This article borrows heavily from Richard Rumelt’s book, Good Strategy/Bad Strategy, given to me by my friend, Joe Thacker. This is one of only three business books I recommend you read (most business books are only suitable for propping open windows with broken sash cords.) The other two you must spend time with are Clayton Christensen’s The Innovator’s Dilemma and Sun Tzu’s The Art of War.
Actually, I’m just kidding about The Art of War. That’s the book everyone recommends when they want to sound really sophisticated. Personally, I have never found any modern business meaning in Mr. Sun’s pearls of wisdom, such as this gem: “Be extremely subtle, even to the point of formlessness. Be extremely mysterious, even to the point of soundlessness.”
So that leaves us with just two. Mr. Christensen’s book is required reading, widely considered to be one of the seminal business works of the second half of the twentieth century. And Mr. Rumelt’s Good Strategy/Bad Strategy, despite its unimaginative title, should likewise join the petite canon of business literature.
Good Strategy/Bad Strategy is a Michelin-starred, seven-course tasting menu of brilliant insights. What I’m about to serve here is a doggie bag full of his scraps, warmed up for you on a paper plate with a splotch of mustard on the side. If you find any of the following bits interesting, do yourself a favor and order his book.
Here’s my top five indicators of a suspect strategy:
1. The strategy starts with a “vision” and a “mission.”
Do you know the difference between the two? Be honest now. Well, I certainly don’t. I do know one way in which they’re the same, though. Nobody in the organization can ever remember them.
This is a shame, because a “vission” (or “mision” if you prefer) is supposed to be there to inspire. How can people be inspired by something they don’t remember?
For a vission to inspire, it needs to be really, really good. And short. In practice, it’s rarely either, much less both.
Great, mission-driven organizations (e.g. the Mayo Clinic; the Red Cross; Harvard University; etc.) can stand for centuries. There’s something magical about such institutions, and corporations are right to try to mimic them.
But that magic is often rooted in authentic and meaningful missions that are deeply woven throughout those organizations’ histories. Let’s face it, most companies do unexciting work and have little hope of finding deeper meaning in what they do. Some stretch so far to make a tenuous connection to “improving lives” that the CEO must cringe every time she is forced to recite it.
“Jeff’s Plumbing, where our mission is to improve peoples’ lives by allowing them to relieve themselves whenever they need to.”
So why does nearly every corporate strategy document start with this kind of tripe? Rumelt explains that at some point in the last twenty years we became infatuated with the fantasy of charismatic, vision-led leadership, and that we started to confuse it with sound strategy work–a far less sexy concept. Great leaders have Vision, the movement reminded us, so you can’t ever hope to be the next Jack Welch unless you gather your team into a conference room and force them to agree on a vission in a single afternoon.
The implications, Rumelt says, are that this, “ . . . siren song of template-style strategy—filling in the blanks with vision, mission, values, and strategies . . . offers a one-size-fits-all substitute for the hard work of analysis and coordinated action.”
The inevitable product of this kind of process is insincere and uninspiring, causing employees to groan and roll their eyes anytime the CEO turns her back.
2. The strategy uses lots of big words
Rumelt refers to them as “Sunday Words”, describing them as “inflated and abstruse.” It’s a bit ironic that he uses the adjective “abstruse,” which I had to look up (it means difficult to understand.)
Whether you use the term “Sunday Words,” or my favorite, “Fifty Cent Words,” we all know them when we see them. They are especially nausea-inducing when they are trendy, recent additions to the sometimes nonsensical vocabulary of the business world, like “disintermediation,” or “omni-channel” or “employee engagement.”
Why is this necessary? To prove that the people who created the strategy are smart? Wouldn’t it be better to use language that is simple and unambiguous? Wouldn’t an inspiring leader insist on that?
Rumelt writes, “A hallmark of true expertise and insight is making a complex subject understandable. A hallmark of mediocrity and bad strategy is unnecessary complexity–a flurry of fluff masking an absence of substance.”
3. The strategy doesn’t define the problem that needs to be solved
This is the most important part of any strategy, yet most organizations skimp on it or skip it entirely. A strategy is a proposed solution. It has no meaning if the problem is not defined.
My first employer, General Mills, understood this. The annual planning process there always started (and still starts today, I suspect) with a presentation of “Key Issues,” the problems that prevented each business from growing at the desired pace. We worked hardest and longest on this first stage of our strategy development because finding the actual causes of what ails a business is very difficult. It’s much easier to stop at the symptoms.
The benefit of all that hard work was that the solutions we prescribed would fall quite naturally out of the problems we defined. As Rumelt declares, “When you cannot define the challenge, you cannot evaluate a strategy or improve it. 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.”
4. The strategy confuses objectives with strategy
I think we can blame the finance guys for this one. Strategy development in most companies starts with the board asking for multi-year projection of the business. This causes the CFO and his team to initiate a “strategic planning” process with the same enthusiasm that Chinese deep shaft coal miners feel when they enter the elevator cage each morning.
The strategy team, often an amalgam of cross-functional, mid-level management draftees who don’t have enough chits lying around to buy their way out of the assignment, will start with the numbers that the CFO wants in year five and work backwards. They will then, with as much creativity as committees usually muster, punch out a list of “strategies” that often look like this:
- “We will grow revenues by X%”
- “We will achieve a market share of X%”
- “We will grow gross margins by X%”
- “We will be an employer of choice”
- “We will be a green, sustainable business and a good member of the community.”
These are not strategies. They are objectives. They are the ends, not the means.
Imagine if Eisenhower had declared that his strategy to win World War II was to win it.
As Rumelt writes, “ . . . most corporate strategic plans are simply three-year or five-year rolling budgets combined with market share projections. Calling a rolling budget of this type a “strategic plan” gives people false expectations that the exercise will somehow result in a coherent strategy.”
5. The strategy doesn’t make hard choices
We have all seen strategy decks with long lists of “strategies” and initiatives. Sometimes the lists are so long that they require fancy graphics to create some semblance of order or logic.
This, like the previous discussed theatrics around vission, makes the fatal mistake of over-estimating peoples’ attention spans.
But more importantly, these long lists reveal a leader’s inability to make difficult choices. I cannot possibly say it better than Rumelt, “ . . . the essential difficulty in creating strategy is not logical; it is choice itself. Strategy does not eliminate scarcity and its consequence—the necessity of choice. Strategy is scarcity’s child and to have a strategy, rather than vague aspirations, is to choose one path and eschew others”(the emphasis is mine.)
I once worked with a leader who would frequently make a speech about “the power of and instead of or!” We didn’t have to make difficult decisions, we just had to think positively and creatively about what was possible! This, that leader thought, was how you inspired people to do great things. You can guess how well that all turned out.
So we’ve identified the hallmarks of a bad strategy, but what characterizes a good strategy? You’ll have to read Rumelt’s book to find out.