Book: Good Strategy/Bad Strategy: The Difference and Why it Matters
Author: Richard Rumelt
As a creative, brand strategist and entrepreneur, I’m interested in strategy, and in my travels across the web, this book, ‘Good strategy/Bad Strategy’ came up quite a few times as the one book to read if you wanted to learn more about strategy. I finally finished it last week, and it really delivered.
In the book, Richard Rumelt showcases the difference between good strategy and bad strategy. Bad strategy is nothing less than wishful thinking, and can be recognized by broad fluffy words, bad objectives and an unwillingness to face problems. Good strategy on the other hand digs in to the situation at hand, addresses the critical problems, prescribes a general guideline in tackling them and includes clear coherent set of actions to take to actually get there.
Good strategy/Bad strategy is a highly recommended reading if you are a leader, a consultant, an entrepreneur or just interested in strategy. The insights are profound and are widely applicable, from the board room to personal dealings.
Highlights from Good Strategy/Bad Strategy
Despite the roar of voices wanting to equate strategy with ambition, leadership, “vision”, planning, or the economic logic of competition, strategy is none of these. The core of strategy work is always the same: discovering the critical factors in a situation and designing a way of coordinating and focusing actions to deal with those factors.
A good strategy does more than urge us forward towards a goal or vision. A good strategy honestly acknowledges the challenges being faced and provides and approach to overcoming them.
A good strategy has an essential logical structure that I call the kernel. The kernel of a strategy contains three elements: a diagnosis, a guiding policy, and coherent action.
The most basic idea of strategy is the application of strength against weakness. Or, if you prefer, strength applied to the most promising opportunity.
How can someone see what others have not, or what they have ignored, and thereby discover a pivotal objective and create an advantage, lies at the very edge of our understanding, something glimpsed only out the corner of our minds.
Identify your strengths and weaknesses, assess the opportunities and risks (your opponent’s strengths and weaknesses), and build on your strengths.
If you fail to identify and analyze the obstacles, you don’t have a strategy. Instead, you have either a stretch goal, a budget, or a list of things you wish would happen.
Strategic objectives should address a specific process or accomplishment, such as halving the time it takes to respond to a customer, or getting work from several Fortune 500 corporations.
Good strategy works by focusing energy and resources on one, or a very few, pivotal objectives whose accomplishment will lead to a cascade of favorable outcomes.
Good strategy is not just “what’ you are trying to do. It is also “why” and “how” you are doing it.
A good guiding policy tackles the obstacles identified in the diagnosis by creating or drawing upon sources of advantage.
Returns to concentration arise when focusing efforts on fewer, or more limited, objectives generates larger payoffs.
…he invested where his resources would make a large and more visible difference.
One of a leader’s most powerful tools is the creation of a good proximate objective – one that is close enough at hand to be feasible.
…imagine that they were allowed to have only one objective. And that objective had to be feasible. What one single feasible objective, when accomplished, would make the biggest difference?
A master strategist is a designer.
But the truth is that many companies, especially large complex companies, don’t really have strategies. At the core, strategy is about focus, and most complex organizations don’t focus their resources.
Extending a competitive advantage requires looking away from products, buyers and competitors and looking instead at the special skills and resources that underlie a competitive advantage. In other words, “Build on your strengths”.
The other way to grab the high ground – the way that is my focus here – is to exploit a wave of change.
You exploit a wave of change by understanding the likely evolution of the landscape and then channeling resources and innovation toward positions that will become high ground – become valuable and defensible – as the dynamics play out.
A good strategy is, in the end, a hypothesis about what will work. Not a wild theory, but an educated judgement.
To guide your own thinking in strategy work, you must cultivate three essential skills or habits. First you must have a variety of tools for fighting your own myopia. Second, you must develop the ability to question your own judgement. If your reasoning cannot withstand a vigorous attack, your strategy cannot be expected to stand in the face of real competition. Third, you must cultivate the habit of making and recording judgements so that you can improve.
