Very often, I emphasize on the importance of “facing the brutal facts” for businesses to overcome their challenges and have a good strategy for winning. Unless you know, unless you acknowledge, unless you accept that a problem exists, you simply can not fix it.

This is simply what Professor Richard Rumelt attempts to explain in his insightful article at McKinsey Quarterly recently. He contends that bad strategy exists because of:

  1. Failure to face the challenge,
  2. Mistaking goals for strategy,
  3. Bad strategic objectives, and
  4. Fluff.

He draws on examples of International Harvester company in the US, as a loosing company, as well, Nvidia as a wining company, while the crucial difference was, in both cases, acknowledgment that a problem exits and defines a strategy to fix it.

Mr.Rumelt contends that the inability to select, and using a template-style strategy are key sources of failure and ending up with a bad strategy. So often, senior managers fail to agree on a single way forward strategy to drive their companies. This leads to assuming and initiating so many plans and pursuing various critical endeavors in undisciplined manner, which, in return, drives the same set of managers to the denial state of risks and perils of their plans as noted by Jim Collins in his book ‘How The Mighty Fall’. Collins coined these two states as ‘Undisciplined pursuit of more‘ and ‘Denial of risks and perils‘, in his book, which eventually leads to total loss or nonexistence.

Template-Style strategy is not any different. A document that has a mission, vision, and set of values without a soul and clear action plan often dies on the printer. Companies and organizations can not survive or win, merely on a creation of a document.

Mr.Rumlet, eventually, proposes that businesses should consider his kernel for a good strategy that is built on problem diagnosis, an approach and a coherent set of actions.

To learn this kernel, I suggest you read the article at McKinsey Quarterly here.

 

The Perils of Bad Strategy
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