Richard Rumelt: evaluation

Transcript context

…I love it. You mentioned this point that some of the biggest challenges to executing a strategy is organizational dynamics, and politics is a part of that. Is there anything you could share for folks to help them through that? You talked about one of the biggest challenges, people just want to keep adding more priorities. There's all these needs. Everyone wants to include their thing in the strategy. Is there anything people can do to improve how this works? Typically, I'll say typically, we need hierarchy of power, because there has to be some mechanism for deciding what we're going to do. And there's people with different interests and different private interests and public interests. And somehow, there has to be a choice about putting some of these aside and doing this, that you can't say, "Our strategy is to do everything that everybody wants to do." That's what happens when you form a committee in a city and you say, "What's our city strategy?" They say, "Oh, we're going to paint the park benches. We're going to clean up the grass, we're going to build a new this, we're going to..." They have a [inaudible 01:11:49] that stuff, everything they're going to do with that. And anybody who raised their hand and says, "Well, what about the birds? Can we..." "Oh, yeah, let's put that in, too," that doesn't go anywhere. So we, inside organizations, people have different opinions. So that's part, they have interests that they may not state clearly. I interviewed Secretary of Defense, Donald Rumsfeld, while we were invading Iraq, second time, and I was actually interviewing about budget matters, but he asked me, "Well, what do you do, professor?" And I said, "Well, I do strategy." And he said, "Well, strategy, that's a hard subject." He said, "I've got people here in the Defense Department who have an expert on anything. You want to know the clan structure in Iraq, we've got people who know. We want to know the weather, we've got people to know. You want to know how many [inaudible 01:13:05] we can fly in 24 hours, people who know. I got anything you want to know, we've got someone who knows about it, but they all disagree. And each have their own private agenda. They have a contract they want to get, they have a company they want to support, they have a conceptual idea they want to push." So every little bit of information comes with an agenda, sometimes obvious, sometimes hidden. And how do you put all this stuff together to come up with a strategy? He says, "Do you academics have a solution to this?" And I said, "No, we don't. We don't know much more than, what, 2,000, 3,000 years ago, which is you put five to eight smart people in a room and you tell them to come up with something. " But his question is at the heart of what I call a foundry, which is how do you get a group of people to coalesce around an action agenda? And what process would you use and how do you do that? It's a different question than, "What should our strategy be?" The question is, "Well, how should you go about creating a strategy? Should you ask the product manager to write an account, or should you ask the CEO to come up with it? Should you hire a consultant? How do you do this?" In my experience, working with companies, is that the senior executives have to do this. te an account, or should you ask the CEO to come up with it? Should you hire a consultant? How do you do this?" In my experience, working with companies, is that the senior executives have to do this. And my experience is that the senior executives know pretty much everything you need to know to do this, that you don't need consulting firms to come in and analyze everything that you do. Yes, you'll gain some insight if they come in and do a competitive analysis, and a customer analysis, and all of that. But the basic issues, the challenges you're facing, they know that. It's not mysterious. They know all that stuff, but they disagree about the importance of different things. And more importantly, they occupy positions of power that, if we go this way, this is going to be hurt. And if we go this way, they're [inaudible 01:15:34] more money for that. And so their interests are not aligned, which is part of what Phil was referring to. And so the problem of strategy inside an organization is diversity of interest and fear of action. Because action, when you do something in an 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 this is why we have a hierarchy, because someone in the end has to say, "It's going to be this way." And 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 for people to do this. If you go to the bookstore and look at the management section in bookstore, most of it's about leadership. And the leadership is mostly about perfecting yourself. It's not about beating anybody, but the theory is that if you perfect yourself and somehow rays come out of your head 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, and that people will follow you, you won't ever have to say, "[inaudible 01:17:19], do that." It's so embarrassing to tell somebody what to do. And so this is the world we live in today, where one of the problems in doing strategy is that it's somehow been displaced by this literary form about mission, and management is being displaced by leadership, which is the idea that the leader has a vision and people... It happened in the '80s. There's a whole literature there about transformational leadership that is percolated through the system, and those, I'm not against 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 Joan's going to be in charge of that aspect." And there's a hesitancy to make those choices, because that's part of the action agenda.…

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