Summary

Rumelt argues that having a strategy is itself a competitive advantage, in that few organizations actually have strategies. Strategy depends on a three-part kernel consisting of a diagnosis, a guiding policy, and of coordinated action.

Notes

The nature of strategy

• Strategy unflinchingly identifies the nature of the challenge ahead
• Strategy creates advantage by generating new perspectives
• Strategy requires rejecting some good opportunities in favour of others
• Strategy is more design than decision-making
• Sustainable strategy cannot be easily replicated
• Strategy cannot be discovered through deduction alone

The kernel of strategy

• Strategy revolves around a diagnosis, a guiding policy, and coherent action.
  • Strategic diagnosis is a clear, honest description of the challenge at hand
  • Guiding policy is a general approach to overcoming a challenge
  • Strategy defines coherent action -- a set of coordinated moves that enact a guiding principle

Inertia and entropy in organizations

• Established organizations tend to optimize for inertia
• Entropy forces organizations to waste energy on alignment
• Chain link systems cannot be improved by focusing on one link alone

Related

• strategy
• innovation

Reference

Rumelt, Richard. Good Strategy Bad Strategy: The Difference and Why It Matters. Illustrated edition. New York: Currency, 2011.