Thursday, January 18, 2018

Review of Good Strategy / Bad Strategy by Richard Rumelt

Found out about Good Strategy / Bad Strategy from another blogger who reviewed it last year. The author Richard Rumelt was an electrical engineer who worked at JPL and then became a strategy consultant and UCLA management professor later in life. Here he is giving a talk about the book at the LSE:

As Rumelt says, "bad strategy is not the absence of strategy, it's an active force of mistaken belief". And he is right - this shows up time and time again in business and in government and anywhere else one needs a strategy.

For example, Donald Trump ran into a problem articulating a strategy last August. Watch this speech he gave about the new strategy for the war in Afghanistan. [Previously on Afghanistan: 1,2,3,4.]

Or read it:

I arrived at three fundamental conclusions about America’s core interests in Afghanistan.

First, our nation must seek an honorable and enduring outcome worthy of the tremendous sacrifices that have been made, especially the sacrifices of lives.
Oh no! The tremendous sacrifices that have been made are a sunk cost now. What are relevant are the potential costs and benefits (if any) of continued involvement in Afghanistan, starting from now, which is what should be evaluated and discussed. Poor reasoning about sunk costs is a sure way to torpedo a strategic deliberation.

Trump also did not elucidate any interests in Afghanistan that would qualify as "core interests." As Steve Sailer says,
Afghanistan is the sort of quagmire that ideally, you'd lure your greatest enemies to attempt to occupy. “Oh no, stay out of Afghanistan! It’s the strategic center of Asia, controlling all of the mountain passes. It’s a veritable Gibralter or Constantinople of strategic world locations.”
A clear understanding of the core interests would have been important for understanding what benefits could be derived from the Afghanistan activities, which could then be compared to the costs. One of the interests that Trump did put forth was that involvement in Afghanistan could somehow prevent future terrorist attacks in America and Europe.

Of course, Afghanis had nothing to do with the 9/11 attack, and for the more minor attacks (like Barcelona which Trump mentions), the best strategy would be to make America and Europe Muslim-free zones. As a CBS correspondent summarized Trump's speech,
1) How long we will be in Afghanistan, how many of us, and what we will be doing there will remain a secret, so the bad guys can’t guess what to do. He can choose among any of the options the globalists give him, and we don't need to know about it.
2) We will win*, and that will stop Muslims in America from stabbing, shooting, blowing up and running over people, because they get their orders directly from goat herders in Afghanistan who shtup little boys.
*3) Winning is undefined. He won't decide when to leave or what to do based on anything specific, because he's a problem-solver and you have to decide on the fly as things change. This way, we can stay there forever.
The result of this muddled Trumpian mess of lies and confusion is a Bad Strategy. So what would a Good Strategy look like?

Rumelt describes the structure that underlies a good strategy as a "kernel", which contains three elements:
  1. A diagnosis that defines or explains the nature of the challenge, helping to simplify the complexity of reality by identifying the most critical, salient aspects of a situation.
  2. A guiding policy for dealing with the challenge; an overall approach chosen to cope with or overcome the obstacles identified in the diagnosis. 
  3. A set of coherent actions that are designed to carry out the guiding policy, which are coordinated with one another to work together in accomplishing the guiding policy.
Rumelt presents interesting cases where the decisionmakers seemed to follow this approach. However, see my comments from the reviews of Billion Dollar Lessons and Why Most Things Fail about possible limitations to strategic thinking.


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