Good Strategy / Bad Strategy

Good Strategy / Bad Strategy by Richard Rumelt is one of the most influential modern books on strategic thinking. The core takeaway is that good strategy is built on clear diagnosis, a guiding policy, and coherent actions, while bad strategy is fluff, slogans, and wishful thinking.

What the book is about

The book’s central claim is that most organizations don’t actually have a strategy — they have goals, visions, or buzzwords. Real strategy requires focus, choice, and a logical chain from problem → approach → action.

Core concepts

1. The Kernel — the structure of any good strategy

Rumelt defines a “kernel” with three parts:

Diagnosis — identifying the critical challenge.
Guiding policy — the general approach to overcome it.
Coherent actions — coordinated steps that implement the policy.

This triad is the book’s most famous contribution.

2. Bad Strategy — what goes wrong

Rumelt highlights four hallmarks of bad strategy:

Fluff (empty, high‑sounding language)
Failure to face the real challenge
Mistaking goals for strategy
Bad strategic objectives (unfocused, contradictory, or impossible)

3. Sources of Power

Good strategy creates leverage by:

Focusing on the most critical issues
Exploiting asymmetries
Understanding systems and bottlenecks
Using design thinking to align actions

Examples Rumelt uses

Steve Jobs at Apple (1997) — radical simplification of the product line.
IBM under Lou Gerstner — diagnosing fragmentation and shifting to integrated solutions.
Lehman Brothers (bad strategy) — increasing risk without mitigation.

These cases illustrate how good strategy focuses and bad strategy avoids hard choices.

Why it matters

It’s widely used in business strategy, product strategy, leadership, and organizational transformation because it gives a practical, testable framework. You can evaluate any plan by asking:

What’s the diagnosis?
What’s the guiding policy?
What coherent actions follow?
If any are missing, you don’t have a strategy — you have a slogan.