Good Strategy, and Bad


I have been in a wide variety of settings — in business, non-profits, and government — where I could tell that our attempts at setting strategic direction were floundering. These situations seemed to have some common issues, but they didn’t seem to be caused by the exact same problems. Many have noted that “history does not repeat itself, but it rhymes.”

In several instances, the group involved with choosing between various alternatives could not come to a clear decision and simply collected all the options into one bloated, self-contradictory mess, leading to a corresponding operational meltdown. In other cases, I believed that instead of strategy driven by a deep appreciation of the actual challenges the organization faced, the group fell back on platitudes and buzzwords in place of a trajectory based on the specifics confronting the organization. (I have on occasion been fired as an advisor because I couldn’t stop fighting against what I thought was terrible strategic analysis.)

One element that I think was missing in these settings was the lack of two things: an understanding of what a good strategy is, and a lack of compelling stories to help groups struggling with defining one to ground the discussions in human terms.

I was reminded of these ideas in an essay by Richard Rumelt, which opens with the story of Horatio Nelson, the admiral of the British fleet at the Battle of Trafalgar during the Napoleonic wars.

The prevailing tactics in 1805 were for the two opposing fleets to stay in line, firing broadsides at each other. But Nelson had a strategic insight into how to deal with being outnumbered. He broke the British fleet into two columns and drove them at the Franco-Spanish fleet, hitting its line perpendicularly. The lead British ships took a great risk, but Nelson judged that the less-trained Franco-Spanish gunners would not be able to compensate for the heavy swell that day and that the enemy fleet, with its coherence lost, would be no match for the more experienced British captains and gunners in the ensuing melee. He was proved right: the French and Spanish lost 22 ships, two-thirds of their fleet. The British lost none.

As Rumelt summarizes, Nelson’s brilliant victory was not driven by listening to the opinion of his many captains, his charisma, or even the prowess of his fleet: “A good strategy does more than urge us forward toward a goal or vision; it honestly acknowledges the challenges we face and provides an approach to overcoming them”.

Rumelt goes on to provide a number of other illustrations of companies developing bad and good strategies, like the failures of International Harvester and Digital Equipment Corporation, and the brilliant market turnaround of Nvidia, whose CEO Jen-Hsun Huang took a very Nelson-like turn by upping the company’s release cadence to 6 months from the industry standard 18-months, and soon leading to Intel leaving the market and market leader 3Dfx falling into bankruptcy a decade later.

And so, looking back over the many settings where I was in a meeting, arguing about the way forward for that organization, I wish I had gained the insight offered through these stories and Rumelt’s condensation of good strategy:

Despite the roar of voices equating strategy with ambition, leadership, vision, or planning, strategy is none of these. Rather, it is coherent action backed by an argument. And the core of the strategist’s work is always the same: discover the crucial factors in a situation and design a way to coordinate and focus actions to deal with them.

Each of these steps is difficult, and must be linked tightly: make a clear and unambiguous diagnosis of the challenge, set a guiding policy to overcome the obstacles laid out in the diagnosis, and take steps — closely coordinated with each other — to accomplish the policy. These are the elements of strategy that rhyme across the stories of Trafalgar and Nvidia, and many others. And their absence is the subtext of all the bad strategies that sadly animate so many strategic failures.

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