Big Idea by Richard Rumelt


Richard Rumelt

Earlier it took about half an hour to define strategy and try to explain the various nuances of the subject. But a few years ago I realized that strategy was much simpler than that.  The strategy is essentially problem-solving.  How did I come to realize this?  While working with companies, I began to see that many of them were not doing strategy at all.  They were doing financial planning and calling it strategy.  The organizations had a five-year financial forecast of their sales, their profits, their market shares, and would define it as their strategy. To critique this, I had to come at it from a position of what is the strategy? Saying that it’s industry analysis, you have to understand your environment or many of the other ways. Finally I came to a conclusion that strategy is about problem-solving.  To do strategy correctly, you have to understand the nature of your challenge. You can’t solve a problem that you haven’t identified, and so the first thing you need to do is put aside these financial forecasts and identify your biggest challenge.  The problems faced in identifying the solutions for eg. Competition, environment, and the looking at the biggest challenge and trying to solve it. That’s what strategy is and that viewpoint, simple as it is has informed a great deal of my thinking and working for the past few years.

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