JP Castling wrote a blog post titled Good Strategy & Bad Strategy: Introducing Richard Rumelt (October 1, 2021).

« I have especially found value in his research on corporate coherence and organizational chain-link effects. On this particular occasion, however, we are going much more basic by looking closer at one of the three central premises in Rumelt’s famous strategy kernel: the guiding policy. »

« Good strategy, in his words, is a coherent mix of policies and actions designed to surmount a difficult, usually high-stakes, challenge. The guiding policy is central to this endeavor as it reflects the overall strategic approach chosen based on what was discovered during the preceding diagnosis phase. In turn, it informs subsequent actions so as to ensure that they are coherent. »

« The policy could therefore be said to act a bit like the guardrails of a highway, directing and constraining action in a given direction; not necessarily defining precisely what to do, but ensuring that movement is coordinated and serves an established purpose. »

« So, a guiding policy is the result of identifying not just the symptoms of a strategic problem but too its causes, and then deciding and defining the general direction forward needed to overcome them. »

« Assumed in his work is that one can deduce the root cause of a problem … But yet, what if one is unable to correctly diagnose the problem? It is not a question simply of skill or lack thereof. In many cases, particularly when one is dealing with complexity, identifying the root cause to observed symptoms is not just difficult but literally impossible. »

« Given the non-existence of reduction and aggregation in complex adaptive systems (such as firms and markets) the notion of strategy as a problem-solving mechanism becomes a bit of a figment of imagination. »

« As I have argued before, the pragmatic approach is to instead run safe-to-fail parallel experiments (in addition to that which one is already doing), whether in own R&D/innovation, M&A activities, portfolio structures or whatever else. »

« When the problem that we face is unsolvable, or we cannot know what the root cause is, the best we can do is to manage it. And, it seems to me, that is often what business strategy in practice must end up being: a continuous attempt at managing a large-scale problem in increasingly effective ways – through learning, adapting, improving and evolving. »

Richard Rumelt is the author of Good Strategy/Bad Strategy: The difference and why it matters (2017)

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