Thursday, June 30, 2011

Good Strategy, Bad Strategy

An UCLA management professor identifies the attributes of what he calls “bad strategy” and lays out a three-step process to build effective business strategies.

I read quite a bit of literature on business strategy in college and then some more when I was doing research to write my second book on supply chain strategy. All along, I thought of strategy as “effective” if it creates competitive advantages and “ineffective” if it does not. Then, I came across this article from McKinsey Quarterly and got acquainted with “bad strategy”.
The author, UCLA management professor Richard Rumelt says, “Bad strategy ignores the power of choice and focus, trying instead to accommodate a multitude of conflicting demands and interests. Like a quarterback whose only advice to his teammates is “let’s win,” bad strategy covers up its failure to guide by embracing the language of broad goals, ambition, vision, and values. Each of these elements is, of course, an important part of human life. But, by themselves, they are not substitutes for the hard work of strategy.” Then, he goes on to elaborate on the characteristics of bad strategy as, Failure to face the problem, Mistaking goals for strategy, Bad strategic objectives, and Fluff.
On creating a good strategy, Rumelt lays out a three-step process of Diagnosis, Guiding Policy, and Coherent Actions. This specifically caught my attention because it aligns well with my own strategy life-cycle described in my book and reproduced below.
Creating a strategy must absolutely follow a diligent process of identifying the core-strength of the business that the corporation believes, can be leveraged to create competitive advantage. This is what is created in step 1 of the process depicted above. Once the central principle or the core strength is identified, the corporation must assess the gaps in its capabilities that will prevent it from leveraging the “central principle of business growth”. The third step then simply is to identify specific initiatives that will help the corporation in creating those “capability gaps” identified in step 2. 
To learn more on how the business strategy should be developed and how it can applied to drive supply chain strategy and other functional strategies, read the related articles below or my book titled Supply Chain as Strategic Asset.
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© Vivek Sehgal, 2011, All Rights Reserved.

Want to know more about supply chain processes and supply chain strategy? Check out my books on Supply Chain Management at Amazon.

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