A leader’s most important responsibility is to honestly identify the biggest challenges to forward progress and to devise a coherent approach to overcoming them. The core of strategy work is always the same: discovering the critical factors in a situation and designing a way of coordinating and focusing actions to deal with those factors. The kernel of a strategy contains three elements:
A good diagnosis simplifies the often overwhelming complexity of reality by identifying certain aspects of the situation as critical. There is really only one question you are asking in each case. That question is ‘What’s going on here?’ Diagnosis is a judgment about the meanings of facts. Comprehend the situation. At a minimum, a diagnosis names or classifies the situation. When a diagnosis classifies the situation as a certain type, it opens access to knowledge about how analogous situations were handled in the past. An explicit diagnosis permits one to evaluate the rest of the strategy. The diagnosis for the situation should replace the overwhelming complexity of reality with a simpler story.
This is an overall approach chosen to cope with or overcome the obstacles identified in the diagnosis. The guiding policy directs and constrains action without fully defining its content. They define a method of grappling with the situation and ruling out a vast array of possible actions. A good guiding policy tackles the obstacles identified in the diagnosis by creating or drawing upon sources of advantage.
These are steps that are coordinated with one another to work together in accomplishing the guiding policy. The kernel of a strategy must contain action. To have punch, actions should coordinate and build upon one another, focusing organizational energy. The actions within the kernel of strategy should be coherent. That is, the resource deployments, policies, and maneuvers that are undertaken should be consistent and coordinated. The coordination of action provides the most basic source of leverage or advantage available in strategy.
Rumelt, R. (2011). Good Strategy Bad Strategy: The Difference and Why It Matters. Currency.