“The core of strategy work is always the same: discovering the critical factors in a situation and designing a way of coordinating and focusing actions to deal with those factors.”

John Kay (the British economist, not the guy who invented the flying shuttle) recently came out with his five book recommendations on economics in the real world. Since I hadn’t read it, I thought I’d pick up Good Strategy, Bad Strategy.

Overall, I’m impressed. Rumelt is an academic who studies strategy, and his clarity and insight does him credit. All he wants is structured thinking, and his book reads like a how-to tutorial: though he usually applies it in the context of business or national defense, it could equally relate to strategy in almost any field. CEOs often read things like Sun Tzu’s Art of War, and this book comes as close as any I’ve read to making that seem reasonable.

Rumelt is worried that much of what is done today is bad strategy, for which he has a specific definition. Bad strategy correlates with fluff, a failure to face core challenges, mistaking goals for strategy, and bad strategic objectives. Too many businesses, he points out, have a strategy of having 20% growth in sales for the next 5 years. That’s not a strategy – it’s at best a goal, and quite possibly wishful thinking.

Strategies are made up of three things. First, diagnose the problem. Second, come up with a guiding policy. And third, derive a set of coherent actions that allow you to implement that guiding policy. Too many organizations neglect the first and third steps, and are thus far too vague in doing the second. A doctor, in contrast, diagnoses a problem, chooses a therapeutic approach as a guiding policy, and then recommends specific medicines, diets, and therapy as a result of the guiding policy.  Action is the key to strategy: goals and theories are only part of the story.

A lot of the book feels straightforward, or at least not complicated. As Rumelt points out, however, in a world where we are often increasingly focused on the short term, there is value in forcing ourselves to think strategically. Consultants, he suggests, are not valuable because they suggest you write a checklist: they’re valuable because you actually write one when they suggest it, when otherwise you might never get around to it. I’m not sure I learned anything revolutionary while reading, but I did think deeply and in new ways about strategy and how we make decisions.

Both as a breakdown of how to think about strategy and a source of fun stories about business, Good Strategy, Bad Strategy does well. Perhaps a little too long and repetitive in parts, but it was well worth the read, and I suspect would be even more useful for someone directly involved in business.

If you want to pick up Good Strategy, Bad Strategy yourself, you can get it here (or in the UK or Canada). Or, join the subtle illumination email list and absorb strategy from reading!