Stratrix

Forty-seven strategies and 178 action items

Richard Rumelt once sat down with the mayor of a small city in the Pacific Northwest to talk about strategy. The planning committee's strategic plan contained 47 strategies and 178 action items. Action item number 122 was “create a strategic plan” 1.

Lists like that, Rumelt explains, grow out of planning meetings where a wide variety of stakeholders suggest things they would like to see accomplished, and the group sweeps the whole collection into the plan 1. Nobody sets out to write bad strategy. It accumulates, and from a distance it looks respectable. You have to know where to look.

This detector tells you where. It gives you 18 plain statements about your current strategy document. You mark how true each one is, and it scores the document from 0 to 100 on six dimensions drawn from Rumelt's hallmarks of bad strategy. It takes about five minutes. You leave with the weakest part of your plan named and a first fix for it.

Bad strategy starts with the ambition. Good strategy starts with what is in the way.

Self-assessment

The Bad Strategy Detector

Hold your current strategy document in mind, or better, open it. Mark each statement for how true it is of that document and the way it is used, not of the strategy you wish you had.

  1. 1 The document names, in a sentence or two, the main obstacle standing between us and better results.
  2. 2 Asked separately, two of our executives would describe the same central problem.
  3. 3 The situation section is a list of trends and facts that never says which one matters most.
  4. 4 The strategy says which customers, markets or products we will not pursue.
  5. 5 Someone senior argued for a different direction while the strategy was being set, and lost.
  6. 6 Every unit's favorite initiative survived the planning process.
  7. 7 Take out the financial targets and very little is left on the page.
  8. 8 For each headline target, the document says what makes it reachable this time: a strength, a change in the market or a new approach.
  9. 9 Asked how we will hit the target, leaders mostly answer with effort: push harder, execute better, want it more.
  10. 10 There are few enough strategic objectives that most managers could name them without looking.
  11. 11 Each near-term objective is something the team could plausibly achieve with the people and money it has.
  12. 12 Some objectives simply restate the ambition, such as “become the market leader,” without saying how.
  13. 13 The main actions support each other: dropping one would weaken another.
  14. 14 Money and people actually moved toward the stated priorities in the last budget.
  15. 15 Some initiatives pull in opposite directions, such as premium service and lowest cost aimed at the same customers.
  16. 16 Our core strategy sentence would be just as true of most of our competitors.
  17. 17 Key sentences lean on words like “synergy,” “world-class” or “customer-centric” without saying what they mean in practice.
  18. 18 A new hire could explain the strategy in plain words after one reading.
Start here

What the detector looks for

Rumelt condensed bad strategy to four hallmarks: “the failure to face the challenge, mistaking goals for strategy, bad strategic objectives, and fluff” 1. Against them he set the kernel of good strategy: a diagnosis of the challenge, a guiding policy for dealing with it, and coherent actions that carry the policy out 1. His book develops both at length 2; our page on Rumelt's kernel test walks through the kernel as a checklist.

The detector turns those ideas into six dimensions, three statements each. Four come straight from the hallmarks. Two come from the kernel's other demands: a real choice, and actions that fit together.

DimensionThe idea behind itWhat a low score looks like
Faces the problemRumelt: a strategy is “a way through a difficulty” 1A situation section full of trends, with no named obstacle
Makes a choicePorter: “The essence of strategy is choosing what not to do” 3Every unit's pet project survived
Goals are not the strategyRumelt's hallmark of mistaking goals for strategy 1Strip out the targets and nothing is left
Few, reachable objectivesRumelt's “dog's dinner” and “blue sky” objectives 1A long list, or objectives as hard as the original problem
Actions fit togetherThe kernel's coherent action 1Initiatives that fight each other, or go unfunded
Plain wordsRumelt's fluff: buzzwords that “masquerade as expertise” 1A strategy sentence any competitor could sign

Rumelt's example of fluff is worth keeping in your pocket. A major retail bank's strategy memo read: “Our fundamental strategy is one of customer-centric intermediation.” Take out the fluff, he observes, and the bank's fundamental strategy is being a bank 1.

In practice

How to read your score

Each answer scores from 0 (Not true) to 100 (Fully true), flipped for the statements that describe a warning sign. A dimension's score is the average of its three statements, and the overall score is the average of all 18. The bands (under 40, 40 to 60, 60 to 80, 80 and above) are our rubric, not a validated scale. They are there to start an argument about the document, not to grade it.

