Effective strategy requires identifying and addressing specific challenges, not just stating goals.
A proper diagnosis forms the foundation of effective strategy, going beyond surface-level goals and understanding the nature of the problem.
Coherence and alignment in policies, actions, and goals are crucial for successful strategies.
Deep dives
Understanding the Epidemic of Bad Strategy
In this podcast episode, the guest discusses the prevalence of bad strategy. He highlights that in the past 20 years, the concept of strategy has been misunderstood, with many mistaking goals and ambitions for actual strategies. He emphasizes that a strategy should be about facing challenges and finding solutions, not just stating goals. He also discusses the importance of diagnosis, guiding policies, and coherent actions in evaluating a strategy. The guest shares insights from his book, The Crocs, which dives deeper into the essence of effective strategy.
The Role of Diagnosis in Strategy
The podcast delves into the importance of diagnosis in strategy. The guest suggests that a proper diagnosis helps identify and understand the challenges a company or organization is facing. This involves going beyond surface-level goals and ambitions and delving into the nature of the problem. He contrasts a genuine diagnosis with simplistic sales-focused PowerPoint presentations that masquerade as strategies. By emphasizing the need to identify the specific challenges and their underlying difficulties, the guest highlights how proper diagnosis forms the foundation of effective strategy.
Examples of Coherent and Incoherent Strategies
The discussion explores the concepts of coherence and incoherence in strategies. Coherence is achieved when the various policies, actions, and goals within a strategy align and complement each other. In contrast, incoherent strategies have conflicting elements that hinder progress. The podcast provides the example of a company that emphasized drug testing for its creative employees, showcasing how actions can undermine the overall strategy. The guest emphasizes the need for strategy to be cohesive and harmonious, with all parts working towards a common goal.
Challenges and Addressability in Strategy
The podcast highlights the importance of focusing on challenges and their addressability in strategy. It explains that not all challenges are equal, and some may be more critical and solvable than others. By prioritizing challenges and determining which ones can be effectively addressed, a strategy can be more focused and impactful. The guest discusses the need to go beyond vague ambitions and goals and instead focus on the specific challenges an organization faces. By identifying challenges and addressing them directly, companies can develop strategies that make a real difference.
The Strategy Foundry Approach
The podcast introduces the strategy foundry approach developed by the guest. The strategy foundry involves bringing together a group of senior leaders to collaboratively address challenges and develop an actionable strategy. The process includes diagnosing the critical challenges, determining the most important and feasible ones, and creating coherent actions and policies. The strategy foundry approach aims to align senior leaders, identify and address key challenges, and foster a sense of commitment and cohesion. The guest emphasizes the need for ongoing strategic reevaluation and decision-making to adapt to changing circumstances.
Richard Rumelt has been described by no less than McKinsey as a "giant in the field of strategy." He's also a dear friend and an enormously influential thought leader. We're going to chat about his latest book, "The Crux" in which he illustrates the principles of challenge-based strategy. The idea is that strategists need to identify the main obstacle to overcome, and do so again and again - a very dynamic approach.
Rita McGrath is a best-selling author, sought-after speaker, and longtime professor at Columbia Business School.
As one of the world’s top experts on innovation and growth, Rita’s work is regularly published in the Harvard Business Review. She is consistently ranked among the Top 10 management thinkers in the world and was ranked #1 for strategy by Thinkers50. Get in Touch, Keep in Touch! https://www.ritamcgrath.com/You can follow me on Twitter (@rgmcgrath), on Instagram (@ritamcgrathofficial), on LinkedIn and here on YouTube. For access to the archives, ability to make comments and to be part of the community, subscribe.
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