Effective strategy

As well as determining what a firm will produce for customers to buy, an effective strategy deals with its impact on the whole organisation.  In Good Strategy/ Bad Strategy, Richard Rumelt identifies the following characteristics of an effective strategy:

• Recognises the nature of a problem and how to surmount it – Answers the question “What’s really going on here?”
• Focuses and coordinates efforts
• Defines the best way to get from here (Present State) to there (Desired State)
• Is responsive to innovation and ambition: Strategy selects the path by identifying the how, why and where leadership and determination are to be applied
• Describes how an organisation will move forward
• Applies strength to the most promising opportunity
• Coordinates policies and actions
• Discovers hidden power in the situation

Rumelt’s book is full of examples of bad strategy, a common thread being the treatment of strategy as a theoretical exercise disconnected from the realities of implementation.  We will return to this subject.