This month, the Insight from Other Strategists feature turns from military thought to business strategy, a notoriously trickier thing to adapt to litigation. While there are certainly excellent business strategists who write knowledgeably about law-firm business strategy, it’s harder to adapt their insights to the actual practice of litigation. (At least for defense lawyers; plaintiffs’ lawyers, who are entrepreneurial to begin with, seem to make business and litigation decisions interchangeably, because the lawsuit itself is their product.) The reason for this seems to be that unlike a lawsuit or military engagement, where the competing parties are involved in an actual head-to-head encounter, business strategy operates more like a race: the competitor is definitely out there, but one makes progress by focusing on one’s own performance more than by interfering with the other side’s plans.

But just because business strategy doesn’t immediately inform litigation strategy doesn’t mean it can’t say anything useful to class-action defense lawyers. One excellent is example is a a recent book by Richard Rumelt, a professor at UCLA Anderson’s School of Management: Good Strategy/Bad Strategy: The Difference and Why It Matters.

Good Strategy/Bad Strategy is primarily a business strategy book, which as a practical matter means its second half is of more limited application to lawyers. (Examples of good business strategy aren’t quite as useful to litigators in the middle of a case.) But the first half, in which Professor Rumelt identifies the difference between a good strategy and bad one, is of immense value. Professor Rumelt begins by identifying what a bad strategy looks like, and he identifies four red flags:

  • Fluff–jargon that "create[s] the illusion of high-level thinking," and obscures the flaws or the hard choices in a given plan.
  • Failure to face the challenge–which usually manifests as an inability to define exactly what the problem is that the party is trying to solve. It’s often the result of a reluctance to make hard choices.
  • Mistaking goals for strategy–a pretty common mistake; "grow by 30%" is a goal, not a strategy. How you plan to grow by 30%; that’s a strategy.
  • Bad objectives–What’s a "bad objective?" A goal, any goal, that exists for the sake of being a goal. A good objective is a concrete, achievable goal that gets you further toward your ultimate objective. Bad objectives, on the other hand, mollify potential dissidents and then clutter to-do lists.

By contrast, Professor Rumfelt identifies "good strategy" as

coherent action backed up by an argument, an effective mixture of thought and action with a basic underlying structure I call the kernel.

(Emphasis in original.) This "kernel" has three elements:

  • Diagnosis–a succinct statement of the problem, one that gets to the meat of the issue despite the flood of complex, often conflicting data.
  • Guiding policy–this is the 30,000-foot view of the solution, the one that everyone can hold in their head easily as they come up against new permutations of the problem. This is rare, rare enough that Professor Rumelt actually states that "A good guiding policy itself can be a source of [competitive] advantage."
  • A set of coherent actions–this is what makes strategy effective, instead of just academic. And it’s hard to develop: a set of coherent actions means prioritizing, and often leaving out actions just because "they’ve always been done."

There are at least two immediate uses for this book in class-action litigation. First, and most obviously, defendants would be wise to use Professor Rumelt’s model on themselves, to make sure that their strategies are "good" ones, instead of just an incoherent, rote "oppose everything the plaintiffs do" plan. Those, far too often, lead to bad results

But second, and possibly more importantly, most plaintiffs’ lawyers are what Professor Rumelt would call "bad strategists," especially when it comes to class certification. This is not surprising, because for many of them, the fight is not over certification, but settlement. And it’s not just with the defendant, but with each other. As a result, many plaintiffs do not think through how they would actually try a certified class with much, if any, rigor. And that is one of the largest weaknesses in most class-action cases. Because most courts want to know how the class action would actually be tried, and most plaintiffs are completely unequipped to offer a coherent trial plan.

Even with the business-strategy focus, I’d heartily recommend Good Strategy/Bad Strategy to complex litigators; there’s a lot more in there of use than in this brief summary. Professor Rumelt has also begun blogging at StrategyLand, which is proving every bit as educational.