Richard Rumelt

The big dysfunction that happens on boards is we say, “Let’s bring in outsiders, people with different backgrounds and representing different social, political, and economic interests.” That’s great, except now you have a roomful of people who don’t understand the business. The language these people have in common is financial accounting, so that’s what they concentrate on. As long as things are going great that’s … [ Read more ]

Richard Rumelt

Some people say, “Strategy is important, but it’s really about execution.” That’s silly. That’s like saying, “We have a military strategy, but our soldiers are too fat to walk.” Execution is part of strategy, of course. Strategy is about what is important and the challenges you face. If one of these challenges is that the organization is dysfunctional, then that’s strategic. If your managers are … [ Read more ]

Richard Rumelt

[Strategy] has to do with a focus of strength against weakness. In business, it’s a focus of strength against opportunities or problems. That focus of strength is essential. If you focus resources on a weak point, even if it’s a great opportunity, you are not acting strategically.

Richard Rumelt

This gap between action and ambition is where most bad strategies come from. Bad strategy is almost a literary form that uses PowerPoint slides to say, “Here is how we will look as a company in a year or in three years.” That’s interesting, but it’s not a strategy.

Richard Rumelt

Many companies treat strategy as a way of presenting to the board and to the investing public their ambitions for performance, and they confuse that with having a strategy. Some of it is the victory of finance as the language of business because we talk about shareholder return as the ultimate measure of success. Executives end up saying, “Our strategy is to achieve these results,” … [ Read more ]

Richard P. Rumelt

The most ancient and still crucial element of strategy is focus. In military terms, it is the concentration of force on an opponent’s weakness. More generally, it is the coordinated application of resources and effort to an important yet addressable challenge. Strategic focus means bringing sources of power to bear on a selected target. If the power is weak, nothing happens. If it is strong … [ Read more ]

Richard P. Rumelt

To execute strategy well, one must consider the logic of challenges instead of wished-for end states. At a moment in time, a properly configured strategy is a mixture of policy and action designed to surmount a high-stakes challenge. (Were the challenge not high stakes, it would not be called strategic.) It is not a financial goal, or a plan for hitting a financial goal, or … [ Read more ]

Why bad strategy is a ‘social contagion’

Author and academic Richard Rumelt explains how to develop strategies that aim to solve problems rather than simply state ambitions.

Good Strategy, Bad Strategy: The Difference and Why It Matters

Developing and implementing a strategy is the central task of a leader, whether the CEO at a Fortune 100 company, an entrepreneur, a church pastor, the head of a school, or a government official. Richard Rumelt shows that there has been a growing and unfortunate tendency to equate Mom-and-apple-pie values, fluffy packages of buzzwords, motivational slogans, and financial goals with “strategy.” He debunks these elements … [ Read more ]

The Perils of Bad Strategy

Bad strategy abounds, says UCLA management professor Richard Rumelt. Senior executives who can spot it stand a much better chance of creating good strategies.

What is Good Corporate Strategy?

Professor Richard Rumelt says its simply the focus of resources on business objectives.

Richard P. Rumelt

Incentives are good in principle, but did Bear Stearns get competent risk management in return for the $4.4 billion bonus pool it distributed in 2006? Does any organization have to give its CEO a $40 million bonus to secure his services? If you pay people enough money to make any future payment beside the point, don’t be surprised when they take vast long-term risks for … [ Read more ]

Richard P. Rumelt

During structural breaks in hard times, cutting costs isn’t enough. Things have to be done differently, and on two levels: reducing the complexity of corporate structures and transforming business models. At the corporate level, the first commandment is to simplify and simplify again. Since companies must become more modular and diverse, eliminate coordinating committees, review boards, and other mechanisms connecting businesses, products, or geographies. The … [ Read more ]