Good Strategy Bad Strategy: The Difference and Why It Matters

Good Strategy Bad Strategy: The Difference and Why It Matters

by Richard Rumelt


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Good Strategy/Bad Strategy clarifies the 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. 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. Yet, 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.”

In Good Strategy/Bad Strategy, he debunks these elements of “bad strategy” and awakens an understanding of the power of a “good strategy.” He introduces nine sources of power—ranging from using leverage to effectively focusing on growth—that are eye-opening yet pragmatic tools that can easily be put to work on Monday morning, and 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.

Product Details

ISBN-13: 9780307886231
Publisher: Crown Publishing Group
Publication date: 07/19/2011
Pages: 336
Sales rank: 123,247
Product dimensions: 6.60(w) x 9.40(h) x 1.00(d)

About 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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Excerpted from "Good Strategy Bad Strategy"
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Copyright © 2011 Richard Rumelt.
Excerpted by permission of The Crown Publishing Group.
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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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