Conversation

Cedric Chin
@ejames_c
I am about 90% convinced that Good Strategy Bad Strategy is a bad book. Two questions: 1. What is something actionable you took away from the book? 2. In a year’s time, circle back and ask: what changes did I make as a result of that takeaway?
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Cedric Chin
@ejames_c
In most cases, people give me a semi-profound answer to the first question. Usually it’s the ‘kernel of good strategy’ or ‘what bad strategy looks like’ The answer to the second question is almost invariably ‘nothing.’
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Cedric Chin
@ejames_c
Contrast this to 7 Powers, where the takeaway (for those who understand or have experienced competitive arbitrage): - there are really only 7 types of economic moats, or ‘Powers’ - there are at most 3 Powers you may build at a given stage - Power comes from discovery+execution
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Cedric Chin
@ejames_c
I haven’t fully figured out why the book is so useless. I think it’s some combination of: - Rumelt has good points to make about what good strategy looks like. But so what? - His proposed method to get to one doesn’t tackle the hardest bit, which is context-dependent diagnosis
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Cedric Chin
@ejames_c
- The framework doesn’t carve the problem at the joints, reducing it to the core question you must answer for strategy to work (beat the competition) - As a result it feels actionable but it isn’t, really.
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Cedric Chin
@ejames_c
The reason I say ‘90% convinced’ is because of the “here is what bad strategy looks like” piece — which is genuinely useful as a pattern matching example. But that’s the limit, I think: - sufficiently thoughtful execs should know this - what to do instead? Book has 0 clue.
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Cedric Chin
@ejames_c
I can’t in good conscience recommend a ~300 page book where the chief value is a useful negative example. I should probably write a summary that compresses this useful bit, so that nobody has to read it and recommend it (to me) ever again. 😤
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Cedric Chin
@ejames_c
The book starts with Porter’s 5 Forces and then drills down on one factor: barriers to entry. The authors conclude that the most important factor for business strategic success is barriers to entry! Pop quiz: can you think of successful businesses with low barriers to entry?
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Cedric Chin
@ejames_c
I can think of so many! So even in the opening setup of the book, it is TRIVIALLY easy to think of counter-examples. The authors then double down on their one insight and work out a full GAME THEORETIC TREATMENT OF BARRIERS TO ENTRY.
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Cedric Chin
@ejames_c
Replying to
@ejames_c
Ok but let’s be charitable. If you want an extremely theoretical, thinky intellectual take on barriers-to-entry, this book might be for you. But even then I can’t recommend it, because Helmer’s 7 Powers just demolishes that treatment in like half the word count.
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Cedric Chin
@ejames_c
The goal of business strategy is the ability to resist margin compression. Barriers to entry is merely one way to do this. And in fact there are multiple ways to accomplish barriers to entry (I count 5 of the 7 Powers)
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Cedric Chin
@ejames_c
And in fact I’m fairly certain Helmer was throwing shade at this book in particular in his first chapter, where he called out idiotic game theoretic takes on strategy in a business context. Ok, my flight is arriving. I’ll stop here.
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