For more than 20 years now, the London-based consultancy Thinkers50 has been — as it puts it — identifying, ranking and sharing the best management ideas and producing lists of the most influential management thinkers. The latest initiative from founders Stuart Trainer and Des Dearlove is a list of the 10 books “every manager should read.” Inevitably, their choices will fuel debate, for alongside such key texts as Peter Drucker’s The Practice of Management, Clayton Christensen’s The Innovator’s Dilemma and Philip Kotler’s Marketing Management as well as the undoubtedly influential In Search of Excellence by Tom Peters and Robert Waterman are some that might be regarded as more of their time than genuinely classic. And then there are the omissions. In the notoriously competitive world of management gurudom, it is likely that there are many disappointed and possibly aggrieved business school professors and management consultants out there.
All of which is by way of saying that any future listing might want to consider the work of Richard Rumelt, professor emeritus at the UCLA Anderson School of Management. His Good Strategy/Bad Strategy was variously hailed as “the most interesting business book of 201” and “the year’s best and most original addition to the strategy bookshelf” — essentially for debunking many of the myths propagated by other occupants of that space. Essentially, Rumelt argued in that book that too many leaders had confused strategy with slogans and buzzwords and had focused on meeting performance goals instead of the tools that would enable the business to do what was necessary to separate it from its rivals.
Now he is back with The Crux, subtitled “How Leaders Become Strategists,” which goes further in cutting through the flimsy aspirations that for so many businesses masquerade as strategies. Inspired by his love of rock climbing and those seemingly impassable obstacles that confront climbers on their routes to the tops of peaks, Rumelt has come to describe the crux as the outcome of a three-part strategic skill. The first part, he writes, is judgment about which issues are truly important and which are secondary. The second is judgment about the difficulties of dealing with these issues and the third part is the ability to focus, to avoid spreading resources too thinly, not trying to do everything at once. This should lead to a focus on the crux, “the most important part of a set of challenges that is addressable, having a good chance of being solved by coherent action.” Since Rumelt sees strategy as a mix of policy and action designed to overcome a significant challenge, he describes the art of strategy as defining a crux that can be mastered and in seeing or designing a way through it — in much the same way as a rock climber devises a set of hand and footholds to overcome an obstacle on a rock face.
This is a very different approach to the usual focus on long-term goals. But, using a variety of examples, ranging from Elon Musk’s SpaceX, through Google and Salesforce to Marvel and Netflix, he suggests that the key to setting an effective strategy is to identify a problem and come up with a way of solving it. Saying things like “we are always increasing sales and cutting costs” or “our company is going to beat all the other paint companies because we are customer focused” do not wash with him. “To have someone believe you and trust in your strategy, there has to be a logic and argument, and some evidence, as to how you are dealing with the challenges you face,” he writes.
The Netflix example is oddly prescient, given the streaming service’s recent fall in subscription numbers. Rumelt points out, however, that the company’s problems, rather than being a recent phenomenon, have been building for some time. Although hailed as a disruptor that had seen off Blockbuster, it paid a high price for its reach. By the end of 2017 its cash costs exceeded its revenue per subscriber. And this was before the content suppliers starting charging more for the programming or started their own streaming services and before Apple, with its very deep reserves, entered the market. Having blazed the trail for streaming, Netflix has found itself competing with its suppliers. The result is that founder Reed Hastings and his colleagues need to be asking themselves some tough questions about where future growth can come from. Rumelt offers one possible way forward, but his point is that rather than picking a strategy they and indeed any other management team need to create it through a thorough analysis of their situation and their best way out of it. Only then will they be able to come up with a coherent plan.
It is a wide-ranging book that takes in failings of military strategy in various conflicts as well as a host of corporate successes and setbacks. Although there are practical elements, including a section at the end designed to show how a group of employees might come together to help create a strategy, Rumelt really seems set on challenging assumptions about strategy. As such, he is not so much providing answers but offering pointers for how more thoughtful leaders might come up with more effective strategies for themselves and their organisations in a world that constantly throws up fresh challenges.
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Why Almost Everything You Thought You Knew About Strategy Is Wrong - Forbes
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