Richard Rumelt Quotes (25 quotes) | Quotes of famous people

Richard Rumelt: 25 quotes0 likes

Famous Richard Rumelt Quotes

“Given that background, I was interested in what Steve Jobs might say about the future of Apple. His survival strategy for Apple, for all its skill and drama, was not going to propel Apple into the future. At that moment in time, Apple had less than 4 percent of the personal computer market. The de facto standard was Windows-Intel and there seemed to be no way for Apple to do more than just hang on to a tiny niche.
In the summer of 1998, I got an opportunity to talk with Jobs again. I said, "Steve, this turnaround at Apple has been impressive. But everything we know about the PC business says that Apple cannot really push beyond a small niche position. The network effects are just too strong to upset the Wintel standard. So what are you trying to do in the longer term? What is the strategy?"”

Richard Rumelt

He did not attack my argument. He didn’t agree with it, either. He just smiled and said, "I am going to wait for the next big thing."
Source: Good Strategy Bad Strategy, 2011, p. 14; Similar story in Rumelt (2007)

“A strategy coordinates action to address a specific challenge. It is not defined by the pay grade of the person authorizing the action.”

Richard Rumelt

Source: Good Strategy Bad Strategy, 2011, p. 92

“[ Diversification strategy is] a firm’s commitment to diversity per se, together with the strengths, skills or purposes that span this diversity, shown by the way in which business activities are related one to another.”

Richard Rumelt

Source: Strategy, structure, and economic performance. (1974), p. 29

“Nelson’s challenge was that he was outnumbered. His strategy was to risk his lead ships in order to break the coherence of his enemy’s fleet. With coherence lost, he judged, the more experienced English captains would come out on top in the ensuing melee. Good strategy almost always looks this simple and obvious and does not take a thick deck of PowerPoint slides to explain. It does not pop out of some "strategic management" tool, matrix, chart, triangle, or fill-in-the-blanks scheme. Instead, a talented leader identifi es the one or two critical issues in the situation—the pivot points that can multiply the effectiveness of effort—and then focuses and concentrates action and resources on them.”

Richard Rumelt

Source: Good Strategy Bad Strategy, 2011, p. 1-2

“Prior work has shown an association between diversification strategy and profitability. This paper replicates that association using more recent and complete data and goes on to investigate the sources of the association. Theoretical arguments are advanced which predict the association which will remain once the effects of varying industry profitability are removed. Empirical tests verify this prediction and permit the discrimination between the effects of industry and diversification strategy on profitability.”

Richard Rumelt

Source: "Diversity and Profitability", 1982, p. 359; Abstract

“Changes don't come along in nice annual packages, so the need for strategy work is episodic, not necessarily annual.”

Richard Rumelt

Richard P. Rumelt in: " Guru Richard Rumelt http://www.economist.com/node/12677012," at economist.com, Dec. 26 2008.

Richard Rumelt Quotes about business

Richard Rumelt

Source: Strategy, structure, and economic performance. (1974), p. 29

“Some of the biggest changes have been in the process of generating business strategies—what I call “strategy work.” Around 1980, the received wisdom was to decentralize into business units, which would each generate a strategic plan. These plans were then amalgamated up the hierarchy, in some portfolio way, for senior management. That approach has all but disappeared, and we’ve seen a dramatic recentralization of strategy work.”

Richard Rumelt

Response to the question: "You’ve been teaching about, researching, and consulting on business and corporate strategy for 35 years. What changes have you seen in that time?"
"McKinsey Quarterly interview," 2007

“This study partitions the total variance in rate of return among FTC Line of Business reporting units into industry factors (whatever their nature), time factors, factors associated with the corporate parent, and business-specific factors. Whereas Schmalensee (1985) reported that industry factors were the strongest, corporate and market share effects being extremely weak, this study distinguishes between stable and fluctuating effects and reaches markedly different conclusions. The data reveal negligible corporate effects, small stable industry effects, and very large stable business-unit effects. These results imply that the most important sources of economic rents are business-specific; industry membership is a much less important source and corporate parentage is quite unimportant.”

Richard Rumelt

Source: "How Much Does Industry Matter?", 1991, p. 167; Abstract

“Then, in 1998, I had the chance to talk with Steve Jobs after he’d come back and turned Apple around. I was there to help Telecom Italia try to do a deal with Apple, but after that business was completed I couldn’t help asking a question. “Steve,” I said, “this turnaround at Apple has been impressive. But everything we know about the personal-computer business says that Apple will always have a small niche position. The network externalities are just too strong to upset the de facto “Wintel” standard. So what are you trying to do? What’s the longer-term strategy?”
He didn’t agree or disagree with my assessment of the market. He just smiled and said, “I am going to wait for the next big thing.””

Richard Rumelt

About strategy starts with identifying changes, and companies taking position (2)
"McKinsey Quarterly interview," 2007

“I consider myself a mainstream researcher in the field of business policy, and the ideas I want to describe in this paper concern the foundations of a theory of business strategy that is rooted in economics. But is such a paper, whatever its merits, really appropriate at a conference entitled 'Non-traditional Approaches to Policy Research'? Surprisingly, it is. The use of economic theory to model and explicate business strategy, as it is understood within the field of business policy, is distinctly non-traditional.”

Richard Rumelt

Source: "Towards a strategic theory of the firm." 1997, p. 131; Lead paragraph

Richard Rumelt Quotes

“Good strategy requires leaders who are willing and able to say no to a wide variety of actions and interests. Strategy is at least as much about what an organization does not do as it is about what it does.”

Richard Rumelt

Source: Good Strategy Bad Strategy, 2011, p. 20
Context: Having conflicting goals, dedicating resources to unconnected targets, and accommodating incompatible interests are the luxuries of the rich and powerful, but they make for bad strategy. Despite this, most organizations will not create focused strategies. Instead, they will generate laundry lists of desirable outcomes and, at the same time, ignore the need for genuine competence in coordinating and focusing their resources. Good strategy requires leaders who are willing and able to say no to a wide variety of actions and interests. Strategy is at least as much about what an organization does not do as it is about what it does.

“For Schumpeter the most important firms are those that serve as the vehicles for action of the real drivers of the system — the innovating entrepreneurs.”

Richard Rumelt

Source: "Towards a strategic theory of the firm." 1997, p. 134

“The enhanced ability to obtain external funding and … capacity to deploy capital internally to the most promising of a wide range of divisional ventures.”

Richard Rumelt

Source: Strategy, structure, and economic performance. (1974), p. 119

“Back in the mid-1990s I was researching strategy in the global electronics industry. I interviewed 20 to 30 executives, CEOs, and division managers and asked fairly simple questions. Which company was the leader in their market? How did that company become the leader? What’s their own company’s strategy?
I saw an interesting pattern. Most executives easily explained how companies became market leaders: Some sort of window of opportunity opened, and the leader was the company that was the first to successfully jump through that window. Not exactly the first mover but the first to get it right.
But when I asked these same executives about their own strategies, I heard a lot about doorknob polishing. They were doing 360-degree feedback, forming alliances, outsourcing, cutting costs, and so on. None of them even mentioned taking a good position quickly when the industry changes.”

Richard Rumelt

About strategy starts with identifying changes, and companies taking position (1)
"McKinsey Quarterly interview," 2007

“Ambiguity as to what factors are responsible for superior (or inferior) performance acts as a powerful block on both imitation and factor mobility.”

Richard Rumelt

Source: "Uncertain imitability", 1982, p. 420