Good Strategy Bad Strategy: The Difference and Why It Matters

by Richard P. Rumelt

Crown’s long record of superior performance under Connelly’s leadership had rested upon its carefully designed strategy that, through a coordinated set of policies, focused the company on products and buyers where the customer’s bargaining power was lessened. When Avery took over leadership of Crown, he found that the new PET bottles were making big inroads into the market for soft drink containers. Product changeover costs in plastics were much lower than in metal containers, so the basis of Crown’s traditional advantage was eroding. What to do? Avery chose to grow the corporation by acquisition with an emphasis on the PET business, attracted by the growth in that industry. The problem was that he left the company’s traditional competitive advantage behind without replacing it. Asked about a loss of focus, CFO Calle showed no concern, interpreting focus as merely a restriction on the product line: “It’s currently fashionable to focus, but we’ve always been there. We operate in a $300 billion industry and serve only the metal and plastic portion, which amounts to $150–200 billion.”5 He did not choose to understand the deeper meaning of focus—a concentration and coordination of action and resources that creates an advantage. Instead, he and CEO Avery were mesmerized by the prospects of expansion.