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Home Book Club

Good Strategy, Bad Strategy – book review

by James Chaplin
April 2, 2021
in Book Club
Reading Time: 3 mins read
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Good Strategy, Bad Strategy – book review
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In this book, Rumelt argues that most businesses either don’t have a strategy, or what they do have is not fit for purpose. With that, he starts by deconstructing all the ways businesses fail when they assemble their strategy, before going on to outline in detail the key elements a business leader should be thinking about when implementing their own. In fact, so groundbreaking was this book, that when it was first published in 2011, it was considered by the Financial Times, to be the business book of the year.
Starting with deconstructing ‘Bad Strategy’ he talks about the typical mistakes made, where specifically he references four hallmarks:

  • Fluff – A form of gibberish masquerading as a strategy. It uses Sunday words ‘words that are inflated and unnecessarily abstruse) and apparently esoteric concepts to create the illusion of high-level thinking.
  • Failure to face the challenge – Bad strategy fails to recognise or define the challenge. When you cannot define the challenge, you cannot evaluate a strategy or improve it.
  • Mistaking goals for strategy – Many bad strategies are statements of desire rather than plans for overcoming obstacles.
  • Bad strategic objectives – A strategic objective is set by a leader as a means to an end. Strategic objectives are bad when they fail to address critical issues or when they are impracticable.

He then goes on to describe good strategy as “a coherent action backed up by an argument, an effective mixture of thought and action with a basic underlying structure, called the kernel. A good strategy may consist of more than the kernel, but without it, there is a serious problem. The kernel of the strategy consists of three elements:

  • A diagnosis that defines or explains the nature of the challenge. A good diagnosis simplifies the often overwhelming complexity of reality by identifying certain aspects as critical
  • A guiding policy for dealing with the challenge. This is an overall approach chosen to cope with or overcome the obstacles identified in the diagnosis.”
  • A set of coherent actions that are designed to carry out the guiding policy. these are the steps that are coordinated with one another to work together in accomplishing the guiding policy.”

Later he talks about competitive advantage, which he describes as the ability to either produce at a lower cost than competitors or generate more perceived value, were achieving this state is central to building an unassailable market position. 
Then in the final segment of the book he talks about what it means to think like a strategist, where he starts by discussing the science of strategy, so entering a hypothesis which you test against, and gives numerous case studies on how this can be done properly. With that, he goes on to discuss the importance of deep thought, meaning understanding in detail all the specifics, when designing a strategy.

In summary, this is a heavyweight book and while not the easiest to read, it is highly rewarding for those who perservere. The subject matter is relevant to anyone who is responsible for managing a business, solution or product as good strategy is at the heart of success, yet so often the correct elements aren’t brought together correctly at the planning stage. This book is an attempt to help such leaders take control so they execute more effectively. Highly recommended.

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James Chaplin

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