I read this book for the first time back in early 2015, and I even blogged about the core idea here and a related idea ‘Deliberatism’ here. This is a crucial book, and it holds a hard-to-live-up-to idea that has the ability to transform your life, if implemented well. It pairs very well with ‘The One Thing’ which I will blog about sometime soon.
Too many times, we take on too much and we try to do everything. This is an excellent strategy when starting out. When you are new or young, try everything out, try different things, taste the berries, like Gary Vee would say. It’s this being open and saying yes to everything that will open doors and fuel your success. But once you get to a level of success, to move to the next level, you have to evolve and change your approach.
In every endeavor, there are the small proportion of factors that disproportionately affect the outcome. It is basically the 80/20 principle. There are the trivial many and the vital few. It is a profoundly important skill to be able to delineate between the few and focus your efforts on the things that really matter.
Imagine being able to accomplish more by doing less. This is the promise of Essentialism. How can you be more focused, more effective and less stressed?
Check out my selected excerpts below, and you can buy the book here.
My Highlights from Essentialism
In this example is the basic value proposition of Essentialism: only once you give yourself permission to stop trying to do it all, to stop saying yes to everyone, can you make your highest contribution towards the things that really matter.
… Less but better. A more fitting definition of Essentialism would be hard to come by.
Essentialism is not about how to get more things done; it’s about how to get the right things done.
It is about making the wisest possible investment of your time and energy in order to operate at your highest point of contribution by doing only what is essential.
The way of the Essentialist means living by design, not by default.
Essentialism is a disciplined, systematic approach for determining where our highest point of contribution lies, then making execution of those things almost effortless.
If you don’t prioritize your life, someone else will.
The pursuit of success can be a catalyst for failure. Put another way, success can distract us from focusing on the essential things that produce success in the first place.
To embrace the essence of Essentialism requires we replace these false assumptions with three core truths: “I choose to,” “Only a few things really matter,” and ‘I can do anything but not everything.”
When we forget our ability to choose, we learn to be helpless. Drip by drip we allow our power to be taken away until we end up a function of other people’s choices – or even a function of our own past choices.
Is there a point where doing less (but thinking more) will actually produce better outcomes?
To discern what is truly essential, we need space to think, time to look and listen, permission to play, wisdom to sleep, and the discipline to apply highly selective criteria to the choices we make.
…and the noisier things get, the more we need to build quiet reflective spaces in which we can truly focus.
When there is a serious lack of clarity about what the team stands for, and what their goals and roles are, people experience confusion, stress and frustration. When there is a high level of clarity, on the other hand, people thrive.
We do a similar thing in our personal lives as well. When we are unclear about our real purpose in life – in other words, when we don’t have a clear sense of our goals, our aspirations, and our values – we make up our own social games. We waste time and energies on trying to look good in comparison to other people. We overvalue non-essentials like a nicer car or house, or even intangibles like the number of our followers on Twitter.
Creating an essential intent is hard. It takes courage, insight and foresight to see which activities and efforts will add up to your single highest point of contribution. It takes asking tough questions, making real trade-offs, and exercising serious discipline to cut out the competing priorities that distract us from our true intention. Yet it is worth the effort because only with real clarity of purpose can people, teams, and organizations fully mobilize and achieve something truly excellent.
Don’t ask, “How will I feel if I miss out on this opportunity?” but rather, “If I did not have this opportunity, how much would I be willing to sacrifice in order to obtain it?”
We all have some people in our lives who tend to be higher maintenance for us than others. These are the people who make their problem our problem. They distract us from our purpose. They care only about their own agendas, and if we let them, they prevent us from making our highest contribution by siphoning our time and energy to activities that are essential to them, rather than those that are essential to us.
Whoever it is that’s trying to siphon off your time and energies for their own purpose, the only solution is to put up fences.
The way of the Essentialist is different. The Essentialist looks ahead. She plans. She prepares for different contingencies. She expects the unexpected. She creates a buffer to prepare for the unforeseen, thus giving herself some wiggle room when things come up, as they inevitable do.
