Good Strategy Bad Strategy

Good Strategy Bad Strategy, The Difference and Why it Matters by Richard Rumelt

Strategy cannot be a useful concept if it becomes a synonym for success
- Ambition is not strategy
- Nor is Determination, Innovation, Goal Setting
Strategy is the path to clarity on adjectives like innovation
Strategy is the response to a problem and the actions/planning that occurs to solve it

Chapter 1: Good Strategy is Unexpected

Goals and initiatives are not a strategy on their own
Many companies opt for lofty initiatives in place of strategy
- Goals paired with a cohesive strategy is not expected
- MASSIVE advantage over initiative oriented businesses
Streamlining strategy creates flexibility to take advantage of new opportunity
- Being able to not just be the first to do it, but the first to get it right

1980s Apple was in a nose dive
- Product line was too complicated and unfocused
- Over bloated across retailers
- Price points were not under control
Steve Jobs re-introduced as acting CEO after NeXT to adjust strategy
- refined offerings to streamlined set of products/services down to 1 PC model
- Brought faster processors over from NeXT
- Instituted more effective production model in Asia based on Dells model
- Reconnected with Windows OS
- Cut 5/6 retailers to control pricing/inventory
- Started to sell through online platform
Resulting downsize gave stronger direction and relative quickness to move to ‘next big thing’
- Apple Music, iPod, iPhone

Discovering power and not taking perceived weakness at face value
- For business, relative strength and weakness is a shallow approach
- Discovery of true powers is moving outside the confines of your mind to its fringes where the hidden advantages take shape
Story competitive analysis:
- Pre Fight
  - David
    - Pros - brave
    - Cons - small, weak, in-experienced
  - Goliath
    - Pros - brave, strong, experienced
    - Cons - unknown
- Post Fight
  - David
    - Pros - experienced with ranged weapon (shepard’s sling), youthful quickness, discarded armor to keep quickness and its lack of effectiveness if hit by Goliath
  - Goliath
    - Cons - weakness at head, lack of protection at weakness
- David’s strength with a ranged weapon takes away Goliath’s hand to hand strength advantage and exploits his biggest weakness

Walmart at face value is replicable by others like KMart (big box store, large shipping operation, scale of product, digital price system)
- Why couldn’t it be replicated? and why did it destroy K Mart in the end?
Walmart’s advantage is either:
- a legal claim (patent) to their advantage
- something K Mart cannot replicate
- KEY: a system big box stores do not recognize and will not replicate due to inertia/incompetence
  - similar to David’s ranged advantage exploiting Goliath’s biggest strength and weakness

Big box stores are thought to need a visiting population of over 100,000 people to keep overhead under control
- Economies at scale - unit costs of production come down when the size of operations increases
Walmart’s system relies on the grid of stores as a digital ecosystem NOT the individual store model
Stronger negotiation and meeting of demand when stores can communicate with each other on what sells
Supply chain management - the centralized management and optimization of the entire flow of goods, services, data, and finances.

US engagement with Soviet Union was largely reactionary
- Congress would hear about issues as they had already occurred and hurried a budget to fill the gap
Andy Marshall changed perspective to emphasize engaging in areas of strength (technical development) to make Soviet Union chase away from what they did best
Understand your strengths and utilize them to separate from the competition.