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Published: November 22, 2011
 / Winter 2011 / Issue 65

 
 

Best Business Books 2011: Strategy

Good strategy calls for effective management and concerted efforts to combat entropy. It calls for the discipline needed to identify low performers and raise the level of overall performance. One “cannot fully understand the value of the daily work of managers unless one accepts the general tendency of unmanaged human structures to become less ordered, less focused, and more blurred around the edges,” writes Rumelt. He admires Alfred P. Sloan of General Motors Company, who insisted on a rigorous review to analyze performance and take action, writing, “Sloan’s product policy is an example of design, of order imposed on chaos. Making such a policy work takes more than a plan on a piece of paper. Each quarter, each year, each decade, corporate leadership must work to maintain the coherence of the design.”

Anyone hoping for a simple formula for strategic success will be disappointed. But in fact the message of Good Strategy, Bad Strategy is liberating. It reminds us that strategy need not be complicated. It’s not rocket science. And furthermore, you can spot the nonsense, simplify, and clarify. “A good strategy is, in the end, a hypothesis about what will work. Not a wild theory, but an educated judgment,” concludes Rumelt. “Good strategy grows out of an independent and careful assessment of the situation, harnessing individual insight to carefully crafted purpose. Bad strategy follows the crowd, substituting popular slogans for insights.”

Many of the ideas in Rumelt’s book reinforce key points in The Essential Advantage and Staying Power. Like Paul Leinwand and Cesare Mainardi, he stresses the need for coherence. Like Michael Cusumano, he emphasizes strategic thinking as a process — a hypothesis to be answered with openness to new ideas. Each of these books reminds us of the basic elements of strategy: the need for clear-eyed analysis, courage to make specific choices, action in support of those decisions, and alignment throughout the organization. They are all about coherence, about developing capabilities not once but in a dynamic manner, and ultimately, about the agility needed to succeed over time.

None of these books guarantee success — not Rumelt’s good strategy, not Cusumano’s six principles, not Leinwand and Mainardi’s essential advantage. In an uncertain and intensely competitive business world, even the best of actions don’t lead predictably to desired outcomes. Strategy is necessarily about competition, where performance is inherently relative, not absolute — a message driven home by the cover of The Essential Advantage, which shows a race among five runners, suggesting that success isn’t about being fast but about being faster than your competitors. Each of these authors knows that fundamental truth and doesn’t try to tell readers otherwise. Their books do an important service by keeping us focused on the most important questions about strategy.

Author Profile:

  • Phil Rosenzweig is a professor at IMD in Lausanne, Switzerland, where he works with leading companies on questions of strategy and organization. He is the author of The Halo Effect...and the Eight Other Business Delusions That Deceive Managers (Free Press, 2007).
 
 
 
 
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