# Good Strategy, Bad Strategy | Richard Rumelt ![rw-book-cover](https://wsrv.nl/?url=https%3A%2F%2Fsubstackcdn.com%2Ffeed%2Fpodcast%2F10845%2Fc96ce1b79620162529a427a617bf2a88.jpg&w=100&h=100) ## Metadata - Author: [[Lenny's Podcast: Product | Growth | Career]] - Full Title: Good Strategy, Bad Strategy | Richard Rumelt - Category: #podcasts - URL: https://share.snipd.com/episode/fd02fc65-8696-4421-9745-ae3e3b3a29e4 ## Highlights - Episode AI notes 1. Rethinking Strategy Components: Strategy is about something more than just analytical tools like the learning curve, matrix, and five forces. It encompasses these tools and prompts the speaker to write a book on the topic. 2. The Nature of Creating Strategy and Diagnosing Situations: Creating strategy involves diagnosing the situation, understanding the nature of reality, and deciding who to pay attention to. It also involves forming hypotheses and comprehensively understanding the situation at hand. 3. Importance of Guiding Strategy in Business: A guiding policy is the core of strategy and is crucial for dealing with the complexity of the business world. Having 17 priorities is merely a laundry list of wishes for the future, rather than an effective guiding strategy. 4. Understanding the concept of priorities: Having too many priorities is counterproductive. The word priority means the first, not everything that might matter. Guiding policy helps determine what is truly important and what is not. 5. Key elements of successful business strategy: Successful business strategy involves understanding the situation, having a guiding cause, and coherent action. Coherence and action are critical for effective strategy implementation. 6. Identifying Signs of a Bad Strategy: A bad strategy often focuses solely on profit or performance goals and overlooks the need for a comprehensive approach. High-level goals and documents produced by a company are not necessarily strategies. 7. Signs of Incomplete or Bad Strategy: Incompleteness or bad strategy can be identified by missing a diagnosis or concrete actions. Concentrating on a few important things leads to a powerful strategy, while attempting too many different things diminishes effectiveness. 8. Understanding power and asymmetry in strategy: Power in strategy involves exploiting an asymmetry or leverage to gain an advantage in a competitive situation. Leveraging differences and imbalances is essential for developing an effective strategy. 9. Sources of power and their implications: Being the first to recognize something and having relationships can be sources of power. However, an established reputation can limit power by creating expectations. 10. The Power of Recognition, Reputation, and Relationships: Being the first to recognize something and having relationships can yield power, but a well-established reputation can limit the ability to innovate. 11. Finding the Source of Power through Favorable Odds: Identifying where the odds are in your favor is crucial for gaining an edge in a challenging situation. Seeking information, skill, and resources that give you an advantage is essential. 12. Identifying Sources of Power and Strategy in Achieving Success: Identifying the source of power and seeking information, skills, and resources that provide an edge is crucial when the odds are against you. Strategy can be surprising and effective. 13. The Evolution of Governance and Power Structures: Societies transition from warlord rule to governance through a gradual process. Access to historical knowledge is crucial for strategic thinking, as strategy requires understanding history and context. 14. Gaining strategic insights from history and human experience: Gaining insights involves understanding history and past experiences. Access to knowledge about past events is crucial for strategic thinking. 15. Developing Action Agenda over Traditional Strategy: Translating the understanding of why a task is hard into a strategy can be challenging. Shifting the mindset from 'strategy' to 'action agenda' when tackling challenges can be more effective. 16. Choosing the Right Challenge: Selecting a challenge that is important and achievable is crucial. Finding the balance between important problems and addressable problems is key. Action steps can be outlined once the right challenge is chosen. 17. Strategy is about focusing on the crux of the problem: Focusing on the crux of an issue rather than picking strategies from a list of options leads to innovative and effective solutions. 18. Immerse Yourself to Gain Insights: Immersion in a problem or situation can lead to unexpected insights. Diagnosing the main challenge and spending more time in immersion can lead to sudden realizations and a clearer path to action. 19. The Challenge of Implementing Action and Strategy in Organizational Change: Implementing action and strategy involves changing power relationships and hierarchies among individuals. The focus on leadership and self-improvement has overshadowed strategy in modern management literature. 20. The Importance of Having a Decider: Leadership has displaced mission and management in strategy today. Having a decider who can make decisions is crucial for taking action and moving the agenda forward. 