Bad Strategy & Good Strategy: How to Tell the Difference

Good strategy and bad strategy are always fighting each other. Sadly, it looks like good strategy loses the battle; Forbes cites less than 10% of leaders exhibit adequate strategic skills.

Richard Rumelt’s classic, Good Strategy/Bad Strategy: The Difference and Why it Matters, acts as an antidote to books with highbrow strategic fluff. This article summarizes key points form the book with frameworks and slides to help you execute the ideas. The focus is a bit more on the signs of bad strategy in an effort to help you avoid the pitfalls.

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What Does a Good Business Strategy Look Like?

Good strategy is coherent action backed up by an argument, an effective mixture of thought and action with a basic underlying structure I call the kernel. A good strategy may consist of more than the kernel, but if the kernel is absent or misshapen, then there is a serious problem.

- Richard Rumelt, Good Strategy/Bad Strategy

Similar to how Plato grappled with defining the “good,” defining what “good strategy" looks like can be problematic. Rumelt’s book offers three essential guideposts for good business strategy:

A Diagnosis

This is where you ask (similar to our OCCAM’s Razor for Strategic Thinking) the question “What’s Happening?” and break down noise and complexity by offering the critical factors of the situations.

A Guiding Policy

Coherent Action

The Three Elements of Good Strategy

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For a deeper look at what strategy is, see our article on:

Defining Business Strategy

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Good Strategy Is Simple, But Not Simplistic.

With that in mind, here's the fastest way to side-step a convoluted strategic planning process.

An Effective Strategic Planning Roadmap

We can admit there's no perfect shortcut to good strategy, BUT this is the best framework I've found that can be employed to layout strategies in a pinch. Does this slide example with Amazon meet the criteria laid out by Rumelt? Is the diagnosis, guiding policy, and coherent action evident? I believe so; that's why I think this "shortcut" can get the job done.

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If you want a framework with all the strategic bells and whistles, our GOST framework is comprehensive and what you're looking for. Check out our:

GOST Post with Video here

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The Easiest Way To Know If You Have A Real Business Strategy

We’ve all heard that “the essence of strategy is choosing what not to do.” I have a simple and easy way to apply this idea, making it a pressure test to help you spot a true strategy from a false one. You must be able to say “NO, I won’t do this” in order to have a bona fide strategy. Let me explain. If you were a hospital, you wouldn’t be able to say “No, patient safety is NOT a priority.” Every hospital has patient safety as a critical, table stakes priority. Therefore, it’s not a strategy, because it’s not differentiated from any others hospitals. ALL hospitals should have patient safety as a focus, so it doesn’t pass muster as a true strategy.

Sometimes a look at what to avoid helps strengthen your vision for what you need to do.

Examination Of What Makes A Bad Strategy

Bad strategy is not simply the absence of good strategy. It grows out of specific misconceptions and leadership dysfunctions. Once you develop the ability to detect bad strategy, you will dramatically improve your effectiveness at judging, influencing, and creating strategy.

- Richard Rumelt, Good Strategy/ Bad Strategy

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The Complete Kiln Collection

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To detect a bad strategy, look for one or more of its four major hallmarks:

Fluff

Fluff is a form of gibberish masquerading as strategic concepts or arguments. It uses “Sunday” words (words that are inflated and unnecessarily abstruse) and apparently esoteric concepts to create the illusion of high-level thinking.

Failure to Face the Challenge

Mistaking Goals for Strategy

Bad Strategic Objectives

Goals and Objectives are NOT Strategies

Here's a simple list of some signs of bad strategy:

o No focus, full of fluff

o Avoid facing brutal truths

o Does not start with question

o Is too ambitious and not executable

o Does not link to core capabilities and is not reinforced

o You can’t say NO to it

o Often focused on goals

Rumelt calls out an especially bad example of a strategy one of his clients shared: "Our strategy is customer focused disintermediation." Does it get any fluffier than that?! A strategy is not abstract orders and jargon. It's not even all about the future or where you hope to be. Strategies can, and often should be, proximate - what problems are you facing today? Have you examined and analyzed anything so you can find your strategy?

If there’s no problem, there’s no strategy.

- Strategy Kiln

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Conclusion

Don't turn to the dark side of bad strategy. Confront brutal truths with courage, but don't be the marvel super hero who thinks it's all about bold entrances and over the top action scenes.

Employ patience and deep thinking to find simple solutions to the problems you face.

Everyone's surprised when they see a real strategy, because they're scarce.

When Steve Jobs returned to Apple two months before bankruptcy, his simple strategy was to cut the Apple computer line down from 15 to just 1. Wall Street thought it spelled certain doom, but his proximate strategy was to survive. Would you have been able to make that call?

Check out the book here

About this Author:

Adam Fischer is a marketer with over ten years of experience in brand management and digital marketing. He’s challenged assumptions and taken bold moves to drive growth in roles at small businesses like Dogeared Jewelry and multi-billion-dollar companies like Nature Made Vitamins and CVS Health. His B.S. in philosophy from Northeastern University helps him ask questions that get to the heart of business issues. His M.B.A. in marketing from the Thunderbird School of Global Management at ASU helps him thinking strategically about driving brands and growth.