The godfather of strategy returns with his trademark zeal for accessible, design-led strategy.
Bouldering is the pastime of the adventurer who favours the peculiar venn of physical exertion, moderate risk, problem-solving, and pleasure. In bouldering vernacular, each vertical obstacle is called a problem. The most challenging of these is known as the crux.
Richard Rumelt’s thesis is that by identifying and addressing the crux of an organization’s problems, leaders can become effective strategists, able to conquer the proverbial mountain of delivering shareholder returns.
As many leaders will attest, strategy can be amorphic, abstract and downright confusing. In his latest book, Rumelt wields a sword of clarity, resuming his role as the arbiter of corporate strategy, and extending and refining theories from his best-seller, Good Strategy/Bad Strategy. Managers (and organizations) are often encouraged to “be more strategic”, or asked to produce a strategic plan, or to deliver against strategic goals. Unfortunately, adding “strategic” as a prefix to a task or output does little to clarify the expected approach or outcome.
After lambasting the sort of corporate guff we have all sat through (or espoused) at one point in our careers, Rumelt asserts that by focusing on (usually) one crux, leaders can design better strategy. This sort of challenge-based strategy is not new per se, but Rumelt makes it fresh by providing accessible, relevant and example-led framing that will resonate with many leaders.
Why isn’t this already done? As Rumelt notes, the strategy industry’s “dirty little secret”, in Gary Hamel’s words, is that it doesn’t have any theory of strategy creation. In The Crux, Rumelt offers his own unified theory of how to do strategy.
For the professional strategist, there is little new ground broken. But for the general manager or aspiring leader grappling with the ambiguous task of strategy it is nothing short of a godsend – a ‘bucket hold’ (to extend Rumelt’s climbing analogies) that provides a strong and stable foundation for powering onwards.
The book is organized into five parts, with valuable case-based examples interwoven through Rumelt’s engaging, and at times cutting, style. It starts with crux-identification and selection, before moving into an explanation of traditional strategy tools in the context of challenge-based strategy, and revisiting key parts of Good Strategy/Bad Strategy. A final section outlines his concept of a Strategy Foundry, a multi-day process involving a group of top managers from across a business.
In addition to offering a compelling case for crux-based strategy design, Rumelt also calls out a number of adjacent factors essential for developing good strategy – that is, strategy that has a realistic chance of succeeding. In many ways these elements are an extension of his previous work, but they appear even more persuasive in The Crux.
The first of these factors is how strategy is inextricably linked to the operating model of the organization – in other words, who has power over what. Left to its own devices, most organizations will continue to function: some will make money, others will wither. But as Rumelt observes, “Strategy means asking, or making, people do things that break with routine and focus collective effort and resources on new, or nonroutine, purposes.” Accordingly, any meaningful review of strategy should include consideration of how the entity is organized. This gentle sentiment becomes more acute when the crux lies not with the industry or technical problems, but with how the organization is designed or how it is being managed.
These challenges can be extremely hard to solve, which is why careful thought should also be given to the question of who defines strategy. As Rumelt explores, agency problems are rife in strategy. In the frenetic loop that can be executive leadership, time constraints can lead to critical questions being delegated to competent but sometimes conflicted colleagues. The agency problem is a pervasive issue in organizations, but it is particularly acute in strategy formulation, where the quality of strategy work is limited by the amount of honesty and integrity in the system.
Accordingly, Rumelt recommends that strategy remain with a small group of the most senior executives, and that traditional strategy tools and frameworks be used with due context and caution. His calls for vigilance are well placed, given corporate tendencies to idolize the ephemeral, to paraphrase Arnold Toynbee – or, more plainly, the habit of defaulting to “the way things are done around here”.
For better or worse, human rationality is bounded – decisions are what they are, not what they ought to be. Human behaviour and outcomes cannot always be deduced from rules and logical steps. For the same reasons, good strategy cannot be deduced from goals or ambitions. It requires a combination of imagination, customer-centricity, knowledge of other designs and a willingness to challenge the status quo.
Rumelt offers a practical solution in the form of design-led strategy: “The most reliable source of new design ideas is a reflection on a felt difficulty,” he writes, endorsing the ideas of John Dewey. In short: effective strategy is achieved through design, not deduction – and good design is best delivered through zeroing in on the crux.
A worthy successor
Rumelt’s prolific case-based insight and incisive writing allows him to cover enormous amounts of material, while freely taking aim at the deficiencies he sees throughout the strategy industry, its established frameworks, and work of fellow strategists such as the late Clayton Christensen. The Crux is thoughtful, practical and downright useful for managers and leaders in organizations of any size. With its extension of the themes developed more than a decade ago in Good Strategy/Bad Strategy, it feels that Rumelt’s ultimate goal is to share his gift of experience and structure to help a generation of leaders become strategists. In this endeavour, he has succeeded.
Tom Sykes is a senior strategy professional and non-executive director.