21. Adaptation and the Founder's Job: Being adaptable to changing conditions is important in business. The role of a founder is to identify an important, achievable problem and solve it for a large group of people. 22. Designing the Perfect Window: The characteristics of a perfect window can be achieved through innovative solutions. Using interauditory filters was one example of achieving the desired characteristics of a perfect window. 23. Focus on Action, Not Theory: Taking action and addressing key challenges is more important than theoretical concepts. Implementing a practical action agenda utilizing company resources can make a meaningful impact. 24. The speaker's approach serves as a competitive advantage and distinguishes them from consulting firms. ([Time 0:00:00](https://share.snipd.com/episode-takeaways/79ff8994-c179-4215-b5d1-ebbce87d42b5)) - Rethinking Strategy Components Summary: The speaker rethinks the traditional strategy components, such as the learning curve, matrix, and five forces, as analytical tools for an adolescent problem. They emphasize that strategy is about something more, prompting the speaker to write a book on the topic. Transcript: Speaker 2 You obviously have these very infamous, famous elements of a good strategy, something you call the Colonel. Can you just talk through those pieces? Speaker 1 Right, sure. So when I used to teach strategy for many years at Harvard and then at UCLA and other places there's lots of ways of looking at strategy. And so years and years ago we thought that the learning curve and the matrix and the five forces and all of those kinds of analytical tools. And it began to dawn on me, but this is some strategy. These are analytical tools for an adolescent problem, for thinking about things, for looking at competition. They're about strategy. Strategy is one, and I started to write a book. ([Time 0:06:23](https://share.snipd.com/snip/7fedc49c-b90c-4acb-829a-dd50b0544076)) - The Nature of Creating Strategy and Diagnosing Situations Summary: Creating strategy is essentially a form of dealing with challenges, involving diagnosing the situation, understanding the nature of reality, and deciding who to pay attention to. It also involves forming hypotheses about what's going on and how things connect together, leading to a comprehensive understanding of the situation at hand. Transcript: Speaker 1 Because I have this other conceptual scheme and I had the whole teachers and writers had, which is that there's a bunch of analytical tools. And, you know, this is back in 2005. 2004. And I've, gradually came to the realization, all strategies from topic. It's a form of dealing with challenges. And that was a basic idea going, and a book. So if that's the core of it, what's the basic activity? What are you doing when you create strategy? Well, here you're diagnosing the situation. You're trying to figure out what's going on here. What's the nature of reality that you deal with? Now, humans can't understand all reality, no one can. So part of what a diagnosis is, is a decision of a who are you gonna pay attention to? And a hypothesis called several hypotheses, a hypothesis about, well, what's going on? How do things connect together? And that's the beginning of the diagnosis. And so diagnosis is an understanding of the situation. That you're at? Well, that's not not. And you can use any of those tools are famous for that. And you can try and find four sheets, you can do any one of a number of things to try to comprehend the situation. ([Time 0:08:15](https://share.snipd.com/snip/7bb138b3-82c8-44f1-85af-24a5dfc29c44)) - Importance of Guiding Strategy in Business Summary: The speaker, an engineer and business strategist, emphasizes the complexity of the business world and criticizes the superficiality of traditional business analysis tools. He highlights the importance of a rich diagnosis of the situation and a guiding policy, which is the core of strategy to deal with the situation. He contrasts this with the inefficacy of having multiple priorities, stating that having 17 priorities is merely a laundry list of wishes for the future rather than an effective guiding strategy. Transcript: Speaker 1 Well, that's not not. And you can use any of those tools are famous for that. And you can try and find four sheets, you can do any one of a number of things to try to comprehend the situation. Although world is more complicated than two by two. So I was educated as an elected engineer. And my early years were spent designing spacecraft for NASA. And when I got into looking at business and business strategy stuff, I was always amazed at how un-intellectual it was. You don't know that. You're ever struggling to master Z transforms and muzzling. And yet these people are looking at two by two, so the diagrams, the outputs, that's what the company's about. So a rich diagnosis of the situation, but then a guiding policy. The guiding policy is what are we going to do? Now, it's a simple thing to say a guiding policy. And the guiding policy is sort of strategy. It's the core of it. It's here's how we're dealing with the situation. And yet when I say that, it flies in the face of, I was writing that, I had a client who had 17 priorities. This is what we're doing. We have 17 priorities. And that's the opposite. That's a laundry list of all the things we wish were happening over the next year. ([Time 