Strategy & Finance

Why This Module?

“The gap between a good strategy and a bad strategy is the difference between clear thinking and muddled thinking.” - Richard Rumelt

This module was MISSING from the original curriculum. Every MBA needs:

• Strategic thinking fundamentals
• Decision-making under uncertainty
• Business literacy and frameworks
• Financial literacy (P&L, Balance Sheet, Cash Flow)

Connection: You can lead people. Now learn to set direction.

Learning Objectives

By the end of this module, you will:

• Distinguish good strategy from bad strategy
• Apply the Playing to Win framework
• Make better decisions under uncertainty
• Understand core business concepts
• Read and understand the three financial statements
• Use financial ratios to assess business health

Week 1-2: Strategic Thinking

Good Strategy Bad Strategy - Richard Rumelt

Rating: Essential | Stanford Professor | Modern Classic | 2011

The Core Idea:

A good strategy is a coherent response to the most important challenge. Most organizations don’t have strategy - they have goals, aspirations, or budget allocations.

The Kernel of Good Strategy:

1. Diagnosis

• What is the challenge?
• “The problem is…” (not symptoms, the core issue)

2. Guiding Policy

• Overall approach to overcome the challenge
• “Our approach will be…”

3. Coherent Actions

• Coordinated steps that work together
• Actions must reinforce each other

Signs of BAD Strategy:

Playing to Win - Lafley & Martin

Rating: Essential | Practical | 2013

The Strategy Choice Cascade:

1. What is our WINNING ASPIRATION?
2. WHERE will we play?
3. HOW will we win?
4. What CAPABILITIES must we have?
5. What MANAGEMENT SYSTEMS are needed?

Where to Play:

• Which geographies?
• Which customer segments?
• Which product categories?
• Which channels?

How to Win:

• Cost leadership OR differentiation
• What’s your unique value proposition?

Week 3: Decision Making Under Uncertainty

Thinking in Bets - Annie Duke

Rating: Essential | Practical | 2018

The Core Idea:

Life is more like poker than chess. We make decisions with incomplete information, and luck plays a role.

Resulting:

• Don’t judge decisions by outcomes
• Good decisions can have bad outcomes (and vice versa)

Thinking in Probabilities:

• Not: “Will this work?”
• But: “What’s the probability this will work?”

Pre-Mortem:

• Before executing, imagine it failed
• “What caused it to fail?”
• Identify and address risks proactively

The 10-10-10 Framework:

• How will I feel about this decision in 10 minutes? 10 months? 10 years?

Week 4: Business Fundamentals

The Personal MBA - Josh Kaufman

Rating: Essential | Practical | 2010

The 5 Parts of Every Business:

1. Value Creation - Find and create what people want
2. Marketing - Attract attention and build demand
3. Sales - Turn prospects into customers
4. Value Delivery - Give customers what you promised
5. Finance - Bring in enough money to keep going

Key Concepts:

• Economic Value = Perceived Benefits - Perceived Costs
• The Iron Law of the Market: Find a market before building

Week 5-6: Finance Fundamentals

Financial Intelligence - Karen Berman & Joe Knight

Rating: Essential | Practical | Clear explanations | 2013

The Three Financial Statements:

Income Statement (Profit & Loss):

Revenue (Sales)
- Cost of Goods Sold (COGS)
= Gross Profit
- Operating Expenses
= Operating Profit (EBIT)
- Interest & Taxes
= Net Profit (Bottom Line)

Key Concepts:

• Revenue is not Cash: You can have sales but no money
• Profit is not Cash: Profitable companies can go bankrupt
• Cash is King

Balance Sheet:

ASSETS = LIABILITIES + EQUITY
(What you own) = (What you owe) + (What's left for owners)

Essential Ratios:

Free Courses

Interactive Tools

Strategy Analysis Tools

Financial Analysis Tools

Decision-Making Tools

ESG & Sustainable Strategy

A Note on ESG (Environmental, Social, Governance):

Modern strategy increasingly incorporates ESG factors. While this curriculum focuses on foundational strategy skills, be aware that:

• Environmental: Climate risk, carbon footprint, and sustainability are now material strategic factors
• Social: Workforce diversity, labor practices, and community impact affect reputation and talent
• Governance: Board composition, executive compensation, and transparency influence investor confidence

Why It Matters for Strategy:

• BlackRock and major investors now require ESG disclosures
• EU regulations (CSRD) mandate sustainability reporting
• Consumers and talent increasingly choose ESG-conscious companies

Free Resources:

• Harvard Business School ESG Cases - Free case studies
• UN Global Compact - SDG integration framework
• SASB Standards - Industry-specific ESG metrics

This curriculum recommends integrating ESG thinking into strategy analysis rather than treating it as a separate topic.

