Rumelt also emphasizes the importance of "leverage"—the ability to focus energy on a specific objective so that a small amount of effort yields a disproportionately large result. This often involves anticipating the behavior of others, identifying a "pivot point" where an opponent or market is vulnerable, and concentrating resources where they will have the most impact. He uses historical and corporate examples, such as Hannibal’s victory at Cannae and Steve Jobs’ turnaround of Apple, to demonstrate how clarity and focus outperform sheer size or ambition.
The core of Rumelt's framework is what he calls the "kernel" of a good strategy, which consists of three essential elements: a diagnosis, a guiding policy, and coherent actions. The diagnosis simplifies the complexity of reality by identifying the specific nature of the challenge. The guiding policy outlines an overall approach for overcoming the obstacles identified in the diagnosis, without listing specific steps. Finally, coherent actions are the practical, coordinated steps designed to carry out the guiding policy. This logical chain ensures that every effort within an organization is directed toward a singular, well-defined purpose.
Conversely, Rumelt identifies "bad strategy" as a failure of leadership to make hard choices. He notes four major hallmarks of bad strategy: fluff, the failure to face the challenge, mistaking goals for strategy, and bad strategic objectives. Fluff is characterized by high-sounding, empty words that mask a lack of substance. Failure to face the challenge occurs when a "strategy" ignores the actual obstacles in the way of success. Mistaking goals for strategy involves treating desired outcomes, like "20% growth," as the plan itself. Lastly, bad strategic objectives are either "blue-sky" (unrealistic) or "dog's breakfast" (a cluttered list of unrelated tasks).