0:09:31](https://share.snipd.com/snip/b544dbc2-c311-4333-b50f-384b66d5dc08)) - Understanding the concept of priorities Summary: The concept of priorities is often misunderstood, with people creating a long list of items and labeling them as priorities. However, having numerous priorities goes against the true meaning of the word, which implies that only a few items should be at the top of the list. In essence, priority means what comes first and should not be a catch-all for everything important. The key is to focus on what truly needs to be done and what can be left out. Transcript: Speaker 1 And yet when I say that, it flies in the face of, I was writing that, I had a client who had 17 priorities. This is what we're doing. We have 17 priorities. And that's the opposite. That's a laundry list of all the things we wish were happening over the next year. We're going to gain market share in China. We're going to cut our emissions. We're going to save energy. We're going to save her. We're going to cut costs for all these different things. I do. And they're all priorities. You know, lots of people use the word priority when they're trying to do all that. You wouldn't want to be in the commercial airplane and hear the tower say to the pilot, I'm giving priority to the following three planes all runway five. You know, right, what do you know? There's something wrong. Well, that's the word priority means the first. That doesn't mean the grab bag for everything that you can think of that might matter. That means what's first. And so the guiding policy is sort of at that level. What do we really have to do here? How do we, what are we doing and what are we not doing? Do you want the diagnosis that we created? ([Time 0:10:47](https://share.snipd.com/snip/17db837b-6533-4443-8eaf-e8dbed733495)) - Key elements of successful business strategy Summary: Successful business strategy involves three key elements: understanding the situation, having a guiding cause, and coherent action. These elements are essential for achieving growth and increasing return on equity. It is important for companies to have a long-term sense of how they could deal with the situation, as changing strategy too often can hinder progress. Additionally, coherence and action are critical for effective strategy implementation. Transcript: Speaker 1 Let's say we define profit as return on equity. If you're going to increase growth and increase return on equity, I didn't do that because you're basically you're basically trying to invest less to get your return on equity. Or you're going to grow and get your profit margin. Oh, how are you going to do that? You get your profit margin up and grow faster. This is baby talk, but CEO after CEO of Thanop and say, well, we're going to grow and a problem. And so having a coherent action that dumped North on one another is an important kind of strategy. So three of them have to be there. There has to be an understanding of the situation. There has to be a guiding cause. See, how are we going to deal with it? And that could be a long term sense of how we could be. I mean, you don't have to change your strategy every five minutes or five years. If you're making all enjoy candy bars or something, you don't really change your strategy. Tell us the more. If you're in the tech business, of course, you're, you have a shorter chardonnary. And then the coherence and action is critical. And so these are these are the three what I call basic elements, the criminal. ([Time 0:13:29](https://share.snipd.com/snip/a7dc2dfc-5a3c-4d56-adab-2042812c1fe0)) - Identifying Signs of a Bad Strategy Summary: A bad strategy is often characterized by the misconception that profit or performance goals alone constitute a strategy. In reality, strategies are not just high-level goals, nor are they documents or meetings. Many people resonated with this notion, acknowledging that the goals or documents produced by a company are not genuine strategies. Transcript: Speaker 2 You have a whole chapter on this and what is a bad strategy? Can we just touch on a few of the things you see as signs that your strategy is bad or maybe it doesn't even exist? Speaker 1 Sure. What a good strategy, bad strategy. A lot of people resonated with the bad strategy. Part of the book, they wrote from e-bats and saying, oh my God, a tight goodness. Someone just finally said that these walling and terminal meetings I'd sit through are not actually strategy. Or these documents that company produces are not actually strategy. And they're not. Bad strategy, the standard bad strategy for a corporation is a set of profit goals or performance goals. I should have goal. Now goals are the engineering of how companies work, to some extent, but abstract, high level goal, ([Time 0:16:55](https://share.snipd.com/snip/2c6854c7-a15e-4dde-bc56-a85e5aeb9fdb)) - Signs of Incomplete or Bad Strategy Summary: Missing a diagnosis or concrete actions is a sign of an incomplete or bad strategy. Coherent and connected actions in small numbers are crucial. Concentrating on a few things, people, and focus areas is the fundamental source of power in strategy. Trying to do many different things is defocusing and risks turning a good strategy into a bad one. Transcript: Speaker 2 Amazing. So just to summarize somewhat, if you're missing a diagnosis, trying to