I loved Good Strategy/Bad Strategy (Amazon) and learned so much from it. What really stood out to me was the depth required in defining strategy, and the way of thinking that takes that depth, and constructs a long term trajectory built on proximate objectives – the next steps that seem totally possible from where we are now. This was the kind of book I was recommending even before I finished it, I definitely think it’s worth the time. I’ve included many quotes below, all emphasis is mine.

Early in the book he gives the example of Napoleon, who split his ships into two columns, destroying 2/3 of the other fleet with no loss to his own.

Good strategy almost always looks this simple and obvious and does not take a thick deck of PowerPoint slides to explain. It does not pop out of some “strategic management” tool, matrix, chart, triangle, or fill-in-the-blanks scheme. Instead, a talented leader identifies the one or two critical issues in the situation—the pivot points that can multiply the effectiveness of effort—and then focuses and concentrates action and resources on them.

He is damning on the sub prime crisis, and specifically about Lehman brothers taking on more risk without mitigating it.

Being ambitious is not a strategy.

These two examples in the opening nailed – for me – the idea that strategy is unrelated to ambition, and charisma – it’s not how motivating the presentation it is, or how grandiose the claims… it’s about what it actually is, the reality it exists in, and the effects that unfold.

A good strategy does more than urge us forward towards a goal or a vision. A good strategy honestly acknowledges the challenges being faced and provides an approach to overcoming them. And the greater the challenge, the more a good strategy focuses and coordinates efforts to achieve a powerful competitive punch or problem solving effect.

Damn!

Unfortunately, good strategy is the exception, not the rule. And the problem is growing. More and more organizational leaders say they have a strategy, but they do not. Instead they espouse what I call bad strategy. Bad strategy tends to skip over pesky details such as problems. It ignores the power of choice and focus, trying instead to accommodate a multitude of conflicting demands and interests. Like a quarterback whose only advice to teammates is “Let’s win,” bad strategy covers up its failure to guide by embracing the language of broad goals, ambition, vision and values. Each of these elements is, of course, an important part of human life. But, by themselves, they are not substitutes for the hard work of strategy.

The section on bad strategy was gripping and recognisable – such a clear articulation, so pointed, so damning. I was taking pictures and sending it to friends, as it so clearly articulated things we have complained about.

The definition of bad strategy is on point.

Bad strategy is long on goals and short on policy or action. It assumes that goals are all you need. It puts forward strategic objectives that are incoherent and, sometimes, totally impracticable. It uses high-sounding words and phrases to hide these failings.

As is the failure mode. This is such a good articulation of something I have been calling “failing managers blame”.

When a leader characterizes the challenge as underperformance, it sets the stage for bad strategy. Underperformance is a result. The true challenges are the reason for the underperformance.

Why we fail to create strategy:

The essential difficultly in creating strategy is not logical; it is choice itself. Strategy does not eliminate scarcity and its consequence—the necessity of choice. Strategy is scarcity’s child and to have a strategy, rather than vague aspirations, is to choose one path and eschew others. There is difficult psychological, political, and organizational work in saying “no” to whole worlds of hopes, dreams, and aspirations.

I was particularly fascinated by the distinction between leadership and strategy, and charisma as a driver of bad strategy – I’m sure we all have examples of bad (but charismatic) leaders, however some of the most strategic leaders had no charisma. Whilst leaders have to get people through the change than strategy entails (charisma is helpful here), the strategy itself is figuring out what purposes are worthwhile and possible to accomplish. This has to be grounded in reality, not wishful thinking.

I do not know whether meditation and other onward journeys perfect the human soul. But I do know that believing that rays come out of your head and change the physical world, and that by thinking only of success you can become a success, are forms of psychosis and cannot be recommended as approaches to management or strategy. All analysis starts with the consideration of what may happen, including unwelcome events.

Good strategy is about reducing ambiguity such that people can actually deliver.

Phyllis’s insight that “the engineers can’t work without a specification” applies to most organized human effort. Like the Surveyor design teams, every organization faces a situation where the full complexity and ambiguity of the situation is daunting. An important duty of any leader is to absorb a large part of that complexity and ambiguity, passing on to the organization a simpler problem — one that is solvable. Many leaders fail badly at this responsibility, announcing ambitious goals without resolving a good chunk of ambiguity about the specific obstacles to be overcome. To take responsibility is more than a willingness to accept the blame. It is setting proximate objectives and handing the organization a problem it can actually solve.

I found this piece on timeframes helpful. I am now somewhat obsessed with proximate objectives – such a helpful description of a way of thinking.

Many writers on strategy seem to suggest that the more dynamic the situation, the further ahead a leader must look. This is illogical. The more dynamic the situation, the poorer your foresight will be. Therefore, the more uncertain and dynamic the situation, the more proximate a strategic objective must be. The proximate objective is guided by forecasts of the future, but the more uncertain the future, the more it’s essential logic is that of “taking a strong position and creating options,” not of looking far ahead.

Gilbreth’s building techniques as an example, “business process transformation” or “re-engineering”. I love this articulation – it really ties into my thoughts on the judicious application of process, and the need for empathy.

Whatever it is called, the underlying principle is that improvements come from re-examining the details of how work is done, not just from cost controls or incentives.

The same issues that arise in improving work processes also arise in the improvement of products, except that observing buyers is more difficult that examinings one’s own systems. Companies that excel at product development and improvement carefully study the attitudes, decisions, and feelings of buyers. They develop a special empathy for customers and anticipate problems before they occur.

This definition of “culture” is not an interpretation I have thought of or heard before, but was immediately helpful in the way I consider and approach things.

We use the word “culture” to mark the elements of social behavior and meaning that are stable and strongly resist change.

The importance of context – this is so critical, and explains why so many leaders who move to a new context fail – because they don’t acknowledge the context, and just try and do the same again.

A good strategy is a hypothesis of what will work based on functional knowledge and your knowledge of your own business – this is a crucial insight. Many people find success in one area, and then fail in the next because they apply the same strategy in a different context. Good strategy is only good in context.

Treating strategy like a problem is deduction assumes that anything worth knowing is already known—that only computation is required.

There was a whole section on why we have to question our ideas and consider more than one, which I think is really important – the first idea often seems like the one that will work, but I think the first idea is often the one that is just the easiest to contemplate.

Thus, when we do come up with an idea, we tend to spend most of our effort justifying it rather than questioning it. That seems to be human nature, even in experienced executives. To put it simply, our minds dodge the painful work of questioning and letting go of our first early judgements, and we are not conscious of the dodge.

Finally, the section on keeping your head and heard mentality was really helpful – the example of re-enforcement in financial markets where optimism begets optimism and problems beget panic is a good but extreme example – human emotions are contagious, and this happens in less measurable ways elsewhere, too.

I really recommend it – I learned a lot. It gave me tools, and also confidence to call the strategy I already do what it is.