Good Strategy, Bad Strategy | Richard Rumelt

Lenny's Podcast: Product | Growth | Career

Jan 21 2024 • 1 hr 49 mins

Richard Rumelt is a legend in the world of strategy. He’s the author of Good Strategy/Bad Strategy and The Crux: How Leaders Become Strategists, both ofwhich are often recommended by guests on this podcast. From his early days teaching in Iran at a Harvard-sponsored business school to teaching at Harvard Business School itself to over four decades teaching at UCLA’s Anderson School of Management, Richard’s impact resonates globally. His strategic insights are sought after by major corporations including Microsoft, Shell, Apple, AT&T, Intel, and Commonwealth Bank and by governmental organizations such as the U.S. Army Special Operations Command. In this episode, we discuss:

• The essential components of a good strategy

• The importance of coherence in strategy

• Common pitfalls that create a bad strategy

• How “power” plays into strategy, and common sources of power

• The value of knowing history when developing effective strategies

• Why a strategy should simply be called an “action agenda”

• The need for one decider in an organization

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Find the full transcript at: https://www.lennyspodcast.com/good-strategy-bad-strategy-richard-rumelt/

Where to find Richard Rumelt:

• Email: richard@generalimagination.com

• LinkedIn: https://www.linkedin.com/in/richard-rumelt-18520828/

• Website: https://thecruxbook.com/

Where to find Lenny:

• Newsletter: https://www.lennysnewsletter.com

• X: https://twitter.com/lennysan

• LinkedIn: https://www.linkedin.com/in/lennyrachitsky/

In this episode, we cover:

(00:00) Richard’s background

(04:29) What is a strategy?

(06:23) The essential components of a good strategy (the “kernel”)

(15:04) An example of good strategy

(16:55) Bad strategy

(25:17) The importance of focus and power

(28:19) Identifying and utilizing power

(34:38) Types of power

(41:13) Implementing power

(48:15) The importance of historical knowledge

(55:23) How to write an action agenda

(01:02:47) The crux

(01:10:40) Challenges to executing a strategy

(01:15:44) The need for a decider

(01:20:39) Strategy for startups

(01:26:04) Richard’s “value denials” exercise

(01:31:01) Closing thoughts

(01:33:57) Lightning round

Referenced:

• China’s Xi says ‘reunification’ with Taiwan is inevitable: https://www.cnbc.com/2023/12/31/chinas-xi-says-reunification-with-taiwan-is-inevitable.html

The Crux: How Leaders Become Strategists: https://www.amazon.com/Crux-How-Leaders-Become-Strategists/dp/1541701240

Good Strategy/Bad Strategy: The Difference and Why It Matters: https://www.amazon.com/Good-Strategy-Bad-Difference-Matters/dp/0307886239

Fundamental Issues in Strategy: A Research Agenda: https://www.amazon.com/Fundamental-Issues-Strategy-Research-Agenda/dp/0875843433/

Strategy, Structure, and Economic Performance: https://www.amazon.com/Strategy-Structure-Economic-Performance-Richard/dp/0875841090

• There’s more than the CIA and FBI: The 17 agencies that make up the U.S. intelligence community: https://www.latimes.com/nation/la-na-17-intelligence-agencies-20170112-story.html

• Programme for International Student Assessment: https://www.oecd.org/pisa/

• Gerstner: Changing Culture at IBM—Lou Gerstner Discusses Changing the Culture at IBM: https://hbswk.hbs.edu/archive/gerstner-changing-culture-at-ibm-lou-gerstner-discusses-changing-the-culture-at-ibm

• Marvin Lieberman on LinkedIn: https://www.linkedin.com/in/marvin-lieberman-2a6b72/

• S&P 500: https://www.spglobal.com/spdji/en/indices/equity/sp-500/#overview

• Battle of Tora Bora: https://en.wikipedia.org/wiki/Battle_of_Tora_Bora

• Milton Friedman: https://en.wikipedia.org/wiki/Milton_Friedman

• The Louvre: https://www.louvre.fr/en

• How does SpaceX build its Falcon 9 reusable rocket?: https://www.sciencefocus.com/space/how-does-spacex-build-its-falcon-9-reusable-rocket

• Charles Darwin: History’s most famous biologist: https://www.nhm.ac.uk/discover/charles-darwin-most-famous-biologist.html

• Donald Rumsfeld: https://www.defense.gov/About/Biographies/Biography/Article/602800/

• Bush: The Decider-in-Chief: https://www.cbsnews.com/news/bush-the-decider-in-chief/

• Woodrow Wilson: https://www.whitehouse.gov/about-the-white-house/presidents/woodrow-wilson/

• How the Sinking of Lusitania Changed World War I: https://www.history.com/news/how-the-sinking-of-lusitania-changed-wwi

• Nokia: https://www.nokia.com/

• The Rise and Fall of Nokia: https://www.hbs.edu/faculty/Pages/item.aspx?num=46041

• Salesforce: https://www.salesforce.com/

• These New Windows Let the Summer Breeze In, But Block the Street Noise: https://www.smithsonianmag.com/smart-news/these-new-windows-let-the-summer-breeze-in-but-block-the-street-noise-7906121/

• Stop it! (Bob Newhart): https://www.youtube.com/watch?v=jvujypVVBAY

The Innovator’s Dilemma: The Revolutionary Book That Will Change the Way You Do Business: https://www.amazon.com/Innovators-Dilemma-Revolutionary-Change-Business/dp/0062060244

Playing to Win: How Strategy Really Works: https://www.amazon.com/Playing-Win-Strategy-Really-Works/dp/142218739X

Steve Jobs: https://www.amazon.com/Steve-Jobs-Walter-Isaacson/dp/1982176865

Only the Paranoid Survive: How to Exploit the Crisis Points That Challenge Every Company: https://www.amazon.com/Only-Paranoid-Survive-Exploit-Challenge/dp/0385483821

Titan: The Life of John D. Rockefeller, Sr.: https://www.amazon.com/Titan-Life-John-Rockefeller-Sr/dp/1400077303/

Yellowstone on Paramount+: https://www.paramountnetwork.com/shows/yellowstone

• Smart telescopes: https://milehighastro.com/collections/smart-telescopes

• Cassandra Clare: https://cassandraclare.com/

Production and marketing by https://penname.co/. For inquiries about sponsoring the podcast, email podcast@lennyrachitsky.com.

Lenny may be an investor in the companies discussed.



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