explain what exactly is wrong. It's a sign your strategy is incomplete or bad. If you're missing concrete actions, it's a sign that your strategy is incomplete or bad. There's also, I think, an element of coherence. The actions have to connect and there have to be a few, very few of them. I always like to think of three is like a good number. Is that is that something you think about? Like the rule of thirds for actions you want to take or even the guiding policy or is there like a number that you think about just like no more than this? Speaker 1 A few, a few, not too bad. Not so a G. Tar number numbers. Is it? You know, we work best when we concentrate. We're more than we concentrate on a few things, a few people, a few focus is it's the fundamental source of power and strategy. Yeah, trying to do many different things is defocusing. Speaker 2 I think there's a this quote in your book that I think is, and this may be paraphrasing each time you say yes, you risk turning a nascent good strategy into a bad strategy. ([Time 0:24:22](https://share.snipd.com/snip/1b2a6ea7-9bee-44d2-a1c4-61bc83d5f32c)) - Understanding power and asymmetry in strategy Summary: The idea of power in strategy is crucial for gaining an advantage in a competitive situation. Power is rooted in exploiting an asymmetry or leverage, which provides a strategic edge. In a competitive scenario, exploiting an inherent difference or advantage is essential to tilt the odds in favor of one's strategy. Transcript: Speaker 2 Yeah, I actually want to talk about both those things. So I'm glad that you tee them up. Let's talk about power. What is this idea of power and how does that plan to strategy wise? It's so important. And then what are some examples of power that people can think about when they're trying to think about implementing and adding a power to their strategy? Speaker 1 Well, in a competitive situation, the fundamental aspect of power is something that's going to give you some sort of advantage. Usually it's an asymmetry of some kind. If two fighters are equally balanced or two horses are equally fast or two armies are equally and they meet in competition, it's 50-50. Who knows what will happen? For a strategy, you need to exploit an asymmetry of some kind. You're a little faster. Oh, they're a little... Something has to be different between now and the sort of things. So that's the beginning of power is asymmetry. We can think of it as leverage. ([Time 0:28:20](https://share.snipd.com/snip/7a4ae4e2-caf8-41cb-b374-d1b4345755fb)) - Sources of power and their implications Summary: Being the first to recognize something can be a source of power, as well as having a certain reputation and established relationships. However, an established reputation can also limit the power by creating expectations. In the case of IBM, their primary source of power was their existing relationships with large corporations, rather than their reputation. Transcript: Speaker 1 But sometimes being first is a source of power. Being first to recognize something can be a source of power. Having a reputation of a certain kind gives you some power that someone who doesn't have that reputation doesn't have. On the other hand, having a well-established reputation of a certain type can be the opposite power because people don't expect you to be able to do something new. They expect you to be able to do this, but not that. Having relationships can be a source of power. When Gertzner took over IBM as a failing in the face of the micro-prostension revolution, he recognized that their primary asset, their source of power, wasn't they were respected And they had... They had Aumntra into every large corporation or plan. No, we have. ([Time 0:29:36](https://share.snipd.com/snip/b5464a08-95b5-4f8f-9734-3d8b7cfb6099)) - The Power of Recognition, Reputation, and Relationships Summary: Being the first to recognize something can yield power, as can having a certain reputation. However, a well-established reputation can limit the ability to innovate. Additionally, possessing strong relationships can be a source of power. For example, when Gertzner took over IBM, he recognized that their primary asset was their customer base, which he leveraged to turn the company around in the face of industry revolution. Transcript: Speaker 1 Being first to recognize something can be a source of power. Having a reputation of a certain kind gives you some power that someone who doesn't have that reputation doesn't have. On the other hand, having a well-established reputation of a certain type can be the opposite power because people don't expect you to be able to do something new. They expect you to be able to do this, but not that. Having relationships can be a source of power. When Gertzner took over IBM as a failing in the face of the micro-prostension revolution, he recognized that their primary asset, their source of power, wasn't they were respected And they had... They had Aumntra into every large corporation or plan. No, we have. That has an actual producing company. And so he said we're going to embrace our customers. Bear hung out customers. You're going to serve our customers because that's our source of power. That's our leverage. That's the asymmetry. Now, the world begins to change. ([Time 