Richard Rumelt | Strategy’s strategist18 min read 17 Sep 2007, 01:45 AM IST
Richard Rumelt | Strategy’s strategist
As a mountaineer, Richard Rumelt, a professor of strategy at UCLA’s Anderson School of Management, has achieved a number of first ascents. The same holds true in Rumelt’s academic career. In 1972, he became the first person to uncover a statistical link between corporate strategy and profitability, finding that moderately diversified companies outperform more diversified ones—a discovery that has held up after more than 30 years of research. Rumelt also challenged the dominant thinking with his controversial 1991 paper, “How much does industry matter?" His study, published in the Strategic Management Journal, showed that neither industries nor corporate ownership can explain the lion’s share of the differences in profitability among business units. Being in the right industry does matter, but being good at what you do matters a lot more, no matter what industry you’re in. This study was one of the first entries in what has since become a large body of academic literature on the resource-based view of strategy.