Strategy’s strategist: An interview with Richard Rumelt

Richard Rumelt is one of the world’s experts in the field of strategy. In this interview with The McKinsey Quarterly (free but registration required) he examines the key difference between strategic planning and business planning; in other words, what makes a plan strategic? Rumelt goes on to explain why a lot of strategic planning that goes on across organisations isn’t necessarily very strategic. He argues that most strategic plans have little to do with strategy and are simply three-year or five-year rolling resource budgets or business plans which creates false expectations that the exercise will somehow produce a coherent strategy. These resource budgets do not therefore deliver the higher performance that senior managers envisage. He argues that the first step in developing a strategy is identifying change in the external environment and exploiting this – this could be technological, political or social. NCVO Third Sector Foresight aims to provide organisations with information about these types of changes. He also highlights the importance of undertaking strategic plans regularly, not annually as most organisations assume; changes don’t come along in nice annual packages. And although these changes have long-term consequences which may be hard to envisage now, organisations need to invest in resources and take a position now. Speculative judgments that respond to change are the basics and the starting point of strategic thinking. No one can predict what the future will hold, but strategic thinking can help organisations to take positions in a world that is confusing and uncertain. Ambiguity and uncertainty can be the flip-side of opportunity.

Last updated at 15:08 Mon 18/May/09.
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