entropy at Denton's

Entropy at GM

Chapter 15 Putting it Together 223

Nvidia jumps from nowhere to dominance by riding a wave of change using a design-type strategy

How a game called Quake derailed the expected march of 3-D graphics

Nvidia's first product fails, and it devises a new strategy

How a faster release cycle made a difference

Why a powerful buyer like Dell can sometimes be an advantage

Intel fails twice in 3-D graphics and SGI goes bankrupt

Part III Thinking Like a Strategist 239

Chapter 16 The Science of Strategy 241

Hughes engineers start to guess at strategies

Deduction is enough only if you already know everything worth knowing

Galileo heresy trial triggers the Enlightenment

Plypotheses, anomalies, and Italian espresso bars

Why Americans drank weak coffee

Howard Schultz as a scientist

Learning and vertical integration

Chapter 17 Using Your Head 257

A baffling comment is resolved fifteen years later

Frederick Taylor tells Andrew Carnegie to make a list

Being "strategic" largely means being less myopic than your undeliberative self

TiVo and quick closure

Thinking about thinking

Using mind tools: the kernel, problem-solution, create-destroy, and the panel of experts

Chapter 18 Keeping Your Head 276

Can one be independent without being eccentric, doubting without being a curmudgeon?

Global Crossing builds a transatlantic cable

Build it for $1.5 and sell it for $8

The worst industry structure imaginable

Kurt Gödel and stock prices

Why the 2008 financial crisis was almost certain to occur

The parallels among 2008, the Johnstown Flood, the Hindenburg, the Hurricane Katrina aftermath, and the gulf oil spill

How the inside view and social herding blinded people to the coming financial storm

The common cause of the panics and depressions of 1819, 1837, 1873, 1893, and 2008

Notes 299

Acknowledgments 311

Index 313

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Customer Reviews

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Sort by: Showing all of 3 Customer Reviews
  • Anonymous

    Posted January 20, 2013

    Outstanding Must-Read on Strategy

    Why no customer reviews on Nook? This is the best business book Ive read in recent memory. Rumelt has made the art and science of strategy approachable with this excellent work. Years of experience and academic mastery are rolled into this book so well that you wont see the line between the two. I have multiple pages of notes from reading this twice so far and I reference this book frequently as I plan out the strategies in my own organization.

    2 out of 2 people found this review helpful.

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  • Posted March 19, 2015

    At first I thought this was like any ordinary strategy book that

    At first I thought this was like any ordinary strategy book that I had read in the past. Other books assume you know what strategy is or isn't and give you examples where a company that achieved success followed said author's strategy. This book ISN'T those books. This book helps to clarify (at least to Rumelt's point of view) of the quality of the strategy (ie, bad or good strategy). The examples are great in a sense that Rumelt for the most part does not say whether the outcome will become a success or not;; he simply focuses on whether a company followed a sound strategy.

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  • Anonymous

    Posted June 19, 2011

    No text was provided for this review.

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