Good Strategy, Bad Strategy by Richard Rumelt Summary

Good Strategy Bad Strategy dismantles misconceptions about strategic planning, arguing that effective strategy requires diagnosing core challenges, crafting guiding policies, and taking coherent action. Rumelt contrasts this with “bad strategy,” which he defines as vague goals, fluff-filled buzzwords, and failure to address critical obstacles. The book provides frameworks like the “kernel” (diagnosis, guiding policy, actions) and emphasizes focusing effort on pivotal issues (“the crux”).

Leaders, entrepreneurs, and strategists seeking actionable methods to cut through complexity will benefit most. It’s particularly relevant for those tired of generic goal-setting and eager to learn how to prioritize resources, identify leverage points, and align teams. The book also helps consultants and educators teaching strategic thinking.

Yes—it’s widely praised for its clarity and practicality. Unlike abstract strategy models, Rumelt offers tools like the “kernel” framework and real-world examples (e.g., Apple’s turnaround). Readers call it a “masterclass in cutting through noise,” though some note its dense academic tone.

A good strategy has three elements:

• Diagnosis: Identifying the central challenge (e.g., market shifts, internal inefficiencies).
• Guiding Policy: A clear approach to overcoming the challenge (e.g., focusing innovation on key technologies).
• Coherent Actions: Specific steps to execute the policy, like reallocating resources or restructuring teams.

Rumelt highlights four flaws:

• Fluff: Jargon-heavy language masking unclear thinking.
• Failure to Define the Challenge: Goals without addressing root causes (e.g., “double revenue” without a plan).
• Mistaking Goals for Strategy: Aspirations like “be number one” without actionable steps.
• Unrealistic Objectives: Initiatives that ignore resource constraints or market realities.

The “crux” is the hardest part of a strategic challenge that, if solved, unlocks disproportionate progress. For example, Netflix’s crux was shifting from DVD rentals to streaming despite short-term revenue risks. Rumelt advises focusing 80% of effort here rather than spreading resources thinly.

The kernel comprises:

1. Diagnosis: Clarifying the problem (e.g., declining customer retention).
2. Guiding Policy: A principle to address it (e.g., improving post-purchase support).
3. Coherent Actions: Implementing solutions like 24/7 chat support and loyalty programs.

He emphasizes building coalitions early, using data to validate the diagnosis, and piloting actions in low-risk areas. For example, a tech company might test a new product line in a niche market before full-scale rollout.

Some argue it oversimplifies organizational politics and underestimates the difficulty of aligning large teams. Others note its examples skew toward corporate contexts, with fewer insights for startups or nonprofits.

Unlike Blue Ocean Strategy (focused on innovation) or Competitive Strategy (industry analysis), Rumelt’s work prioritizes rigorous problem-solving over generic frameworks. It’s often paired with The Crux for deeper tactical guidance.

Start by writing a “strategy kernel”:

1. Diagnosis: “Our customer churn rate is 30% due to poor onboarding.”
2. Guiding Policy: “Simplify the onboarding process.”
3. Coherent Actions: Redesign tutorials, assign dedicated onboarding specialists, and track progress weekly.

• On focus: “The core of strategy is choosing what not to do.”
• On bad strategy: “Long lists of ‘priorities’ are smoke screens for a lack of clarity.”
• On power: “Strategy is the craft of building strength, not wishing for it.”