Good or Bad Strategy
How do you know your strategy is good or bad? In this article we cover a few yet quite important tools for keeping yourself in check. There are essentially three check points that Richard Rumelt 2011, called “the kernel of good strategy”. Kernel refers to “the central most important part of something” Oxford. Firstly, the diagnosis of the situation or challenge at hand. Secondly the creation or identification of a guiding policy for dealing with the critical difficulties, and finally a set of coherent actions. Let’s unpack them one by one.
- A diagnosis defines or explains the nature of the challenge. A good one will simplify the often overwhelming complexity of reality by identifying certain aspects of the situation as critical.
- A guiding policy is the overall approach chosen to cope with or overcome the obstacle identified in the diagnosis.
- A set of coherent actions are the steps that are coordinated with one another to work together in accomplishing the guiding policy.
The 80/20 Pareto principle comes into play here. Not every problem or challenge is critical. The executive of the business need to earn their keep here. They have to help nail and accurately identify the challenge. This is more of an art than a science and there is real danger of defensiveness, tackling holy cows and pet projects, that will not really move the needle and move the business forward in any significant way. The medical students know this well. If the clinical diagnosis is flawed everything else that follows is not going to help the patient.
The diagnosis, if we stay with the medical analogy , is when the doctor looks at the patient’s set of signs and symptoms together with the history. It’s really the determination of “what is going on”. The doctor then makes a clinical diagnosis, that is, naming a disease or pathology. The therapeutic approach that the doctor chooses is the guiding policy. Finally, the prescriptions for diet, therapy, and medication are the set of coherent actions to take. In business, the challenge is usually dealing with change and competition. Executives have to diagnose the nature of the challenge rather than simply naming performance goals. The consultant helps guide the team with the selection of a guiding policy to deal with the challenge, and the setting of coherent actions to be taken.
Your strategy is good if it ticks all three of the boxes. A bad one will miss the mark on one or all of the stages. When choosing a consultant, it is to get help on any of these three aspects. Some, not all consultants, will be great at all three. However, do take such claims with a pinch of salt. At least the medical fraternity is to be commended here. They will refer to other specialists who are better qualified to deal with specific pathologies. Its up to you, the ball is in your court.