What is the obstacle that is keeping you back from achieving what really matters to you? By systematically identifying and removing this “constraint” you’ll be able to significantly reduce the friction keeping you from executing what is essential.
…highly creative individuals use strict routines to free up their minds. Most creative individuals find out early what their best rhythms are for sleeping, eating, and working, and abide by them even when it is tempting to do otherwise,” Mihaly says. “they wear clothes that are comfortable, they interact only with people they find congenial, they do only things they think are important…personalizing patterns of action helps to free the mind from the expectations that make demands on attention and allows intense concentration on matters that count.
Focus on the hardest thing first.
They know that execution is easy if you work hard at it and hard if you work easy at it.
Essentialist never attempts to do more than one thing at a time.
“I do believe in simplicity. It is astonishing as well as sad, how many tribal affairs even the wisest thinks he must attend to in a day;…so simplify the problem of life, distinguish the necessary and the real” – Henry David Thoreau
The way of the Essentialist isn’t just about success; it’s about living a life of meaning and purpose.
There is only one success. To be able to spend your life in your own way.
– Christopher Morley
We are surrounded by success porn. From Facebook to Snapchat, the digital sphere is littered with quote cards spouting off generic success platitudes and motivation. You know the ones, the images of the suave guy in the impeccable suit and nice watch. Or the flawlessly shot Instagram gym model showing off her perfect abs and toned body.
I like to look at it as what I call ‘priming’. When I sit to design, one of the first things I do is to pull up my favourite sites and browse for inspiration. I spend time looking at beautiful things. It primes and stimulates my mind to think in the same vein as my inspiration and helps me know what my benchmark of quality should be.
That’s what success porn does, or should do. It is a burst of inspiration, a certain smug satisfaction, a ‘hell yeah! high five! let’s get it’ sort of moment. And it’s good. Sometimes you need that spark, that reminder.
The main problem with success porn is that you can get that hit of self righteous dopamine so many times that you begin to feel satisfied without actually doing any work.
It is easy to brainstorm, and research and learn. It makes us feel good, like we are taking actual steps. And granted, it is a first step in the process of getting what you want. But consuming content, no matter how good, whether it be Gary V or Tai Lopez or Grant Cardone or whoever your guru is, is not the same as doing the work.
The path to success is the steady consistent grind, the work, the fears, the tears. It is not as sexy as success porn, but it is the thing that actually produces results. And there are a lot of things unique to your circumstance that you would have to navigate with your own wits and common sense as well as all the tips and knowledge you have gained from your blogs, podcasts and videos.
The second subtler problem with success porn is the narrative that success looks a certain way. Success for millenials in general falls in the same boxes – a great job, a great startup, lots of money, gadgets, travel to exotic places, self care, romantic love and baecations. All of which are absolutely wonderful pleasures.
But the thing with life is…it is life. It is varied, it is complex and it is nuanced. Success has to be something you define for yourself. You don’t need to subscribe to an idea of success. You just have to find what you like, what you believe, what fulfills you and be committed in the pursuit of that. That is what success is.
I used to burnout a lot. I would work almost every waking hour for months at a stretch. In fact, I expected to flame out around June every year. I would start hating everything and everyone – my work, my clients, and my life. Then I would be basically incapacitated for a month and then bounce back. I completely disrespected my personal rhythms.
Interest and Energy are cyclical…Alternating periods of activity and rest is necessary to survive, let alone thrive. Capacity, interest, and mental endurance all wax and wane. Plan accordingly.
– Tim Ferris (The 4 hour work week)
Hard work and hustle are important. You do have to push hard. Like Bruce Mau’s incomplete manifesto for growth says –
Stay up late. Strange things happen when you’ve gone too far, been up too long, worked too hard, and you’re separated from the rest of the world.
But you also need to unplug. You need to allow yourself to recover. Which can be very hard if you are a type A personality. Or you are obsessed. I have found myself lost for hours longer than I intended working. And after a long stretch of days with my nose to the grindstone, I find that a little rest wont cut it. I need unplug completely. So I take some days off, hang with friends, and do nothing, read, catch up on all my favourite shows and then I get back to it.
