Good Strategy Bad Strategy

By Richard P. Rumelt

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. A good strategy is not just what you are trying to do, but why and how you are doing it. A great deal of strategy work is trying to figure out what is going on. Not just deciding what to do, but the fundamental problem of comprehending the situation. 

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. 

Business competition is not just a battle of strength and wells; it is also a competition over insights and competencies.

Compare change in our life during those that occurred between 1875 and 1925. During these years, electricity first hit the night and revolutionized factories and homes. In 1880 the trip from Boston to Cambridge and back was a full day's journey or horseback. Only twenty years later that trip was a twenty minute ride on an electric streetcar. With the streetcar came commuting and the suburbs. The sewing machine put decent cloths in everyone's reach. Electricity powered the telegraph, the telephone and the radio. Railroads knit the country together. The automobile came into common use and revolutionized American life. Highways were first built. IBM's first automatic tabulating machine was built in 1906. Modern advertising, retailing and consumer branding was invented. 

Making a list is a basic tool for overcoming our own cognitive limitations. The list itself counters forgetfulness. The act of making a list forces us to reflect on the relative urgency and importance of issues. And making a list of "things to do, now" rather than "things to worry about" forces us to resolve concerns into actions.