0:29:42](https://share.snipd.com/snip/16897292-4dae-40bc-9265-08f2d9e6e521)) - Finding the Source of Power through Favorable Odds Summary: In gambling, the general expectation is to lose, except for skill-based games like poker. Similarly, statistically, new restaurants are likely to fail, so investing in the S&P 500 is often suggested over starting a restaurant. The key lies in identifying where the odds are in your favor, seeking information, skill, and resources that give you an edge and a source of power in your endeavors. Transcript: Speaker 1 Even interested. Well, maybe if you play poker with skill, you can expect to make some money. But the general casino games, you're going to expect to lose. And business, statistically, if you come to me and you say, I'm going to open a new restaurant, which is my strategy. My answer would be don't open a restaurant, invest in the S&P 500, because the statistics are that new restaurants fail. So what makes you think that you can succeed? Oh, I really want to succeed. Not good enough. I trained under a shot who's been very successful. All that's interesting to me more. So there it is. Where's the symmetry here? Where's the source of power? Where you go from the odds, the standard odds in this game are against people. Where you think the odds are in your favor? And that's a source of power looking for this information, the skill, this thing in the field, the resources are arranged that's going to give you this edge. ([Time 0:42:59](https://share.snipd.com/snip/2fa70c37-6fa1-41c7-bd8b-2843bc21ce97)) - Identifying Sources of Power and Strategy in Achieving Success Summary: Identifying the source of power and seeking information, skills, and resources that provide an edge is crucial in a situation where the odds are against you. The ability to shape and focus actions, along with executing coherent strategies, can lead to surprising success, contrary to the expectation of bumbling around. Transcript: Speaker 1 I trained under a shot who's been very successful. All that's interesting to me more. So there it is. Where's the symmetry here? Where's the source of power? Where you go from the odds, the standard odds in this game are against people. Where you think the odds are in your favor? And that's a source of power looking for this information, the skill, this thing in the field, the resources are arranged that's going to give you this edge. And some of that is sort of part of the situation. And some of it's how you shape and focus your actions. Strategy tends to be surprising when we see it. When we see it work. And surprising because we all expect people to bumble around. We expect armies to bumble around. We expect nation states to bumble around. We don't expect them to execute coherent strategies. United States went to Afghanistan. ([Time 0:43:42](https://share.snipd.com/snip/06984cb4-756d-4a5a-b89d-0edeebea687e)) - The Evolution of Governance and Power Structures Summary: Historical examples from different regions demonstrate the transition of societies from warlord rule to cohesive governance through a gradual process. The evolution involves the conqueror establishing initial structures, which eventually leads to the development of government and possibly democracy. Access to historical knowledge is emphasized as essential for strategic thinking, given the absence of a scientific formula for strategy akin to physics or engineering. Transcript: Speaker 1 Oh, well, what the war with society? Where else do we look for an alge? Well, if I look at Scotland in 1650, you look at France in 1300. You look at Japan. Before the modern era. These are warlords of science. Well, how did they go from bad to being a co-hearing government that maybe wasn't democratic? Still, there was a government that I've just left warlord. It took some, the conqueror on the rest. And then it took a long time for them to put in the structure itself of government. And then maybe it became democracy. But that's the process. It's not like you just go in there and say, you're now no longer a warlord society, because we've decreed it. I don't know. You're going to ask me more questions about what it is people should know and how do you get these sorts of power? How do you get these insights? I'm a big fan of history. I'm a big fan of knowing things about what happened. Business history, biographies, warring history. And if you don't have access to other times in other places and other things that have happened, it's very hard to think strategically about the situation you're in. Because there isn't a science of strategy. It's not like physics. It's not like engineering, where we can write down the equations of stress on a beam and say how thick does the beam have to be. ([Time 0:46:24](https://share.snipd.com/snip/ae242e96-f54f-4a83-9af4-46ab659d0231)) - Gaining strategic insights from history and human experience Summary: Gaining insights and strategic power involves understanding history, including business history, biographies, and war history. Access to knowledge about past events and experiences is crucial for strategic thinking, as strategy is not a science like physics or engineering, but is based on analogies to previous human experiences. Transcript: Speaker 1 Know. You're going to ask me more questions about what it is people should know and how do you get these sorts of power? How