Everyone’s rhythm is different. Some people can work months non-stop without needing a break. I max out after 3-4 days of intense work, then I need at least one day of light work or rest. Every couple weeks or so of this, I would need at least 3-5 days to do a full reset. I find that if I respect this rhythm I can stay very productive over a longer stretch of times. Goodbye to those burn outs that would wipe out for a month at a time.
But beyond banishing burnout, unplugging periodically allows you to gain perspective. Working long and hard keeps you firmly in the thick of the forest, hacking and slashing away. Hitting that reset button allows you to step back and see the forest for the trees. You rise up to the big picture view, analyse your actions and results and recalibrate your efforts when you get back in the game. It also helps you reconnect to your ‘why’. Some times you need to remind yourself why you do what you do to avoid becoming jaded.
Being in that calm space, observing and listening opens you up to receiving answers to problems that have been plaguing you. It is the incubation space that allows all subconscious to work out the kinks and issues you have been wrestling with in the hustle. Unplugging creates the conditions for the famous flash of inspiration that jolts into our mind when we are least expecting it. Suddenly the answer appears, the smart-cut and months of wasted effort are shaved off your journey.
Working hard is necessary, but remember to rest. An unsharpened saw no matter how productive will get blunt over time from overuse.
This is a slight rant on something I have been experiencing in the past few weeks.
I started out in this design/design business thing self taught. I learned to use the software and I’ve been sloughing away at it ever since. In the 7-8 years I’ve been doing this, I have probably designed up to thousands of pieces and artifacts – logos, mailers, flyers, websites, etc. Over time I have gotten good at delivering visually pleasing work quickly and within the chaotic constraints of the typical client service business.
For most creatives, the most exciting part of our work is the actual creative part, making the thing, the logo or the booklet or the poster. Many times I have fallen into the trap of becoming nothing more than a tool for the client, a pixel pusher. Do this, do that, move that there, without much regard for my opinion or ideas on what works. That was entirely my fault. I did not understand the value I brought to the table nor could I communicate that effectively.
In the chaotic landscape of client services, things tend to be frantic. Everything is always due yesterday. There is often not a good enough understanding of the connection between design output and business objectives. Design becomes a last minute exercise quickly producing pieces of communication without any form of strategy or intent.
This is a mistake.
Sure you can get a nice looking design out of a competent designer working this way. But creating design that actually works, design that clarifies your intentions and aims your efforts, design that sets u up for greater success beyond the project at hand, that is something else entirely. That is the love child of good process and talent.
The Design Method outlined by Eric Karjaluoto in his book goes as follows: Discovery – Planning – Creative – Application. Newbie designers and most clients are happy jumping right into the creative. However they miss out on the many benefits of engaging the first two steps.
Discovery allows you to fully understand the problem at hand, it gives you context. Ideally, the designer should be able to immerse himself/herself into the world of the client and understand how the business works, what the problems are and how the audience interacts with them. Discovery has the benefit of helping the client understand what’s really going on with the business. Are there gaps in the communications? Do you understand what you really do? Do you understand what you are selling? Do you have objectives, and do you know how you are going to achieve them?
Planning helps connect the insights from discovery to the nitty gritty of execution. It provides a plan of action of what needs to be done, targeted to whom and by when. It gives purpose to your efforts and ensures you don’t waste time going down rabbit holes.
Respecting the process transforms a simple brief for a website for a bus company to a holistic communication solution geared at increasing online sales. Instead of just a website, the client is steered towards adopting online marketing, referral campaigns and developing e-commerce solutions. A directive to design new labels for a budding craft beer brand now turns into the task of the defining and refreshing company brand in light of their new investment, offerings and aspirations. Instead of just labels, the brand is rewarded with a deeper understanding of itself and a roadmap for handling communications moving forward.
Rushing through the design process to the production bit might be satisfying in the short term, but you miss out on a ton of value left on the table in the long term.