Too often, leaders are dishonest about the purpose of their strategies, Rumelt says. “They are not experimenting with strategic possibilities, they are satisfying power bases.”
Rumelt says one of his clients developed 11 priorities in its 2009 strategic plan. By 2012, when they called for Rumelt’s help, they had achieved none of them.
Leaders fear picking the wrong strategy if they do narrow down their focus. But Rumelt says: “If you have no idea what to do, you need to loosen up. You need the ability to experiment.”
Do something doable
Faced with many competing strategic needs, Rumelt has a simple solution: do something doable. Rumelt calls it a “proximate objective” – one that is close enough at hand to be feasibly achieved.
This approach builds a company’s confidence in its ability to solve problems and realise strategy, and it also means that money, time, effort and people are used more efficiently.
Competitive advantage is not in itself going to make any company wealthy. “You get wealthier by actively strengthening a competitive advantage,” Rumelt says.
Strategy in volatile times
The title of Rumelt’s address in November is “Keys to strategy in volatile times”. It is something that is occupying the minds of leaders around the world.
Rumelt suggests that the idea that the world used to be more stable is a myth. “Between 1885 and 1920 the aeroplane was invented, cars appeared, electric motors appeared, the world turned upside down. Today we have the internet and everyone is excited. But that is not as big a change as aeroplanes that take you anywhere in the world.
“And so we live in volatile times. The trick to strategy is to have a relatively moderate time horizon, say 18 months. Start with something you can accomplish in 18 months that will make a substantial difference.”
To hear Richard Rumelt’s recipe for effective strategy in more detail, with case studies of both successes and failures, book your tickets to Creative Innovation Asia Pacific, November 28-30, 2012, at the Sofitel in Melbourne. LeadingCompany is a Digital Media Partner to the Creative Innovation event.
Good Strategy/Bad Strategy: The Difference and Why it Matters was chosen as one of six finalists for the Financial Times & Goldman Sachs Business Book of the Year award for 2011.
This article first appeared on LeadingCompany.