Read the lowest dimension first, and treat a low diagnosis score as the one that matters most. Rumelt is blunt about why: if you fail to identify and analyze the obstacles, “you don't have a strategy. Instead, you have a stretch goal or a budget or a list of things you wish would happen” 1. A plan can score well on plain words and coherence and still be aimed at nothing.

In practice

What to do with each result

  1. Low on facing the problemStop editing the plan. Write the obstacle in two sentences and test it on three colleagues separately. Rebuild from whatever they agree on.
  2. Low on choiceWrite down what you will not do, and stop one current initiative. A choice nobody feels is not a choice.
  3. Low on goalsGive every target a sentence explaining why it is reachable now. Targets without one belong in the budget, not the strategy.
  4. Low on objectivesCut to the few objectives the diagnosis demands, each one reachable with today's resources.
  5. Low on coherencePut initiatives next to their budgets. Fund, merge or stop the ones that pull against the main choice.
  6. Low on plain wordsRewrite key sentences until a new hire could act on them, and delete any a rival could sign.
Advanced

Where a self-score misleads

The obvious objection: a scoring tool is itself a template, the very thing Rumelt warns against. He criticizes “template-style” planning that fills in the blanks with vision, mission, values and strategies 1. Fair. The detector cannot write a strategy, and a high score proves nothing about whether the strategy is right. It only checks that a document has the shape of a strategy rather than the shape of a wish list. Use it to find the gap, then close the gap with thought, not with a better form.

The second limit is the scorer. The people who wrote the plan will grade it kindly. Have three members of the team score it separately and compare. A spread of more than 30 points on any dimension (our rule of thumb) is itself a finding: the team does not share a view of the strategy, and that is worth more than any average.

The third is politics. Rumelt describes a 1992 strategy discussion at Digital Equipment Corporation where three camps argued for three incompatible strategies and the CEO asked the group to reach consensus. The compromise statement, “DEC is committed to providing high-quality products and services and being a leader in data processing,” was, in his words, not a strategy but “a political outcome” 1. If your plan scores low on choice and plain words at once, look for the same cause. The fix is a decider, not a better draft.

In practice

Next steps

If the detector found a weak diagnosis, read the kernel test and start there. If it found fluff or no choice, the Strategy Statement Builder forces both into the open in 35 words or fewer. If your initiative list failed the coherence test, four tests for strategic initiatives will help you cut it.

Then score the document again. The number matters less than the question it forces: what, exactly, is in our way?

Questions

What is bad strategy?
Richard Rumelt uses the term for plans that look like strategy but lack its core: a diagnosis of the challenge, a guiding policy and coherent action. He names four hallmarks: failing to face the challenge, mistaking goals for strategy, bad strategic objectives and fluff. Bad strategy is not a wrong answer. It is a document that never says what problem it is solving.
Is this detector a validated assessment?
No. The six dimensions draw on Rumelt's hallmarks and his kernel of good strategy, but the statements, scores and bands are our rubric. They have not been validated or benchmarked against company results. Use the score to locate the weakest part of a plan and to start a conversation, and have several people score the same document separately.
What is an example of fluff in a strategy?
Rumelt quotes a retail bank's internal memo: “Our fundamental strategy is one of customer-centric intermediation.” Intermediation means taking deposits and lending them out, so the sentence says the bank is a bank. Fluff is any sentence that sounds like insight but would be equally true of every competitor, or that no manager could act on.
What should I fix first if my plan scores badly?
Fix the diagnosis first. A plan that does not name the obstacle it is meant to overcome cannot choose an approach to it, so improving objectives or language before that only polishes a wish list. Write the obstacle in two sentences, check that colleagues agree, then rebuild the choice and the actions from it.

Sources

  1. Rumelt, R. P. (2011). The Perils of Bad Strategy. McKinsey Quarterly (June 2011), adapted from Good Strategy/Bad Strategy. The four hallmarks of bad strategy and the quoted list of them; “a way through a difficulty”; the passage on stretch goals, budgets and wish lists; the city plan with 47 strategies and 178 action items and action item 122; “dog's dinner” and “blue sky” objectives; fluff and the “customer-centric intermediation” memo; template-style planning; the 1992 DEC discussion and its compromise statement; the kernel of diagnosis, guiding policy and coherent actions.
  2. Rumelt, R. P. (2011). Good Strategy Bad Strategy: The Difference and Why It Matters. Crown (now Crown Currency), July 19, 2011. ISBN 9780307886231. The book-length treatment of bad strategy and the kernel; publisher's page.
  3. Porter, M. E. (1996). What Is Strategy?. Harvard Business Review (November–December 1996). Section III: “The essence of strategy is choosing what not to do.”

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