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Richard Rumelt

25 quotes

“Changes don't come along in nice annual packages, so the need for strategy work is episodic, not necessarily annual.”
Richard Rumelt (born 1942) first seen 2008 wikiquote, CC BY-SA 4.0 source
Recorded in: Richard P. Rumelt in: "Guru Richard Rumelt," at economist.com, Dec. 26 2008.
“[ 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 (born 1942) wikiquote, CC BY-SA 4.0 source
“[In related businesses] common skill, market or resource applies to each.”
Richard Rumelt (born 1942) wikiquote, CC BY-SA 4.0 source
“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 (born 1942) wikiquote, CC BY-SA 4.0 source
“It is commonly accepted that successful performance of a firm hinges on restricting activities to cultivating a related and familiar range rather than 'bold moves into uncharted'.”
Richard Rumelt (born 1942) wikiquote, CC BY-SA 4.0 source
“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 (born 1942) wikiquote, CC BY-SA 4.0 source
“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 (born 1942) wikiquote, CC BY-SA 4.0 source
“In summary, uncertain imitability obtains shen creation of new production functions is inherently uncertain and when either causal ambiguity or property rights in unique resources impede imitation and factor mobility.”
Richard Rumelt (born 1942) wikiquote, CC BY-SA 4.0 source
“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 (born 1942) wikiquote, CC BY-SA 4.0 source
“A major advancement in the strategy field is the development of models where firm heterogeneity is an endogenous creation of economic actors.”
Richard Rumelt (born 1942) wikiquote, CC BY-SA 4.0 source
“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 (born 1942) wikiquote, CC BY-SA 4.0 source
“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 (born 1942) wikiquote, CC BY-SA 4.0 source
“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?”
Richard Rumelt (born 1942) wikiquote, CC BY-SA 4.0 source
“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?”
Richard Rumelt (born 1942) wikiquote, CC BY-SA 4.0 source
“Despite the roar of voices wanting to equate strategy with ambition, leadership, “vision,” planning, or the economic logic of competition, strategy is none of these. The core of strategy work is always the same: discovering the critical factors in a situation and designing a way of coordinating and focusing actions to deal with those factors.”
Richard Rumelt (born 1942) wikiquote, CC BY-SA 4.0 source
“The kernel of a strategy contains three elements: a diagnosis, a guiding policy, and coherent action.”
Richard Rumelt (born 1942) wikiquote, CC BY-SA 4.0 source
“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.”
Richard Rumelt (born 1942) wikiquote, CC BY-SA 4.0 source
“A leader’s most important job is creating and constantly adjusting this strategic bridge between goals and objectives.”
Richard Rumelt (born 1942) wikiquote, CC BY-SA 4.0 source
“When organizations are unable to make new strategies — when people evade the work of choosing among different paths in the future — then you get vague mom-and-apple-pie goals everyone can agree on. Such goals are direct evidence of leadership’s insufficient will or political power to make or enforce hard choices.”
Richard Rumelt (born 1942) wikiquote, CC BY-SA 4.0 source
“The kernel of strategy contains three elements:”
Richard Rumelt (born 1942) wikiquote, CC BY-SA 4.0 source
“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 (born 1942) wikiquote, CC BY-SA 4.0 source
“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 (born 1942) wikiquote, CC BY-SA 4.0 source
“In 1805, England had a problem. Napoléon had conquered big chunks of Europe and planned the invasion of England. But to cross the Channel, he needed to wrest control of the sea away from the English. Off the southwest coast of Spain, the French and Spanish combined fleet of thirty-three ships met the smaller British fleet of twenty-seven ships. The well-developed tactics of the day were for the two opposing fleets to each stay in line, firing broadsides at each other. But British admiral Lord Nelson had a strategic insight. He broke the British fleet into two columns and drove them at the Franco-Spanish fleet, hitting their line perpendicularly. The lead British ships took a great risk, but Nelson judged that the less-trained Franco-Spanish gunners would not be able to compensate for the heavy swell that day. At the end of the Battle of Trafalgar, the French and Spanish lost twenty-two ships, two-thirds of their fleet. The British lost none. Nelson was mortally wounded, becoming, in death, Britain’s greatest naval hero. Britain’s naval dominance was ensured and remained unsurpassed for a century and a half.”
Richard Rumelt (born 1942) wikiquote, CC BY-SA 4.0 source
“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 (born 1942) wikiquote, CC BY-SA 4.0 source
“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.”
Richard Rumelt (born 1942) wikiquote, CC BY-SA 4.0 source