Don’t Create A Business Strategy Without Reading This First

A four-time PROFIT 200 member recommends his must-read business book

Written by Randall Litchfield

Real strategy is a rare thing in the business world—a lot gets lost in increasingly complex processes. When I was formulating the strategy for my company, Inbox Marketer, instead of looking to consultants and popular theories, I gravitated to military examples. To understand why, read “Why Most Business Strategy Isn’t.” Having said that, there was one business book I found very helpful.

The best was Good Strategy, Bad Strategy by Richard P. Rumelt (Crown Publishing, 2011). The book is a must read for any entrepreneur because, as the name implies, it tells you both what to do and what not to do. Rumelt argues that the core of a good strategy is insight into the true nature of the situation, understanding the power that can be derived from it and crafting an appropriate response. He shows how this insight can be cultivated using a wide variety of tools to guide your own thinking.

I found the two most useful were his concept of the “kernel of strategy” and developing “proximate objectives.” To Rumelt, strategy is not a goal or objective but a battle plan for action customized to the unique attributes and conditions that differentiate an organization from its competitors. The kernel contains three elements: diagnosis that explains the nature of the challenge; guiding policy for dealing with the challenge; and a set of coherent actions designed to carry out the guiding policy.

Using this approach in our case, we diagnosed our changing competitive position with more multinational marketing services companies entering our space of digital messaging. The guiding policy was to attack where these competitors are relatively weak—the mid-sized business sector. The coherent action is to productize our services to be able to handle a much greater number of smaller accounts.

I strongly recommend this book, even as a good read. The most entertaining aspects of Rumelt’s work are the sheer number of stories and experiences he draws from his long career of consulting.

Read more columns on The End Game by Randy Litchfield.

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