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Of Course!

Whenever colleagues from abroad tell me they are planning a trip to the east coast, I urge them to add Arizona as a detour destination. “We have the Grand Canyon,” I tell them. “If this is your only trip, you can’t leave without taking one look.” Those who make the trek are eternally grateful. There’s just no describing the Grand Canyon and no photo or film can ever do it justice.

A good strategy is sort of like the Grand Canyon. Expounding at length never really does the trick and that big a-ha! moment you have when you see it (or get it) for the first time makes all the difference in the world. Richard Rumelt, author of Good Strategy, Bad Strategy: The Difference and Why it Matters, makes a similar observation. “Describing the destination,” he writes, “is no substitute for a detailed map showing how to get there. It’s kind of obvious. Just try finding Sipaulovi Village on explanation alone.

The problem with applying that wisdom to everyday management is that too many people don’t know what “strategy” means. Business people, fluent in buzzspeak, translate the term into everything it isn’t. “Despite the roar of voices wanting to equate strategy with ambition, leadership, ‘vision,’ planning or the economic logic of competition,” Rumelt writes, “it is none of these.” In fact, it’s far simpler. For Rumelt it’s a kernel built around a logical structure, “a diagnosis, a guiding policy, and coherent action.” What that means is – simply – defining the problem, adopting the solutions that will fix it, then applying that solution instead of ten others. A strategy is “a way through a difficulty,” or “a response to a challenge.” If you don’t define the challenge, or if you’ve done it badly, you can’t evaluate the quality of the strategy you’ve adopted. “A word that can mean anything has lost its bite.”

It’s a common error. Organizations often conflate goals with strategy. Goals tell you what you want to achieve. The strategy tells you how to get there. Regarding one client who made this mistake, Rumelt writes, “Strategic objectives should address a specific process or accomplishment, such as halving the time it takes to respond to a customer.” Bad strategy isn’t simply the absence of those things. “Bad strategy has a life and logic of its own, a false edifice built on mistaken foundations.”

It takes a smart man to develop a simple strategy. Rumelt, a Berkeley alum, Ph.D. from Harvard, board member of the Strategic Management Society, former professor of Harvard Business School, INSEAD’s Business School of the World, and currently of UCLA, is that kind of man. His approach to strategy is encapsulated in two simple rules: make it coherent (by coordinating policies and actions) and change your viewpoint (through subtle shifts in view that create new strengths). Wal-Mart is a perfect example. Sam Walton’s success was not that he broke conventional wisdom. Instead, he broke conventional definitions of what it means to be a store. The crucial element was that “the network, not the store, became Wal-Mart’s basic unit of management.”

Many organizational action plans fail because they don’t notice the elephant in the elevator, according to Rumelt. They focus on the wrong obstacles for achieving their goals, or they misunderstand the goals in the first place. So, their well-laid plans never address them. But, if your business sector is filled with rivals, their lack of strategy might also benefit you. “The first natural advantage of good strategy arises,” Rumelt writes, “because other organizations often don’t have one.”

Simplification is key to eliminating the inertia that prevents good strategy. Rumelt suggests stripping out excess layers to “eliminate the complex routines, processes, and hidden bargains among units that mask waste and inefficiency.” Developing high quality strategic resources is another powerful tool. It’s a simple idea. Develop resources that serve you well over time but that your competitors can’t duplicate without economic loss.

Rumelt’s own success as a consultant and teacher is that he digs beneath the superficial to get at the fundamental source of problems. It’s a great strategy. Just think where the Grand Canyon would be if it had only scratched the surface. FBN

Photo above:  Flagstaff Business News book reviewer Constance DeVereaux at Barnes and Noble following a recent book discussion.  They are held the last Thursday of each month, sponsored by Barnes and Noble.

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