Good Strategy Bad Strategy: The Difference and Why It Matters

Good Strategy Bad Strategy: The Difference and Why It Matters

by Richard P. Rumelt
Summary Notes

Focus on Core Products and Simplify Operations to Survive

In 1996, Apple Inc. was in a difficult position, as Windows-Intel-based PCs were dominating the market. CEO Gil Amelio tried to reorganize the company’s products into four groups and added a new Internet Services Group. Steve Jobs returned to the company and served as interim CEO. He implemented a strategy of cutting staff, simplifying the product line, moving manufacturing offshore to Taiwan, and reducing inventory by more than 80%. He also convinced Microsoft to invest $150 million in Apple.

Jobs' strategy was successful because it focused on the core problem and implemented a coordinated set of actions. He simplified the product line, sold it through a limited set of outlets, and stopped the development of new operating systems.

In August 1990, Iraq invaded Kuwait with 150,000 soldiers. Saddam Hussein's primary motive was financial, as he wanted to cancel his debts to Kuwait and use its oil income to repay his debts to other nations. Five months later, a thirty-three-nation coalition organized by U.S. president George H. W. Bush was carrying out air strikes against Iraqi forces and rapidly building its ground forces. Iraq had increased its force in Kuwait to more than five hundred thousand.

General Schwarzkopf's use of the primary offensive doctrine of the U.S. Army during the Gulf War was unexpected, as it was achieved through successful deception. This included an early visible amphibious raid on the Kuwaiti coast and actions to destroy Iraq’s navy. The press also unknowingly helped in this misdirection by reporting on the amphibious training and the build-up of troops just south of Kuwait.

Organizations often spread rather than concentrate resources, as they are trying to appease and pay off internal and external interests. Richard P. Rumelt noted that it is surprising when a complex organization, such as Apple or the U.S. Army, actually focuses its actions. Good strategy requires leaders who are willing and able to say no to a wide variety of actions and interests. Strategy is as much about what an organization does not do as it is about what it does.

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