Good Strategy/Bad Strategy: The difference and why it matters [Hardcover]

I've been very impressed with this book and would be happy to recommend it to anybody who would like to define a real strategy.

By that I mean, as the book explains, not just churning out boilerplate wishful-thinking Vision Statements and Financial Projections, but a serious approach to creating a methodical and actionable strategy to overcome a seemingly infinite number of potential problems faced in business and every other sphere of life where strategic thought is required.

As a small business owner I have found this book to be invaluable for generating ideas and direction for my business efforts.

Another point that should be mentioned is to do with credibility. If you needed any further convincing that this book is a worthwhile read, buried a third of the way into the book is the fact that the author is a former NASA engineer, as well as a long-time researcher of strategy. He has interviewed many top level strategists, including the likes of Steve Jobs. The information shared is, by all accounts, very well founded.

Highly recommended.

As the title of this review correctly indicates, Richard Rumelt is convinced (and I agree) that a good strategy can provides both a timely head's up to imminent challenges and guidance when preparing to respond effectively to them. With surgical skill and (to my delight) a light touch, he explains what a good strategy is. In fact, he also explains what is and isn't a strategy, good or bad. Moreover, he cites dozens of real-world examples to illustrate which strategies succeed, which fail, and why. Both good and bad strategies are a result of a process so Rumelt correctly examines both good and bad processes, each of which involves a sequence of decisions. Thus a good strategy is the result of a process of correct decisions; a bad strategy is the result of a process of incorrect decisions.

One of Rumelt's valuable insights suggests that a decision is correct if (huge IF) it is appropriate to the given needs, interests, resources, and objectives. This is what Peter Drucker had in mind (in 1963) when observing, "There is surely nothing quite so useless as doing with great efficiency what should not be done at all." Many years later, Michael Porter made essentially the same point when suggesting that "the essence of strategy is choosing what not to do." Rumelt's purpose in the book is to awaken his reader "to the dramatic differences between good strategy and bad strategy and to give [his reader] a leg up toward crafting good strategies." Rumelt nails the "what," devoting most of his attention to the "how" and "why."

Here is a partial list of the real-world situations that Rumelt rigorously examines:

o How Steve Jobs saved Apple
o General Schwarzkopf's strategy in Desert Storm
o Discovering Wal-Mart's secret
o How blue-sky objectives miss the mark
o Pivot points at 7-Eleven and the Brandenburg Gate

Note: More about "pivot points' later

o Why Kennedy's goal of landing on the moon was a proximate and strategic objective
o [How] Hannibal defeats the Roman army in 216 B.C.
o What bricklaying teaches us about deepening advantage
o Deduction is enough only if you know everything worth knowing
o The worst industry structure imaginable

These and other mini-case studies reveal why strategy is, like a scientific hypothesis, "an educated prediction of how the world works. The ultimate worth of a strategy is determined by its success, not its acceptability to a council of philosophers or a board of editors. Good strategy work is necessarily empirical and pragmatic. Especially in business, whatever grand notions a person may have about the products or services the world might need, or about human behavior, or about how organizations should be managed, what does not actually `work' cannot long endure." Amen.

With regard to "pivot points," they magnify impact of an effort. "It is s natural or created imbalance in a situation, a place where a relatively small adjustment can unleash much larger pent-up forces." For example, in the business world, a strategic thinker "senses such imbalances in pent-up demand that has yet to be fulfilled or in a robust competence developed in one context that can be applied to good effect in another." In m y opinion, pivot points seem to be first cousins to Michael Kami's trigger points, Andy Grove's inflection points, and Malcolm Gladwell's tipping points. Obviously, a good strategy takes full advantage of every opportunity that pivot points offer.

Those who share my high regard for this brilliant book are urged to check out Walter Kiechel III's The Lords of Strategy: The Secret Intellectual History of the New Corporate World.

I'm not exaggerating when I say that reading this book made me think more clearly.

The author describes what strategy IS, and describes how to distinguish good from bad. It's the kind of stuff that's obvious - but only AFTER you've had it pointed it out to you.

He goes into a clear breakdown of what makes bad strategy (wishful thinking, not understanding the problem, etc.) and good strategy (knowing what the problem is, actionable etc.). The tips on how to detect bad strategy are worth reading. One of them is to watch out for "fluff" --- I love this definition of cloud computing from an EU report: "an elastic execution environment of resources involving multiple stakeholders and providing a metered service at multiple granularities for a specified level of quality-of-service". (In case you wondered what your EU taxes were being spent on).

It's easy reading and quite short, you can probably read most of it on a 2 hour flight, and it's worth the time; really recommended.