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To look more closely at how a guiding policy works, follow the thinking of Stephanie, a friend who owns a corner grocery store.
Useful story for illustrating diagnosis to guiding policy to coherent informed action
Strategy is about action, about doing something. The kernel of a strategy must contain action.
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.
Using such a cost advantage to good effect will require the alignment of many actions and policies.
Strategic actions that are not coherent are either in conflict with one another or taken in pursuit of unrelated challenges.
These two sets of concepts and actions were in conflict rather than being coherent.
Now these actions may all have been good ideas, but they did not complement one another.
doing these things might be sound operational management, but it did not constitute a strategy.
A strategy coordinates action to address a specific challenge.
Another powerful way to coordinate actions is by the specification of a proximate objective. By “proximate,” I mean a state of affairs close enough at hand
to be feasible.
we should seek coordinated policies only when the gains are very large.
Good strategy and good organization lie in specializing on the right activities and imposing only the essential amount of coordination.
focus, channeled at the right moment onto a pivotal objective, can produce a cascade of favorable outcomes.
In general, strategic leverage arises from a mixture of anticipation, insight into what is most pivotal or critical in a situation, and making a concentrated application of effort.
In competitive strategy, the key anticipations are often of buyer demand and competitive reactions.
In many circumstances, anticipation simply means considering the habits, preferences, and policies of others, as well as various inertias and constraints on change.
To achieve leverage, the strategist must have insight into a pivot point that will magnify the effects of focused energy and resources.
Returns to concentration arise when focusing efforts on fewer, or more limited, objectives generates larger payoffs.
A “threshold effect” exists when there is a critical level of effort necessary to affect the system.
When there are threshold effects, it is prudent to limit objectives to those that can be affected by the resources at the strategist’s disposal.
In either case, the strategist can increase the perceived effectiveness of action by focusing effort on targets that will catch attention and sway opinion.
invested where his resources would make a large and more visible difference.
choosing an objective that can be decisively affected by the resources at hand.
One of a leader’s most powerful tools is the creation of a good proximate objective—one that is close enough at hand to be feasible.
diagnosed the problem as world opinion.
He argued that the Soviet Union’s strategy of focusing its much poorer technological resources on space was leveraging, to its advantage, the world’s natural interest in these out-of-this-world accomplishments.
He argued that being first to land people on the moon would be a dramatic affirmation of American leadership. The United States had, ultimately, much greater resources to draw upon; it was a matter of allocating and coordinating them.
Guiding policy following from diagnosis and informed by technological advantage the US could leverage
the moon mission had been judged feasible.
he laid out the steps along the way—unmanned exploration, larger booster rockets, parallel development of liquid and solid fuel rockets, and...
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since Kennedy’s time, there has been an increased penchant for defining goals that no one really knows how to achieve and pretending that they are feasible.
every organization faces a situation where the full complexity and ambiguity of the situation is daunting. An important duty of any leader is to absorb a large part of that complexity and ambiguity, passing on to the organization a simpler problem—one that is solvable.
The more dynamic the situation, the poorer your foresight will be. Therefore, the more uncertain and dynamic the situation, the more proximate a strategic objective must be.
“taking a strong position and creating options,”
even more proximate—more like tasks and less like goals.
To concentrate on an objective—to make it a priority—necessarily assumes that many other important things will be taken care of.
A system has a chain-link logic when its performance is limited by its weakest subunit, or “link.”
one should identify the limiting factors.
The first logical problem in chain-link situations is to identify the bottlenecks,
The second, and greatest, problem is that incremental change may not pay off and may even make things worse.
There are little or no payoffs to incremental improvements in chain-link systems,
refocusing on change itself as the objective.
I left cost cutting to the last because I wanted the cost-reduction campaign to work with, but not define, the type of machines we build.
It takes insight into the key bottlenecks. Plus, it takes leadership and the willingness to absorb short-term losses in the quest for future gains.
The explanation for its continued excellence and the lack of any effective me-too competition is that its strategy builds on chain-link logic.
IKEA’s system has a chain-link logic. That means that adopting only one of these policies does no good—it
This is what is meant by "unique business model" i.e. What are you doing that others maybe aren't but that gives you an advantage others cannot early replicate
must perform each of its core activities with outstanding efficiency and effectiveness.
These core activities must be sufficiently chain-linked that a rival cannot grab business away from IKEA by adopting only one of them and performing it well.
