Good Strategy Bad Strategy

Good Strategy Bad Strategy

A framework for creating and auditing strategy, distilled from Richard Rumelt's Good Strategy Bad Strategy: The Difference and Why It Matters. Good strategy has a simple underlying logic — an honest diagnosis of the critical challenge, a guiding policy for overcoming it, and coherent actions that carry the policy out. Use this skill to detect the four hallmarks of bad strategy and to replace goal lists and vision decks with a working kernel.

Core Principle

Strategy is coherent action backed by an honest diagnosis — not goals, vision, or wishful thinking. A goal ("20% growth") names an ambition; a strategy explains how the ambition will be achieved given the actual obstacles. Bad strategy is not the absence of strategy but an active substitute for it: buzzword fluff, refusal to name the challenge, and laundry lists of initiatives. The heart of strategy work is choice — concentrating effort and resources on the one or two pivotal objectives whose accomplishment unlocks everything else.

Scoring

Goal: 10/10. Score strategies, plans, and strategy documents by walking the eight rows of the Quick Diagnostic and counting how many pass. Report the current score and the specific changes needed to reach 10/10. The bands below name what each tier looks like; the row count keeps the rating reproducible run to run.

• 9-10 (8 rows pass): Complete kernel — honest diagnosis, choiceful guiding policy, coordinated resource-backed actions — aimed at a pivot point, with an explicit list of what will not be done
• 7-8 (6-7 pass): Kernel present but one element weak: thin diagnosis, a policy that rules little out, or actions not yet coordinated and funded
• 5-6 (4-5 pass): The challenge is named, but the plan is a list of independent initiatives and some goals masquerade as strategy
• 3-4 (2-3 pass): Mostly goals, targets, and vision statements; no diagnosis; fluff in key passages; nothing ruled out
• 0-2 (0-1 pass): Pure bad strategy — buzzword fluff, dog's-dinner objective lists, denial of the real challenge

Framework

1. The Kernel of Good Strategy

Core concept: Every good strategy shares the same structure: a diagnosis that defines and simplifies the critical challenge, a guiding policy — the overall approach chosen to overcome the diagnosed obstacles — and coherent actions: coordinated, resource-backed steps that carry out the policy. A document missing any of the three is not yet a strategy.

Why it works: A diagnosis replaces the overwhelming complexity of reality with a simpler story that highlights what is critical, often by analogy to a known pattern. The guiding policy channels effort by ruling out vast realms of possible action — like guardrails, it directs without dictating every move. Coherent actions turn intent into coordinated force; most plans fail by jumping straight from ambition to a list of independent initiatives.

Key insights:

• The diagnosis is the strategy's pivot: Gerstner reframed IBM's 1993 challenge from "mainframes are dying, break the company up" to "our advantage is integrated capability; the obstacle is internal coordination" — and everything downstream changed
• A guiding policy is not a goal or a vision — it is an approach ("ride wave X by concentrating on Y"), and a real one feels like a choice with losers
• If a competitor could paste your guiding policy into their deck unchanged, it is a platitude, not a policy
• Coherent actions reinforce one another — each step makes the others easier — and every one carries an owner, resources, and a date
• A kernel needs no mission, vision, or values preamble; it fits on one page
• Most failed "strategies" skip the diagnosis entirely — prescribing before examining

Applications: