A startup can apply the kernel of good strategy to its business model by first diagnosing the problem or challenge it faces. This involves understanding the market, competition, and internal capabilities. Next, it should establish a guiding policy for action, which could be a unique value proposition or a novel approach to delivering services. This policy should address the diagnosed problem and leverage the startup's strengths. Finally, the startup should define coherent actions to implement the guiding policy. These could be specific projects, initiatives, or processes that bring the strategy to life.

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Good Strategy, Bad Strategy

Even some of the world’s biggest organizations do strategy poorly, and incorrectly credit their success to personal decision-making skills. We read th...

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In its simplest form, good strategy answers three very simple questions: 'why' (diagnosis of the problem), 'what' (guiding policy for action), and 'how' (the actionable objectives themselves). Rumelt calls this the kernel of good strategy. A good guiding policy tackles the obstacles identified in the diagnosis of a problem through the creation of advantage or the collection from sources of advantage. Importantly, not all advantage is competitive (in the case of nonprofits or public-policy strategy). Action points are vital to any good strategy. Companies often lack action points. With Bush in Iraq, the goal was to invade and conquer. The goals were freedom, democracy, and reconstruction; but the strategy was not implemented until General David Petraeus laid out what must be done to counter an insurgence (something that had not been considered before). General Petraeus' impact was great. This example demonstrates why coherent action must be central to any strategy. "A good strategy doe...

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A small business can use the key topics or framework covered in the book "Good Strategy, Bad Strategy" to grow by applying the three core elements of a good strategy: diagnosis, guiding policy, and coherent action. Firstly, the business needs to diagnose the problem or challenge it is facing. This could be anything from lack of market share to poor customer retention. Secondly, the business needs to develop a guiding policy to address the diagnosed problem. This policy should aim to create or leverage advantages. Lastly, the business needs to define coherent actions to implement the guiding policy. These actions should be specific, actionable, and directly linked to the guiding policy and diagnosis.

Some examples of companies that have successfully implemented the principles of good strategy as outlined in Richard Rumelt's book 'Good Strategy, Bad Strategy' include Apple, Amazon, and Google. Apple's clear diagnosis of the problem of complicated technology, their guiding policy of creating user-friendly devices, and their coherent actions in product development and marketing align with Rumelt's principles. Amazon's strategy of becoming the 'Earth's most customer-centric company' and their actions to achieve this also align with these principles. Google's strategy of organizing the world's information and making it universally accessible and useful, and their actions in developing search algorithms and other technologies, also demonstrate the principles of good strategy.

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