The Kernel of Good Strategy


Fred Perrotta

In writing Goal-Oriented Communication, I noticed a parallel between those ideas and the outline of "good strategy" in the book Good Strategy/Bad Strategy by Richard Rumelt.

Goal-oriented communication articulates: what is the goal, why are we pursuing the goal, and the constraints around the project. How to achieve that goal is left to the employee.

Rumelt's Kernel of Strategy is similar but flips the first two questions. Why are we doing this (diagnosis), what is the plan (guiding policy), and how will we accomplish this strategy (coherent actions).

According to Rumelt, most strategies are "bad." Not because the strategy is wrong but because it is not a strategy. Often what passes for strategy is really a goal or, at best, a tactic.

"Increase sales by 20%" is not a strategy. It's a goal without context or a plan. Presumably, the plan is "wishful thinking."

As explained by Rumelt, the kernel of a strategy contains 3 elements.

The Kernel of Good Strategy

  1. A diagnosis that defines or explains the nature of the challenge. A good diagnosis simplifies the often overwhelming complexity of reality by identifying certain aspects of the situation as critical.

Start by answering the question, "What's going on?"

A diagnosis is an assessment of the situation, whether that's within your market or company. Diagnoses are judgements. "Diagnoses cannot be proven to be correct."

The first step in setting your strategy is to assess a set of facts then use that assesment to direct your effort to what is most important.

The guiding policy and actions of a strategy are then attempts to solve the diagnosed problem. When the diagnosis changes, so should your strategy.

  1. A guiding policy for dealing with the challenge. This is an overall approach chosen to cope with or overcome the obstacles identified in the diagnosis.

The guiding policy is an approach to or method of dealing with the diagnosed problem. The policy should point you in a specific direction but not list specific actions.

In the same way that the diganosis helps to focus the problem, the guiding policy should help to focus the solution.

  1. A set of coherent actions that are designed to carry out the guiding policy. These are steps that are coordinated with one another to work together in accomplishing the guiding policy.

At best, most "strategies" start and end here. Rumelt's Kernel of Strategy is more complete as it provides the context for the actions (tactics).

The assessments in the first two steps are important to providing the context for the actions. A clear strategy assures that the actions will add up to something. They may not be right, but they also won't just be wishful thinking.


Notes

My notes from Good Stratey/Bad Strategy