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.

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.”

- Quote: Richard Rumelt, Good Strategy/Bad Strategy

Elements of Good Strategy:  diagnosis, guiding policy, and coherent action..  From the book, 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:

1. 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.

2. A guiding policy: Essentially, this means making choices so you have a focused approach

3. Coherent Action: The word coherent is carefully chosen here; your actions should coherently reinforce your competitive advantage with a set of coordinated activities.

If you want a deeper look at what strategy is, see our post here >>