Rumelt argues that having a strategy is itself a competitive advantage, in that few organizations actually have strategies. Strategy depends on a three-part kernel consisting of a diagnosis, a guiding policy, and of coordinated action.
The nature of strategy
- Strategy unflinchingly identifies the nature of the challenge ahead
- Strategy creates advantage by generating new perspectives
- Strategy requires rejecting some good opportunities in favour of others
- Strategy is more design than decision-making
- Sustainable strategy cannot be easily replicated
- Strategy cannot be discovered through deduction alone
The kernel of strategy
- Strategy revolves around a diagnosis, a guiding policy, and coherent action.
Inertia and entropy in organizations
- Established organizations tend to optimize for inertia
- Entropy forces organizations to waste energy on alignment
- Chain link systems cannot be improved by focusing on one link alone
Rumelt, Richard. Good Strategy Bad Strategy: The Difference and Why It Matters. Illustrated edition. New York: Currency, 2011.