Richard Rumelt: evaluation

Transcript context

…To undertake a strategy that you think will work, you've got to have a reason that it makes sense and that reason is derived from some source of power, some source of advantage. Ultimately, your power or your advantage is something based in history that has the feel of reputation, or institutional skill, or it's some kind of symmetry or knowledge that you have that others don't have. So it's a resource that you can use that your competitors or others don't have equal access to because you've either have mastered it or you own it or you inherited from the past. All those things are sources of the power that you use to make it not an even bet. So when you walk into a casino, 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 in business, statistically, if you come to me and you say, I'm going to open a new restaurant. What should my strategy be? 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 chef who's been very successful. Oh, that's interesting. Tell me more. So there, where's the asymmetry 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. That's the source of power we're looking for. We're looking for this information, this skill, this thing in the field, the way 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 don't expect it. We expect people to bumble around. We expect Arby's to bumble around. We expect nation states to bumble around. We don't expect them to execute coherent strategies. The United States went to Afghanistan and it wanted to catch Osama bin Laden, but at the same time they didn't want to put an army in the shield to actually catch him because it would the embarrassing to have that many Americans in the field. That's what happened in Tora Bora. The Secretary of Defense said, no, we don't want to make it look like we're taking over the country, so they didn't try to catch him as hard as they could. And we want to have the education of women and we want to have a democracy and we want to have a long list that we would have no opium production, but at the same time, our allies are the opiate producers. It was the Taliban that got rid of opiate. Americans didn't do it. So we had all these different objectives. It doesn't work. You need to have a focus on something achievable. What's achievable? [inaudible 00:46:03] Nation-building is hard stuff. It takes a century. So we had all these different objectives. It doesn't work. You need to have a focus on something achievable. What's achievable? [inaudible 00:46:03] Nation-building is hard stuff. It takes a century. Afghanistan, I'm off on a tangent here with Afghanistan, but it's a really interesting subject. Afghanistan was a warlord society, a bunch of different warlords running the place. Well, what's a warlord society? Where else do we look for an analogies? Well, we look at [inaudible 00:46:32] in 1650. You look at France in 1300. You can look at Japan before the modern era. These are warlord societies. Well, how did they go from that to being a coherent government that maybe wasn't democratic at first, but still, there was a government instead of just as much war. It took some [inaudible 00:46:59] to conquer all the rest. And then it took a long time for them to put in the structure itself of government and then maybe became a democracy. Maybe not, but that's the process. It's not like you just go in there and say, you're now no longer a warlord with 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 sources 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, war history. If you don't have access to other times and 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 that. A lot of it is based on analogy to previous human experience. That is an amazing insight. Is there anything you find most rich and valuable in terms of history periods, empires, stories that you find most connects as an analogy? Is there anything you find consistently is useful or is it just read as much as you can and you'll often find something in there?…

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