Good Strategy-Bad Strategy: Post #7 The Kernel--Diagnosis

The Diagnosis: This step tries to answer the question: What’s going on here? Like medicine, leaders look for emergent patterns when trying to diagnose a problem. And reducing overly complex situations to a story or an analogy can often help leaders from becoming hopelessly stuck. Rumelt uses the Lou Gerstner story at IBM as a way to approach diagnosis. Gerstner determined that IBM needed to move from an integrated IT model to an integrated consulting model focused more on the customer than the technology. That story began to penetrate the market and change the course of IBM’s slump in the mid ‘90s.

Good Strategy-Bad Strategy: Post #6 The Kernel

The Kernel of a Good Strategy: “Good strategy is coherent action backed by argument, an effective mixture of thought and action with a basic understanding of what I call the kernel.” For Rumelt, the kernel consists of three key elements: 1) A diagnosis—a simplified explanation of the issue or challenge being faced; 2) a guiding policy—an overall approach to face the obstacles identified; and 3) a set of coherent actions—focused actions to implement the guiding policy.

Good Strategy-Bad Strategy: Post #5--Why?

Why So Much Bad Strategy? To answer this question the author points to three problems. 1) The unwillingness or inability to choose. To create a coherent plan to execute a strategy, you have to say yes to some things, but just as often you must say “no” to others. This gets very hard when executives have pet projects and/or resources they are loathe to give up in service of a new strategy. Unless it’s a dire state, the status quo wins every time. The “If it ain’t broke don’t fix it” philosophy compelled people in Detroit to keep making big cars long after things changed, but no one could see it or wanted to react to it. 2) Template-Style Strategy: Here Rumelt does a frontal assault on the typical vision-mission-values-strategy templates used by so many consultants with companies, churches, government agencies and nonprofits. One example he uses to show the futility of this approach is Enron’s values: “Respect, Integrity, Communication and Excellence!” He says: “…template-style strategy frees them from the onerous work of analyzing the true challenges faced by the client.” Thus, by couching issues in the more positive terms of this model, people can avoid the very difficult issues so no feelings are hurt. 3) New Thought: For ages, people have subscribed to the notion that you get what you think about. Rumelt beats up on this idea by offering the fact that we also have to think about not-so-happy thoughts if we want to vet a workable strategy.