Good Management Is Not Good Strategy. Here’s What Is:
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One of the most annoying things I hear from leaders is that “we had a great strategy, but just couldn’t execute it.” That’s simply not possible. If you can’t execute it, it’s not a great strategy. Most likely, it was a fantasy cooked up by some combination of consultants and investment bankers which was enshrined in PowerPoint.
As Richard Rumelt points out in his new book, The Crux, planning is not strategy. Yet that’s what managers are good at, so when they set out to create a strategy they build a plan, starting with objectives and working back to resources and operational directives, rejiggering assumptions along the way to make everything fit.
Good strategy doesn’t rely on assumptions. It changes them. When you look at visionary leaders, like Ray Kroc and McDonalds, Charles Lazarus at Toys “R” Us or Thomas Watson Jr. and the IBM 360, they all focused on solving an emerging problem. The truth is that the next big thing always starts out looking like nothing at all. Good strategy creates something new.
Defining A Problem And It’s Crux
Managers lead through objectives, or what they call in the military commander’s intent, to achieve a desired end-state. To achieve these objectives, good managers make plans, allocate resources and delegate authority to direct action. They monitor progress, give advice and guidance, and maintain an atmosphere of accountability and good morale.
But how are objectives determined? Is the prescribed end-state really desirable? Is it achievable and meaningful? As Rumelt points out, without a true strategic process in place, objectives tend to be tied to financial goals that are easily measured, such as “We want to achieve 15% revenue growth, while improving profit margins and increasing market share.”
Good strategy starts with defining a problem that addresses a particular market reality. Kroc designed McDonalds to fit with an emerging suburban lifestyle. Lazarus came up with the “everyday low price” at Toys “R” Us to solve for the huge inventory swings that sale events caused. Watson bet the company on the IBM 360 because the lack of compatibility among IBM’s machines was slowly killing the company.