do you get these insights? I'm a big fan of history. I'm a big fan of knowing things about what happened. Business history, biographies, warring history. And if you don't have access to other times in other places and other things that have happened, it's very hard to think strategically about the situation you're in. Because there isn't a science of strategy. It's not like physics. It's not like engineering, where we can write down the equations of stress on a beam and say how thick does the beam have to be. It's not like it's a lot of it. It's based on analogy to previous human experience. Speaker 2 That doesn't have an amazing insight. Is there anything you find most rich and valuable in terms ([Time 0:47:22](https://share.snipd.com/snip/a9706e0e-9f25-458e-b69f-ec85fcb6f160)) - Developing Action Agenda over Traditional Strategy Summary: The challenge lies in translating the understanding of why a task is hard into a strategy. People struggle to create a strategy due to the overwhelming information from books and websites. The speaker advises to state the problem and shift the mindset from 'strategy' to 'action agenda' when tackling such challenges. Transcript: Speaker 1 Client will tell me, oh, we want to open up business in Australia. It's a market we haven't had. And I'll say, okay, so why are you and I talking about that? You're the CEO. Just tell somebody to do it. What makes it hard? Oh, well, we don't know anybody in Australia and they kick us out. Now, if you'll tell me, if you push, she'll tell you why it's hard. But that understanding hasn't been percolated into a strategy. Part of the problem is that the concept of strategy has been so beaten up by thousands of books and thousands of web sites that people have a hard time trying to figure out how to create A strategy because they're drawn up, down, left, right. So my two pieces of advice that anybody that's actually trying to do this is A, state the problem. And B, don't call it a strategy. Call it an action agenda that ([Time 0:56:50](https://share.snipd.com/snip/2c98f811-2093-4f65-9278-871268f8200e)) - Choosing the Right Challenge Summary: In facing challenges, the key is to select a challenge that is both important and achievable. This involves finding the balance between problems that are important due to their proximity to your ambitions, and problems that can actually be addressed. Once the right challenge is chosen, action steps can be outlined to tackle it, with the understanding that the process might extend over a period of time, such as three years for a big company. Transcript: Speaker 1 Challenges? So you're choosing a challenge. You're choosing of the possible challenges you could face up to. You can't do them all. So there's a focus thing. Choosing which challenge to focus on and that challenge has to be a important. And B, it has to be achievable. It has to be something that you can address. It has to be an addressable child. And so the search for an action agenda, not calling it a strategy, is this balance between problems that are important, because they're close to your ambition, and problems that you Can actually address and do something about. So that overlap then becomes the choice you make. Okay, we're going to go after this. And here's the action steps we're going to take to do that. And it's a big company. The action steps may extend over to three years. ([Time 1:01:27](https://share.snipd.com/snip/95018e7c-034f-4a54-a24c-6c80009e42ce)) - Strategy is about focusing on the crux of the problem Summary: The insight of the snip is that in the context of designing space missions, the key to solving complex problems is to focus on the crux of the issue rather than picking strategies from a list of common options. By understanding the core difficulty, one can find innovative and effective solutions, as demonstrated in the example of determining the location of Jupiter by taking a picture against distant stars during the mission to Mars. Transcript: Speaker 2 Space X. Speaker 1 When there was designing, I was a concept from designer, but machine became Voyager. And well, I've passed the planets into interstellar space where it's floating around right now. Well, one of the problems is how do you know where Jupiter is? It's right there. Okay. How do you know where it is? Well, sir, mine is a hundred miles. And you know exactly where it is. When we set the mission of Mars, we were off by 500 miles. So, Jupiter, how do we know exactly where it is? Because we can look at it to our telescope. So we can look at it from the right side of our orbit and all this, and we can look at it from the right side of our orbit. But it's still a couple of thousand miles there in that. That's too much. And then studying that problem, the simple solution suddenly flashed. I wish I could put it in its mind. It wasn't. Which is, oh, pick a picture of it. Why if we're halfway there? And we'll see it against the distant stars. And now we'll have a triaglage. Big, lower it is. So designers experience this sense of focusing on the crux of the shuttle, the hardcore. And then seeing away true. And that's strategy. Strategy isn't picky strategy out of a list of common strategies. It's looking at the problem. What makes that problem hard? And seeing a way to solve it. ([Time 