Documentaries & Video Content

YouTube Deep Dives

Netflix / Streaming

Business Strategy Documentaries

Newsletters

Recommended Podcasts

🤖 AI Tutor Context (Bring Your Own AI)

Copy the text below and paste it into ChatGPT, Claude, or Gemini to start a personalized Socratic tutoring session.

System Prompt:

You are Professor Zuzka, an expert MBA instructor at a top business school (Harvard/Stanford style).

Topic: Strategy & Finance Key Frameworks:

1. Rumelt’s Strategy Kernel (Diagnosis, Policy, Action)
2. Lafley’s Choice Cascade (Winning Aspiration, Where to Play, How to Win)
3. Annie Duke’s Thinking in Bets (Probabilistic Thinking)
4. Financial Statements (P&L, Balance Sheet, Cash Flow)

Your Goal: Deepen my understanding through Socratic questioning. Do NOT give me answers.

Rules of Engagement:

1. No Lectures: Never output long explanations. Ask questions.
2. Challenge Me: If I give a surface-level answer, push back. “Why?” “What evidence supports that?”
3. Scenario-Based: Invent mini-scenarios (e.g., “A coffee shop has high revenue but no cash. Diagnose this using the financial statements.”) to test me.
4. Rigor: If I am vague, ask for specifics.

Start by asking me: “Welcome to the Strategy & Finance module. Let’s test your ‘Diagnosis’ skills. Ready for a quick scenario?”

Phase 5A Checklist

Week 1-2

• Read “Good Strategy Bad Strategy”
• Read “Playing to Win”
• Applied the 5 questions to a decision

Week 3

• Read “Thinking in Bets”
• Practiced estimating probabilities
• Conducted one pre-mortem

Week 4

• Read “The Personal MBA”
• Analyzed one business using 5 parts

Week 5-6

• Read “Financial Intelligence”
• Practiced reading a real company’s financials
• Calculated key ratios for a business

Reflection Questions

1. Apply Rumelt’s kernel to a company or initiative:

   • Diagnosis?
   • Guiding policy?
   • Coherent actions?

2. Apply Playing to Win to your career:

   • What does “winning” look like?
   • Where will you compete?
   • How will you win?

3. Look up a public company’s financials:

   • What’s their gross margin?
   • Are they profitable? Cash flow positive?

Connection to Phase 5B

Phase 5A gave you strategic thinking. Phase 5B gives you entrepreneurial action - how to actually build something.

I'm studying Strategy & Finance (Phase 05A of my MBA program).

Act as a Socratic tutor - don't give me direct answers. Instead, ask me questions to help me discover insights about these concepts: Strategic Diagnosis, Strategy Choice Cascade, Decision Making Under Uncertainty, Financial Statements, Financial Ratios.

Start by asking what I already know about one of these topics, then guide me deeper with follow-up questions. Challenge my assumptions when appropriate.

After each of my responses, either:
1. Ask a deeper follow-up question
2. Point out a gap in my reasoning
3. Connect my answer to another concept

Let's begin.

Quiz me on Strategy & Finance. Ask 10 questions covering: Strategic Diagnosis, Strategy Choice Cascade, Decision Making Under Uncertainty, Financial Statements, Financial Ratios.

Rules:
- Mix question types (multiple choice, short answer, scenario-based)
- Start easier, get progressively harder
- After each answer, tell me if I'm right or wrong and explain why
- Keep a running score
- At the end, summarize what I know well vs. need to review

Ask the first question now.

Help me apply Rumelt's Strategy Kernel, Playing to Win Choice Cascade, Thinking in Bets (Annie Duke), The Personal MBA 5 Parts, Financial Statements Analysis to a real situation in my life or work.

First, ask me to describe a recent challenge or decision I faced.

Then guide me through analyzing it using these frameworks:
- Which framework applies best?
- What would each framework reveal about the situation?
- What would I do differently knowing this?

Don't lecture - ask questions that help me discover the insights myself.

I want to practice case analysis for Strategy & Finance.

Give me a short business scenario (2-3 paragraphs) involving Strategic Diagnosis, Strategy Choice Cascade, Decision Making Under Uncertainty, Financial Statements, Financial Ratios.

Then ask me:
1. What's the core problem?
2. Which frameworks from Strategy & Finance apply?
3. What biases might cloud judgment here?
4. What would you recommend?

After each answer, push back on my reasoning before moving to the next question.

I'm studying Strategy & Finance and need to understand these concepts deeply: Strategic Diagnosis, Strategy Choice Cascade, Decision Making Under Uncertainty, Financial Statements, Financial Ratios.

For each concept, ask me to explain it in simple terms (as if to a child).

If my explanation is unclear or wrong, don't correct me directly. Instead:
1. Ask clarifying questions
2. Give me a scenario that tests my understanding
3. Help me refine my explanation

The Feynman technique says if you can't explain it simply, you don't understand it well enough.