WTF is Strategy, Really?

A primer on Good Strategy, Bad Strategy, and how you can strategize a little better in your work and life.

Are you good at strategy?

I guess most readers of this post will say yes, almost on autopilot. But what exactly would that mean? What is strategy in the first place, and how would you know if you're any good at it?

As we enter a distinctly new and different phase at work, I'm looking to improve my own strategy skills to (hopefully) be able to make reasonably smart business decisions. In researching the topic, I kept finding the same book recommended over and over again: the aptly named Good Strategy, Bad Strategy, by Richard Rumelt. Let me share what I've learned from this excellent book so far, so perhaps you too can bump up your strategic abilities at work and in your life.

What Strategy Is and Isn't

"Strategy" has become a word that means everything and nothing at the same time. We use the word carelessly, often to describe things that aren't strategy at all.

Rumelt provides a few examples of what strategy is often confused with in the professional world:

"Despite the roar of voices wanting to equate strategy with ambition, leadership, “vision,” planning, or the economic logic of competition, strategy is none of these."

If strategy isn't the same as planning, visioning nor competing, then, you may ask, what is it? Let's loop back to Rumelt again:

"The core of strategy work is always the same: discovering the critical factors in a situation and designing a way of coordinating and focusing actions to deal with those factors."

In other words, strategy, in its very essence, is the hard work of identifying what we should do with the limited resources we have, why we should do exactly that, and how we should do it.

Bad Strategy

That sounds simple enough in theory. Yet, the reason Rumelt's book was necessary to write in the first place, is that the world is full of bad strategy. This is problematic because it leads people to waste precious resources, energy and capabilities on ineffective pursuits of reaching their goals.

Rumelt brings examples, and present them with a joyfully sarcastic tone, which makes my inner cynic go warm. Here is one example of a bad strategy based on fluff rather than substance, dissected and called out in Rumelt’s distinctive tone:

"Fluff is superficial restatement of the obvious combined with a generous sprinkling of buzzwords. Fluff masquerades as expertise, thought, and analysis.

As a simple example of fluff in strategy work, here is a quote from a major retail bank’s internal strategy memoranda: “Our fundamental strategy is one of customer-centric intermediation.”

The Sunday word “intermediation” means that the company accepts deposits and then lends them to others. In other words, it is a bank. The buzz phrase “customer-centric intermediation” is pure fluff. Pull off the fluffy covering and you have the superficial statement “Our bank’s fundamental strategy is being a bank.”

– Richard Rumelt

The problem with a fluffy "strategy" like this, is that it cannot be used to guide the efforts of the bank's employees towards what matters most. In fact, it cannot be used to guide efforts in any direction at all, because it is simply a statement of the obvious fact that the bank is, and will continue to be, a bank. What do you do with that?

Good Strategy

It logically follows that good strategy is the opposite of bad strategy. Bingo. Good strategy can and should be used to guide effort, capital and resources towards their best possible use. This, unfortunately, is easier said than done, especially in a complex world where it's seldom crystal clear what the best path forward is. But alas, we must try. So, let's learn how.

To to create a good strategy, we must first acknowledge three basic facts of life:

  • Our resources (time, money, focus, attention, energy, competencies..) are limited, but our desires and opportunities are practically unlimited.
    This means we cannot do everything we want to do, nor achieve everything we want to achieve. We have to prioritise – to choose to do some things and, unfortunately, sacrifice loads of opportunities to do other things.

  • There are certain ways to use our resources that are more effective than others.
    This means the strategist must figure out, or at least make an educated guess about, which way will be the most effective way to reach our goal. The answer to that quesiton is of course contingent on what we want most – what our goal actually is.

  • We will face problems.
    The world is complicated and entropy is real, so we must find ways to deal with problems when they inevitably interfer with us as we try to execute our strategy. Bad strategy does not concern itself with pesky little things like problems, but good strategy must acknowledge the inevitable presence of problems, and provide guidance for how to deal with them.

Good strategy is based on these fundamental facts. It makes clear which goals an organisation shall pursue, describes the most important problems the organisation faces, and provides a guide for what it should do with its limited resources to solve the problems and reach its goals most effectively.

That sentence was quite a mouthful. Let's put it in simpler, metaphoric terms: good strategy is like a GPS – it shows you where your destination is, and it gives you directions for how to get there (turn left at the roundabout to avoid a queue ahead!).

If you have a GPS in your car, you know that it doesn't do all the work for you. You still have to drive the car yourself. But you no longer need to constantly think about where to turn, or if you're on the right path – you can just take a glance at the GPS every now and then. A good strategy has the same effect: it won't do the work for you, but with a quick glance, you'll know what to do to stay on the fastest route to your desired destination.

I could go on and on, but I’ll leave it at that for now. To be continued next week, and the week after that, when I’ll share the strategy we’re defining for the next 1-3 years for our company Braver. Whether that strategy sounds good, bad, dumb or dumber will be up to you, dear reader, to evaluate.

Until then, stay tuned, and stay strategic,