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Good Strategy Bad Strategy, in detail
Good Strategy Bad Strategy is Richard Rumelt's indictment of the strategic planning process as it is practiced in most organizations, and his articulation of what genuine strategy actually requires. Rumelt is one of the most respected strategy scholars alive, and the book is both a diagnosis of what passes for strategy and a framework for producing real strategy instead.
The core diagnosis is that most organizations produce "bad strategy" — documents and presentations that list goals, aspirations, and mission statements without ever identifying the actual challenge or how to overcome it. Bad strategy is recognizable by four hallmarks: fluff (strategic buzzwords that disguise the absence of thought), failing to face the challenge (not clearly naming the problem being solved), mistaking goals for strategy (stating desired outcomes without specifying how to achieve them), and bad strategic objectives (vague or impractical targets that can't guide action).
Rumelt's definition of good strategy is built around the "kernel": diagnosis, guiding policy, and coherent actions. The diagnosis defines the challenge — what is the specific nature of the obstacle or opportunity? The guiding policy specifies the approach to addressing the challenge, ruling out some actions and concentrating resources on others. Coherent actions are the specific steps, resource allocations, and organizational changes that implement the policy. Without all three, you don't have a strategy — you have a wish list.
The book is organized into two halves: the first diagnoses bad strategy with examples from politics, military history, and business; the second explains what makes strategy good, with case studies including Apple's return under Jobs, Nvidia's bet on graphics processors, and the US's containment strategy during the Cold War. Rumelt writes in a clear, sometimes acerbic voice — he is not gentle about strategic pretension — and the book is more intellectually ambitious than most business strategy books.
The big ideas
- 1.
Bad strategy is not the absence of strategy — it is the pretense of strategy through mission statements, goals, and buzzwords that avoid naming the actual challenge.
- 2.
The kernel of good strategy: a diagnosis (what is the nature of the challenge?), a guiding policy (what approach addresses it?), and coherent actions (what specifically will we do?).
- 3.
Diagnosis is the most undervalued element. Without a clear diagnosis of the actual problem, guiding policy and actions cannot be coherently designed.
