“Bad strategy” apparently shows up as ”fluff”, failure to face challenges, mistaking goals for strategy, or choosing bad objectives – all common enough, maybe, but these are not any kind of strategy. There are plenty of actual strategy mistakes that repeat endlessly across industries and throughout time, but do not get a mention.

The “good strategy” principles offered are not wrong, but seem to follow a random walk around a variety of concepts – many of which, in the absence of clear instruction, themselves qualify as “fluff”. Plenty of anecdotes to show examples of good and bad, and reasonable-enough principles to follow, but no clue how to actually do what the examples show or how to enact the principles.

Prof Rumelt is no doubt a brilliant strategist, but no-one reading this is going to understand what to actually do to design and implement a strong strategy.

• Across-the-board approaches to cost reduction are fast, relatively easy, and appears “fair”, but a differentiated approach is both more effective and more likely to be sustainable [big under-statement - across the board cuts are just dumb!].
• One perennially hard-to-reach cost area concerns product or service specifications, and McK recommends significant changes to how products and services are designed and delivered—and a more sophisticated understanding of how customers perceive the value of product and service features. Add to this two continuing big problems [a] the need to trim over-extended product ranges in which the marginal revenue from tail-end products undermines the viability of the whole market proposition (I’ve just reviewed a horror-story example of this issue in an investment-fund provider) and [b] that in the switch to a service or ‘solution’ orientation, it’s important to ‘productise’ what’s offered to avoid constant re-inventing of wheels and gross inefficiencies in delivery.
• Companies seem determined to extend cost reduction efforts further into the front line, at the risk of damaging the very system that makes the business work at all. Encouragingly, McK find a majority of companies are focusing on organizational factors such as talent and capability, and process innovation has a role here too (see recent post on this). 

See www.strategydynamics.com

If such capabilities consist of individual skills + availability of required information +  existence of effective processes to get the team’s tasks done, then knowing about individuals’ skills alone may not be enough.

A team might, for example, know that a certain activity takes too long, costs too much or is not done well enough, and also know that the reason for the specific problem is not under-skilled people, but limited or too-slow access to information or laborious processes that obstruct even experienced staff. 

(For more, see extract from chapter 10 of my book).

The old value-chain may help show how costs and activities are traded off between parts of the system, but says nothing about how that system will perform over time.

Helpfully, the article goes on to offer tactics that, when used together, seem to make transformations more successful, depending on the purpose of the effort.

NEW: join strategy dynamics on LinkedIn.

Seven Ways Forward from Booz & Co’s strategy+business on, with specifics for Manufacturing, Consumer Products, Aerospace and Defense, Telecom, Finance, and general guidance on rebuilding capabilities for long-term growth.

Surviving the Downturn: Lessons from Emerging Markets from Sloan Mgmt Review [title self-explanatory]

Three Opportunities to Seize in the Downturn a blog post from Harvard Business Publishing [HBP] makes the case for two points I’ve raised before [a] that there’s cheap talent on the market right now, and [b] there are cheap opportunities to acquire key assets or entire businesses … which leads to the 3rd point, that there will be new winners and losers out of all this.

How Recessions Shake Up Industries in the Daily Stat from HBP [their link takes you to a different article] reports studies from McKinsey and BCG on how industry leaders fall and new leaders emerge in downturns – a reminder for your strategy to be intentional and targeted about challenging specific existing and new rivals, not just trying in some vague way to do better than others [a shortpiece on this at the end of chapter 5 in my book].

Timing Strategic Moves in the McKinsey Quarterly explains how scenario approaches can help avoid moving too soon or too late in these uncertain times. It’s rather focused on macro-economic and stock-market indicators, rather than [I'd prefer a more assertive stance be taken - choosing what to do and when in order to make the future play out as you want, rather than the passive response implied if not actually stated in this.]

Strategic Planning: Three Tips for 2009 from McKinsey Quarterly explains the value of scenario-based planning, the need to intensify monitoring to detect how the recovery is changing things, and the need I have emphasised to look beyond the crisis. [Shame most firms were not doing enough monitoring before the recession!]

Also some good content in Taking Advantage of Tumultuous Times from Monitor.