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How to break bad habits
How habits are formed
The importance of consistency
Success isn’t just about what your organization does, it’s also about blocked or failed competition
For example, in setting cold war strategy, it made little sense to match Soviet capabilities. The best method was to build on our strengths in ways that were aimed at their weaknesses.
Act so as to impose exorbitant costs on the competition using your relative advantages
A bad strategy isn’t miscalculation, it’s avoiding the hard work of crafting a good strategy. Good strategy means making priority choices.
Sources of bad strategy:
This is the idea that positive thoughts help you achieve outcomes. Examples include The Power of Positive Thinking, Tony Robbins, Christian Science.
Success doesn’t come from New Thought. Ford didn’t have a unique vision of building a car for the masses nor was his vision particularly shared with the assembly line workers; what he had was the engineering skill to make it happen.
A good strategy works by harnessing power and applying it where it will have the greatest effect.
The fundamental sources of power:
Consider the habits, preferences, and policies of others together with inertias and constraints on change
Focus on the predictable downstream effects of changes that have taken place
Example: Toyota built hybrid engines because they foresaw that higher oil prices would create demand for greater fuel economy.
Pivot points magnify the effects of focused energy; a small adjustment can unleash pent up energy.
In Japan, customers want variety, so they have hundreds of food varieties that constantly change.
In China, customers want service, so their stores are spotless.
A proximate objective names a target that the organization can hit or even overwhelm
Example: Engineers can’t work without a specification, so set something determinate as a goal even if you’re not exactly sure what you need.
The US decided that the space race was about the moon, which was the objective we were better placed to achieve.
Proximate objectives are simple and defined. Leaders construct them this way even if the organization’s true challenges are complex and ambiguous
Systems have a chain-link logic when performance is limited by the weakest subunit or link.
Improving a single link does not improve the results of the system as a whole unless the weakest link is improved
Merely creating more pressure for higher profits wouldn’t solve the problem because multiple areas under the control of different teams each need to be improved before the results show up in increased profits
A sequential strategy works best in which leaders take responsibility for the final results and focus on one link at a time.
Focus is attacking a segment of the market with a system supplying more value to that part of the market than anyone else can.
To find a company’s focus, look at its distinctive policies and ask what all of those policies are aimed at.
Many large companies have no strategy and no focus.
Example: Crown Cork & Seal has fast response times and great technical assistance so they can do small production runs on short notice. This raises their costs but means that they’re the only bidder for companies that need a fast, small production run.
Interesting advantages are ones that you can increase with strategic skill, like growing a fruit that you can market more effectively using your special marketing skills. Boring advantages are just a given that cannot be optimized, like a machine that simply produces silver.
Airline deregulation: Even after deregulation ended, airlines used the same rules of thumb they’d used during the period of regulation
Even after AT&T lost its position as a regulated monopoly, its old non-competitive routines stayed in place even after management wanted to shift the company to a competitive footing
Fix this by simplifying the organizational structure. This will illuminate the inefficiencies hidden in the system. It may be necessary to fragment the group structure into smaller pieces.
To change group norms, you may need to change the alpha member of the group.
To generate a strategy, one must put aside the comfort and security of pure deduction and launch into the murkier waters of induction, analogy, judgment, and insight.
Thinking it through can be done by using one or more of the following approaches:
Education officer at museum
Strategy is the craft of figuring out which purposes are both worth pursuing and capable of being accomplished
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Richard P. Rumelt
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