I’ve been following Will Larson for a while at this point. I read his book Staff Engineer, listened through the associated podcast, , follow his blog, and listened to his talk on strategy. I was excited to see his interview pop up on Lenny’s podcast recently.
Then, I heard Lenny’s interview with Richard Rumelt and thought Richard had a straightforward, practical approach to thinking about strategy. It’s interesting tracing the lineage of ideas - Richard Rumelt’s mental model was similar to what I had heard from Will Larson. It makes sense; Will had read and drawn on two of Richard’s books. He has blog posts Notes from “Good Strategy, Bad Strategy” and Notes on The Crux. I’m going to keep this post short since I don’t have much of anything to add to the discussion. These are just the highlights that most stood out to me.
Strategy has 3 components:
- Accurate and honest diagnosis
- Guiding policy
- Coherent and consistent action
Listening to the full podcast will give the fullest explanations and anti-patterns of the three elements. I will highlight one anti-pattern here. That is equating goals with a strategy; even worse, a grab-bag of unfocused goals. Goals have the potential to be more nebulously attached to both the input (diagnosis) and output (coherent actions.) A guiding policy should be strongly, causally attached to the other two components. The connection between the first two ensures you are solving the right thing, and the second tie contributes to the efficacy of your solution. A clarifying, alternative term for strategy is “Action Agenda” (aligning with Amazon’s leadership principles, Bias for Action.) “Action Agenda” emphasizes that the only useful strategy is one that moves people to action. Without action, nothing will be accomplished.
When contemplating a new project or finding yourself in a competitive position, tackle the crux. The Crux is the hardest part of a rock climb. Richard drew the parallel that if you can’t handle the crux of a climb, you shouldn’t do the climb at all. Similarly, not being able to tackle the crux of a product or business problem means you should probably table the idea. You don’t want to waste effort on other portions of the sequence if you can’t make it to completion. That isn’t to say we should just be giving up. An encouraging piece of advice was to “Pick a problem that aligns with your ambition but is also reasonable to do something about.” Finding that most important problem where you can move the needle and taking consistent action will almost always lead to improvement.
An understanding of power and history are two contexts key to creating a strategy. Power is an angle differentiating you from the competition that you can exploit as an asymmetry. Network effects and distribution channels are two examples of power. Richard put a big emphasis on reading business, military, and economic histories as a way of understanding both strategies that worked and ones that failed. He says to be a mentally active participant in the historical situation, taking in the information people had at the time and analyzing it. One way to do that is by reading the front page of old newspapers like the New York Times. That helps immerse yourself in the context of the moment and set aside biases of 20/20 hindsight we have when looking back on the situation.
In conclusion, I would highly recommend a listen for anyone wanting to level up their strategy analysis game. It is a hard choice whether I should add Good Strategy, Bad Strategy or a history book to my reading list! I’m almost done with Never Split the Difference and have Rob Henderson’s book Troubled coming up on family stability and social class.