Rumelt on strategy (III): Dudes, don’t confuse budgeting with strategic planning

One of the themes of Richard Rumelt‘s book on strategy is that strategy is about confronting problems, not covering them up. “If you fail to identify and analyze the obstacles, you don’t have a strategy. Instead, you have either a stretch goal, a budget, or a list of things you wish would happen.”

Rumelt argues that most corporate strategic plans are simply long-term budget plans, not coherent strategic approaches. “You can call these annual exercises ‘strategic planning’ if you like, but they are not strategy. They cannot deliver what senior managers want: a pathway to substantially higher performance. To obtain higher performance, leaders must identify the critical obstacles to forward progress and then develop a coherent approach to overcoming them.”