1:07:01](https://share.snipd.com/snip/4042c127-2200-4a77-bb9c-32e82261e5ac)) - Immerse Yourself to Gain Insights Summary: Insights often come unexpectedly and may require immersion in a problem or situation. To improve strategy and problem-solving, focus on diagnosing the main challenge and spending more time in immersion. This approach can lead to sudden realizations and a clearer path to action. Transcript: Speaker 1 Oh, it doesn't always come when we want to. It can come while you're driving the car. It can come the next day. It could come in the channel. Draw story reports that his insight into the nature of evolution came as he stepped off. I'm on the carriage into the village. So suddenly he said, Oh, yeah, I thought it's obvious. It's like how we raise animals. We read the read the struggle. Sure. Why was that so hard for me to see? Speaker 2 So I think one of the big takeaways here is that if you want to get better at strategy or be more successful with how you think about strategies spend a lot more time on diagnosing the problem And finding the biggest challenge that is keeping you from what you're trying to achieve. Speaker 1 And your insight might come the more you're immersed. And call it an action agent. Here's what we're going to do. Not here's all the things we wish would have. ([Time 1:09:36](https://share.snipd.com/snip/3102ef7d-a66b-403a-91df-522551e57e65)) - The Challenge of Implementing Action and Strategy in Organizational Change Summary: Implementing action and strategy in an organization involves changing power relationships and hierarchies among individuals, making it a challenging task. There is a reluctance to assert authority and tell others what to do, which has been exacerbated by the emphasis on self-perfection and leadership in modern management literature. As a result, the traditional practice of implementing strategy has been displaced by a focus on personal development and leadership, making it difficult to bring about meaningful organizational change. Transcript: Speaker 1 Because action, when you do something in your organization of any size, it involves people changing what they do. It involves changing power relationships among humans in some way. That someone who's been the alpha maybe is not the alpha anymore, someone else is the alpha. This is heavy stuff. And then this is why we have a hierarchy because someone in the end has to say, it's going to be this way. And that's it. People are hesitant to do that. CEOs are hesitant to do that more so today than when I was a young man. It's become hard. And so I think that's the way that we're going to be doing it. Well, I was a young man. It's become hard for people to do this. If you go to the bookstore and look at the management section in the bookstore, most of it's about leadership. And the leadership is mostly about perfecting yourself. It's not about bleeding anybody. The theory is that if you perfect yourself, then somehow raise your mind if you're dead and people will follow you because you're so magnetic and you're so perfect and you're so wonderful And you're so insightful at that. People will, oh, you will ever have to say, figures, do that. It's so embarrassing to tell somebody what to do. And so this is the world we've been today where one of the problems in doing strategy is that it's somehow been displaced by this literary form. ([Time 1:15:53](https://share.snipd.com/snip/a41d18b0-e1d3-4fe7-9d53-20faff87b475)) - The Importance of Having a Decider Summary: The problem with strategy today is that leadership has displaced mission and management. There is a hesitancy to make choices and appoint deciders, which is crucial for taking action. The takeaway is to have a decider who can make decisions and move the agenda forward. Transcript: Speaker 1 And so this is the world we've been today where one of the problems in doing strategy is that it's somehow been displaced by this literary form. About mission and and management is being displaced by leadership, which is the idea that the leader has a vision and people. It happened in the age. There's a whole literature there about transformational leadership that is percolated through the system. And those, I'm not going to get this leadership, but you have to tell people at some point, we're going to do this and we're going to do it this way and Bob's going to be in charge of this aspect And Jones going to be in charge of that aspect. And there's a hesitancy to do to make those choices because that's part of the action agenda. So the takeaway there is essentially have a decider. Speaker 2 It makes me think of actually if George Bush, you talked about Rumsfeld, but George Bush is famous quote, I'm the decider. I don't know if you remember that. Yeah, that's true. Speaker 1 One of the things we see in government particularly is presidents have a hard time getting advice because they surround ourselves with people who want to please them number one. ([Time 1:17:24](https://share.snipd.com/snip/77b0b5fc-d1fc-426f-a537-c17bf27d460e)) - Adaptation and the Founder's Job Summary: The key insight is that in business, one must be adaptable to changing conditions, constantly adjusting as new information comes in. Additionally, the role of a founder is to identify an important, achievable problem and solve it for a large group of people, emphasizing the