Hotline: The Crux of the Brand-Customer Relationship (Part 4)

Richard Rumelt – 1

Richard Rumelt in his own words: “I studied electrical engineering in college, then worked as a spacecraft designer at the Jet Propulsion Labs. I studied Bayesian statistical decision theory at the Harvard Business School, switching to study strategy after two years. Then spent three years in Iran, teaching at a new Harvard-sponsored business school. Then back to HBS, then to UCLA to teach strategy for forty years, with three years off to teach at INSEAD (France).”

The Crux is his second book on strategy. The first book, “Good Strategy/Bad Strategy: The difference and why it matters” was published in 2011. He has spent a lifetime thinking, writing, and advising on strategy. As he writes: “What fascinates about strategy is its centrality to the success or failure of individuals, enterprises, and even nations. Make the right move at the right time and a cascade of positive outcomes may be unleashed. Fail to grasp the nettle of solving the crux problem and recovery may be long delayed or even impossible.

Much of what I have learned about strategy has come from working with executives. Whether at the DoD, a small start-up, or a giant enterprise like Shell, the best have a knack for teasing out the key elements of a situation and then focusing energy and resources on resolving those problems or grasping those opportunities. I have also seen too many who mistake vague generalities about ambitions and purposes for strategy or who treat strategy as an exercise in setting financial goals.”

Here are some quotes from Rumelt in a 2007 interview with McKinsey Quarterly:

Most corporate strategic plans have little to do with strategy. They are simply three-year or five-year rolling resource budgets and some sort of market share projection. Calling this strategic planning creates false expectations that the exercise will somehow produce a coherent strategy.

Look, plans are essential management tools. Take, for example, a rapidly growing retail chain, which needs a plan to guide property acquisition, construction, training, et cetera. This plan coordinates the deployment of resources—but it’s not strategy. These resource budgets simply cannot deliver what senior managers want: a pathway to substantially higher performance.

There are only two ways to get that. One, you can invent your way to success. Unfortunately, you can’t count on that. The second path is to exploit some change in your environment—in technology, consumer tastes, laws, resource prices, or competitive behavior—and ride that change with quickness and skill. This second path is how most successful companies make it. Changes, however, don’t come along in nice annual packages, so the need for strategy work is episodic, not necessarily annual.

… Strategic thinking helps us take positions in a world that is confusing and uncertain. You can’t get rid of ambiguity and uncertainty—they are the flip side of opportunity. If you want certainty and clarity, wait for others to take a position and see how they do. Then you’ll know what works, but it will be too late to profit from the knowledge.

… A strategic insight is essentially the solution to a puzzle. Puzzles are solved by individuals or very tight-knit teams… If you ask a group to put aside the bullet points and just write three coherent paragraphs about what is changing in an industry and why, the difference is incredible. Having to link your thoughts, giving reasons and qualifications, makes you a more careful thinker—and a better communicator.

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Rajesh Jain

An Entrepreneur based in Mumbai, India.