Product Strategy: the Guiding Policy

You’re constructing your product strategy. You know your purpose. You know how to identify bad strategy. And you know the kernel of a good strategy: start with the diagnosis, move on to the the guiding policy, and plan a set of coherent actions. Let’s continue to follow Richard Rumelt and dig into the guiding policy. Quote from Good Strategy, Bad Strategy:

“The guiding policy outlines an overall approach for overcoming the obstacles highlighted by the diagnosis. It is “guiding” because it channels action in certain directions without defining exactly what shall be done.

“A good guiding policy tackles the obstacles identified in the diagnosis by creating or drawing upon sources of advantage. Indeed, the heart of the matter in strategy is usually advantage. Just as a lever uses mechanical advantage to multiply force, strategic advantage multiplies the effectiveness of resources and/ or actions. Importantly, not all advantage is competitive.

“A guiding policy creates advantage by anticipating the actions and reactions of others, by reducing the complexity and ambiguity in the situation, by exploiting the leverage inherent in concentrating effort on a pivotal or decisive aspect of the situation, and by creating policies and actions that are coherent, each building on the other rather than canceling one another out.

“There was no way to establish that this particular guiding policy was the only good one, or the best one. But, absent a good guiding policy, there is no principle of action to follow. Without a guiding policy, Stephanie’s actions and resource allocations would probably be inconsistent and incoherent, fighting with one another and canceling one another out.”