need for an action agenda over a static strategy. Transcript: Speaker 1 There's an error saying that I like that says he who forecasts the future lies even himself. We're making bets. That's with business ships. We're making a bet. And if we're a rich company, we can make a bed in a fort to get on. We have to adapt as the information comes in. And that's the nature and story. The action agenda has to be quick adaptation to changing conditions. I feel like you have another book here where you could adapt a lot of this wisdom to startups. I'm looking at my notes from when we were talking about earlier. Speaker 2 And you have this point of when you're trying to write out a, you call it an action agenda, not a strategy. You're basically on the hunt for a big problem and an important problem and an achievable problem. And essentially you can boil that down to that is the job of a founder to find an important problem and then solve it for a lot of people. Yeah. Yeah. I like that. I like the other exercise that you should do. I was upset because I lose my mind. ([Time 1:25:22](https://share.snipd.com/snip/b3e4b2b1-d4bd-441b-b363-589ea1520252)) - Designing the Perfect Window Summary: The insight is about the inception of salesworth.com, where the speaker engaged a group of students in brainstorming the characteristics of a perfect window. They discussed that the perfect window should be transparent, allow sunlight in while providing shade, let in air but keep out bugs and noise. The discussion led to the idea of using interauditory filters to achieve the characteristics of the perfect window. Transcript: Speaker 1 And so that was the beginning of sales worth.com. I asked a group of students wants to think about the perfect window. This is physical, something we could think about in the classroom without doing a lot of research. Well, what the perfect window. Oh, perfect window should be transparent. Should let the sun in. All right. So it's lit in the light, but not all the time. Sometimes you want to watch the show. So it should also dark. Oh, I'll let you. Drabes for for shade is for. Okay. It should let in the air. Good, but not the bugs. Oh, it's great. It should let in the air, but not the noise. That's a little harder. Yeah. So you go down the list of things that are window should do, which you let in light, but not light. It should let in the air, but not the noise. It should not let in every don't want it. Should let not let in the bugs. It should maybe have shutters or not shutters. And so I said, how could you design the perfect window? What we're looking like. And there's some kids at MIT that had developed this thing that lets in here, but keeps up the noise. There's little auditorium filters. Keep out noise in some certain frequencies. Well, we don't have a perfect window, but. ([Time 1:28:11](https://share.snipd.com/snip/33b88f33-fc0c-4881-b970-e9efdd6e61b9)) - Focus on Action, Not Theory Summary: The key insight is the emphasis on taking action and addressing key challenges rather than getting caught up in theoretical concepts such as strategy, mission, and vision documents. The approach is to identify one or two key challenges that can be addressed and then focus on implementing a practical action agenda. This practical approach is in contrast to the time-consuming and expensive process of developing strategic documents. It also involves utilizing the company's resources to make a meaningful impact over an extended period, rather than engaging in short-term consulting arrangements. The speaker appears to value the asymmetry of their approach, which serves as a competitive advantage and distinguishes them from consulting firms. Transcript: Speaker 1 And so they begin to get this sensual. Oh, geez, we better focus. Better focus on something. We better do something about some of these. And so then we begin to, you know, go through this thing. I don't know which ones are really important in which ones are really addressable. Well, sometimes we don't know. Third customer or not. Oh, well, is there anybody there who's actually does know. So Sean, we could fly in here. I have some perspective on this. How do we, you know, so we begin to try to identify the one or two key challenges that can actually be addressed. And what are we going to do about it? What are the co-guard actions we are to to take these off. That's the issue. It's from kind of time after the founders all say to me, well, where's the strategy? Where's the document with the mission vision? All that. Nothing. That's not what we do. We're doing an action agenda. And the foundry is time consuming and a bit expensive to sell extent. And most of the times we've had found a way they really hope the company. Gather its widths and its resources and do something. Which, you know, I'm very pleased with how the founders work. It's not so easy to figure out how to take the boundary concept and expand it. I've talked to a couple consulting firms about, well, guys like to work on it. Families and they say, how does it work? It's one guy for three days. That's not what we do. We do 10 guys for three years. It's not a business model. But that's a nice asymmetry for me because, you know, they're not going to compete with me. ([Time 1:46:30](https://share.snipd.com/snip/c365e5a6-dc5f-4eac-a68f-51ad2fbf9030))