This post is about using the approach in “Good Strategy Bad Strategy” to question, review and develop an organisation’s strategy.
I think “Good Strategy – Bad Strategy” by Richard Rumelt is one of the best books on strategy I have come across. I was one of the first to read it, and once I picked it up I had trouble putting it down. Now that is quite a compliment for a management book, especially one on Strategy.
As a strategy consultant who has tried most strategic analysis approaches in his time, there are three reasons I like this book:
1) The first, it sticks a sharp pin in many of the supposed approaches to strategy that include having passion, mistaking goals for strategy, and a failure to face the challenge of strategy
2) It makes a clear distinction between strategies, and strategy. Strategies and options you might choose. Strategy is about thinking through what the problem that you are facing is and finding guiding policies and actions to address those challenges. This might include some strategies, but these should not be confused with thinking strategically.
3) Most importantly, it provides an elegantly simple (but not simplistic)set of three questions that you have to address to be strategic. Three questions that apply in any context.
Those three questions are:
a) What is the problem? What is the situation? What is the story diagnosis of the problem and its story? Unless you understand this you are not addressing a strategy.
b) Given the diagnosis of the situation, what guiding principles and policies should now be applied. The elegant part of this is that this is where “strategies” are useful, but teh guiding policies might not be as sophisticated as a grand strategy, simply a statement that channels energy and effort.
c) What therefore are the coherent actions. Strategy has to be implemented and the coherence of the actions is the manifestation of the guiding principles in action. If the actions are not consistent with the guiding principles, they should not be carried out as they won’t address the diagnosis of the problem.
Given this simple framework, I set to work with a Professional Services business, analysing their strategy.
The first step was to create three areas on the wall to contain the thoughts from the three main questions: Situation, Guiding policies and coherent actions. Then we concentrated on the first area. The first stage was to brain dump all the problems and phrases that described the situation so we could develop a set of problem areas and descriptions of those areas that the team could agree. As the picture developed these started to manifest themselves into seven or eight situations areas (two of which were relatively positive and the others had more negative connotations. As the work progressed, these were developed into a short story for each area.
We them moved across to the guiding principles and started developing ideas that would address the problem areas that were developing. This started a process of iteration moving between:
1) What potential principles might we apply?
2) Do we actually have the story correct, and what evidence do we have?
3) What sources of guidance should we look for. In this case, a professional services firm, two useful sources of strategy options were David Maister’s work “Managing the professional services firm” and Treacy & Wiersema’s “The discipline of market leaders”. Clearly other sources could be used to address other aspects.
This iterative process continued for 2-3 days as the team explored options, developed ideas, sought counsel in evidence and material, discussed options among themselves. One noticeable feature was the frequent return to the stories and situations to ensure they were complete. As the work progressed, additional areas of problem and analysis were also exposed. The iterative development of the guiding principles could not be completed until the the team were completely happy with their analysis of the situation.
One thing that helped, was to line up the areas of guiding policies, with the situation analysis , so that the story read well across the wall. Another caution was to see that areas where new policies were being developed usually took up a lot of space. In contrast it was easy to fall into the trap of taking existing guiding policies for granted. When these came up, they too were included on the wall.
It took another couple of days to work through the guiding principles. One feature of this was the testing of consistency and congruence of these policies by the team as they worked through the options and developed the policies. Was it congruent to offer products as well as being an expert based business? Was the website policy consistent with the revenue model? How would recent leads and current clients, take to this story? Were the executive team happy with the overall consistency? Could we implement it? Would it actually address the situation analysis?
Throughout this time, ideas were being dropped into the “Coherent actions” areas. However these were only visited once the guiding principles were complete. At this stage the analysis of each situation and the guiding principles designed to address those areas and focus resources were written up in a four page plan. Remarkably short and concise, as guiding principles should be. The team were also asked to go out and talk to people about the guiding principles and positioning they were now adopting, with people who were safe, trusted associates. This was a deliberate ploy to help the team members practice telling the story, to develop how they would tell the story in a smooth and convincing manner, and to test how convincing they were.
By this time it was clear we had what would traditionally be called a vision and mission. However , it was not the usual glib statement of a vision, but one that had much more substance in the minds of the team.
Once this was complete, the coherent actions where addressed using a time line and structuring the main tasks against the guiding principles.
It was only at this point that we developed a more detailed tangible future, a time line of actions, a strategy map and the more detailed plan that each member of the team adopted part of.
Overall it was a thought provoking experience. I would use Richard Rumelt’s approach again. Especially where the team need an expansive thing and even need to stop doing what they have always done. It has the advantage of opening up the questioning and diagnosis to a wider set of questions than any specific strategy analysis tool normally develops. Also, the concise, yet powerful guiding principles provide an excellent point of reference when working on any aspect of the strategy, for instance is the website approach consistent with the positioning and sales policies? If PR is our preferred channel for influencing the market where do we choose that is consistent with our policy on clients?
So, overall a very satisfying experience as a facilitator and consultant. Also a very effective tool as a client. Good strategy bad strategy has a lot going for it as a tool as well as being a good thought provoking read.
