In today’s complex and competitive world, crafting a successful strategy is crucial for any organization or government entity. However, developing a truly effective strategy is not as simple as setting ambitious goals or resorting to vague buzzwords. Dr. Richard Rumelt, a prominent professor of Business & Society at UCLA, wrote a book about it: Good Strategy/Bad Strategy: the Difference and Why it Matters. If you know about all the steps of building the OGSM, we can take a quick look at Dr. Rumelt’s most important lessons. These are important to keep in mind when refining your strategic plan, and we return to them over and over; most of the mistakes and strategic problems in OGSMs result from failure to heed them.
Lesson 1: Strategy Means Making Choices
Before we talk about good strategies and bad strategies, we should talk about what strategy actually is because that can be a source of a lot of confusion. Rumelt describes in his book how many organizations have strategies that are indistinguishable from goal-setting (“our strategy is to grow by 20% each year”) or amorphous fluff disguised as strategic concepts (“we professionally restore value-added methods of empowerment to collaboratively supply competitive data,” that kind of stuff).
A real strategy is a coherent approach answering the most important challenge your organization is facing. Since your resources are limited, you can only achieve the maximum effect when you stack them, rather than moving them in diffuse directions. A strategic plan should help you make those choices: which projects fit the strategy, but also: which ones don’t? If your strategy can’t help you clarify that, you’ll probably need to polish it further.
Lesson 2: Good Strategies Embrace the Holy Trinity
For Rumelt, a strategy should be more than simply a description of something your organization does (“we focus on growing our market share in China”). A good one is a kind of three-step program. First, you must analyze a challenge, obstacle, or problem (for example, an opportunity, threat, or weakness you identified in your SWOT analysis). Next, you select an overarching approach for your strategy. Finally, that results in strategic planning of actions.
A good strategy has to encompass all three elements. A diagnosis without an approach is merely a problem. And actions without an overarching direction are often diffuse, undifferentiated, and ineffective. Only with the ‘holy trinity’ of strategy, you’ll have a complete and executable strategy. “Good strategy,” Rumelt writes, “is not just what you’re doing but also why and how.”
Lesson 3: Strategy is Top-Down, Not Bottom-Up
So far so good, but once you’ve clarified what a strategy is: how do you pick a good one? The other day, I asked this in a workshop for a Dutch municipal government. “It’s simple,” one of the participants answered. “First, we make an inventory of all our projects, and then the strategy emerges from that.” That may sound like it makes sense, but when you think about it, it really doesn’t. “All our projects” refers to an enormous and varied portfolio of projects in most organizations, often developed over the course of various management styles and change programs.
Trying to distill a strategy from that dog’s dinner usually doesn’t give you much of a handle on a clear solution or path to your goal. Choosing a strategy is a top-down process of structured decision-making. What is our challenge? What direction do we choose? What measures fit that direction? Only by approaching strategy top-down can it help you critically evaluate which efforts might not be the best use of your time. Even if that sometimes leads to difficult emotions…
Lesson 4: Kill Your Darlings
Emotions, Rumelt writes, are one of the most significant reasons why many organizations can’t seem to select and execute a good strategy. “Bad strategy flourishes because it floats above analysis, logic, and choice, held aloft by the hot hope that one can avoid dealing with these tricky fundamentals and the difficulties of mastering them.” It is, in summary, especially avoidant behavior that leads to bad strategy. Selecting and effectively executing a strategy (unfortunately) means you often have to discontinue projects and efforts that people are attached to or have invested in.
Especially when those people are also in leadership roles within your organization, power dynamics can easily result in a watered-down consensus statement instead of a clear strategic choice. The biggest challenges in strategic execution are often not logical or substantive, but organizational, political, and psychological. Other than strategic consultants, it can be a good idea to involve a coach or process facilitator in your strategic planning.
Lesson 5: Focus on the Right Things
“A good strategy draws power from focusing minds, energy, and action. That focus, channeled at the right moment onto a pivotal objective, can produce a cascade of favorable outcomes,” Rumelt writes. Strategic leverage emerges when you have a clear insight into the pivotal factors in the situation, and when you focus your efforts there. Where should you intervene to achieve the maximum effect? A useful tool to create this clarity is the KPI tree: an overview of all the factors and the degree to which they impact the results of your organization, department, or project.
If you can map which changes have the largest impact on your results, you can design your strategy accordingly. Leading indicators can help you anticipate future developments, while lagging indicators clarify the ‘pivot points’ where you should intervene for maximum effect. That way, you can realize an effective strategic execution, and you maximize the chance of your efforts bearing fruit.
In conclusion, developing a good strategy is both an art and a science, requiring clear thinking, focus, and courage. Dr. Richard Rumelt’s lessons on strategy serve as a guiding light for organizations seeking to refine their OGSM frameworks. By embracing the holy trinity of strategy, adopting a top-down approach, addressing emotional hurdles, and focusing on the right elements, an organization can set itself on the path to success. Strategy, when done right, is the fuel that propels an organization towards its goals and navigates it through the challenges of an ever-changing landscape. Through strategic clarity and effective execution, organizations can transcend mediocrity and achieve greatness.
This blogpost was inspired by the work of Richard Rumelt; Good Strategy/ Bad Strategy. If you are interested in learning more from this book, click here.
Do you want to learn more about OGSM and how you can use it? click here.