“Of course, everyone knows a strategy once they see one—be it Microsoft’s, Nucor’s, or Virgin Atlantic’s. Anyone can recognize a great strategy after the fact. We also understand planning as a ‘process.’ The only problem is that process doesn’t produce strategy—it produces plans. The dirty little secret of the strategy industry is that it doesn’t have any theory of strategy creation.” Gary Hamel
Quote from The Crux by Ricard Rumelt
Strategy Is Exploration: Understand the Problem Before Planning Solutions
When strategy becomes a calendar event, it devolves into a procedural exercise: fill in the template, update the slides, present to leadership, move on. What gets lost in this routine is the actual work of strategy: wrestling with why growth has stalled, confronting uncomfortable truths about what’s not working, and identifying the hard choices required to break through.
In The Crux, Richard Rumelt makes a crucial distinction: processes don’t produce strategy, they produce plans. Plans assume you understand the problem and simply need to organise your response. Strategy, by contrast, is the insight into what the real problem actually is. Most organisations skip this diagnostic work entirely, jumping straight to action items and initiatives assuming they understand the real hurdles or worse, believe they already have the right solution to an unexplored problem.
Rumelt’s advice for strategists is deceptively simple: cultivate a sense for when things repeatedly go wrong, for problems that keep resurfacing despite your efforts, and for opportunities that feel tantalizingly close yet remain out of reach. These patterns reveal real constraints preventing progress.
Key quote: “Experienced designers can be seen to engage with a novel problem situation by searching for the central paradox, asking themselves what it is that makes the problem so hard to solve. They only start working toward a solution once the nature of the core paradox has been established to their satisfaction.”
Richard Rumelt
Strategic thinking is sometimes confused with following the right framework. Real strategy is more complex than finding dogs and cows. It’s figuring why things aren’t the way you expect them to be and what you’re going to do about it.
“Herbert Simon was fascinated by the difference between deduction and design. He explained that normal science is about understanding the natural world. “Design,” he argued, “on the other hand, is concerned with how things ought to be” in order to carry out human purposes.”
Quote from The Crux by Richard Rumelt
A strategy that works in one context can’t be copied to another as is. A strategy is always developed in response to a specific challenge. To develop a strategy you need to understand the challenge, the constraints, and the desired outcomes.
“Strategy is problem solving, and it is best expressed relative to a particular challenge.”
Richard Rumelt, The Crux
Grow your core. Whether you’re buying a business, selling one, expanding into a new area or building new capabilities focus on opportunities that will help you grow your core capabilities.
The clearest sign you don’t have a strategy
I can’t remember where I first heard this, but it’s stuck with me ever since: the clearest sign that you don’t have a strategy is when everything becomes a strategic initiative.
Here’s a useful way to think about it: Growing a business comes down to making a handful of big decisions and countless small decisions. A big decision fundamentally changes what you prioritise and how work gets done. Everything that follows, every project, every initiative, every resource allocation, should be traceable back to these few pivotal choices.
Strategy is the biggest of these decisions. It’s the choice that determines what you’ll do and, critically, what you’ll stop doing.
The problem is that most organisations accumulate activities over time. Projects become permanent. Pilots outlive their usefulness. Initiatives championed by former executives linger. These activities consume resources without generating meaningful returns. They survive not because they’re strategic, but because no one has made the hard decision to eliminate them.
Without a genuine big decision about where you’re going and how you’ll get there, it’s hard to distinguish between what matters and what’s just accumulated baggage.
When everything feels important, everything gets labelled “strategic” and your actual strategic priorities get buried under the weight of organisational inertia.
Richard Rumelt captures this problem perfectly:
Key quote: “Activities, or whole chunks of business, are needless when they don’t generate a surplus. The resources they consume may or may not show up on financial statements. The resources may be money, public controversy, or management attention. In any of these cases, “weeding the garden” is necessary because of the tendency, like “the stuff” in your garage, for such activities to accumulate. Sometimes they are the favourites of a powerful executive or of a past CEO. Other times, they are parts of a larger unit, kept alive by its ability to subsidize them. In any case, when they are not needed for a vigorous program of growth, they sap time and energy from more important things.”
Richard Rumelt (The Crux)
The Loop Method: In volatile situations (low predictability and fast change) be quick to observe, orient, decide, and act. This is called the Boyd Loop named after Captain John Boyd who developed it.
Richard Rumelt, The Crux
When a new opportunity or challenge arrives on the scene, the first capable response often wins: not necessarily the first mover, but the first one to provide a competent reaction.
A good strategy has three parts: Diagnosis, Guiding Policy, and Coherent Action. You don’t have a completed strategy if any one of them is missing.
Diagnosis is a thorough understanding of the problem and constraints. This element of strategy is what you see on slides decks and roadshows. Policy and Coherent Action are often the misunderstood elements of strategy.
Here’s an example Rumelt shared in The Crux that clearly shows how policy and action are linked together.
Amazon is single minded about their customer obsession. As Rumelt explains, the company is “ is almost totally customer centric and coherently focused on quickness.”
Every policy from how their site works to how deliveries and returns are managed serve their customer obsession. The same obsession is visible in their actions from how easy it is to buy from Amazon to how they’ve innovated their supply chain to make doing business with Amazon as frictionless as possible.
Once you have decided your strategy, every policy and every action that follows is guided by your strategy. Anything less is wasteful.
At the simplest level, coherence means that actions and policies do not contradict each other. In the best of cases, coherence comes from actions working synergistically to create additional power.
Richard Rumelt, The Crux
Building the right skills and capabilities is how you shift mindsets. Inspiration alone is not enough.
A strategists job is to find the crux of the problem and address it effectively and without distraction by designing coherence between policies and actions.
No matter how skilled, a strategist may not succeed at driving cherent action without the support of leadership that is committed to building the needed skills and capabilities in the organisation.
If you’re tasked with creating a strategy, be single-minded about finding the crux and developing coherent policy and actions. If you’re a leader going through strategic change focus in changing mindsets through building needed skills and capabilities.