Good Strategy, Bad Strategy — Key Content & Insights

Source: Richard Rumelt, "Good Strategy Bad Strategy: The Difference and Why It Matters" (2011, Crown Business)
Author: Richard P. Rumelt, Harry and Elsa Kunin Professor of Business & Society, UCLA Anderson School of Management
Compiled by: FebrAI for Mohammad Febriyanto, July 2026

1. The Core Argument

"The core of strategy work is always the same: discovering the critical factors in a situation and designing a way of coordinating and focusing actions to deal with those factors." — Richard Rumelt

Most organizations don't have a good strategy. They confuse strategy with:

• Ambition ("We will be #1")
• Vision statements
• Goal-setting ("Revenue growth of 20%")
• Innovation for its own sake
• Inspirational leadership
• High-level decisions without follow-through
• Successful outcomes (retrospective rationalization)

Strategy is not any of these things. Strategy is about how you will achieve something — it is the difference between a diagnosis + guiding policy + coherent actions, and just a wish.

Original source: Rumelt, R.P. "Good Strategy Bad Strategy: The Difference and Why It Matters." Crown Business, 2011. ISBN: 978-0307887898.

2. The Kernel of Good Strategy

The kernel of a strategy contains three essential elements:

Good strategy is coherent action backed up by an argument, an effective mixture of thought and action with a basic underlying structure called the kernel.

Source: Rumelt, R.P. "Good Strategy Bad Strategy." Crown Business, 2011. (Cited via The Right Questions, 2020) https://kellblog.com/2020/07/11/book-review-of-good-strategy-bad-strategy-by-richard-rumelt

A good guiding policy tackles the obstacles identified in the diagnosis by creating or drawing upon sources of advantage.

Source: Kizak, E. "Book Review: Good Strategy Bad Strategy by Richard Rumelt." Medium, 2023. https://medium.com/the-innovation/book-review-good-strategy-bad-strategy-by-richard-rumelt-8f6e66fb8659

Strategy is about focus, and focus requires saying no. Good strategy concentrates effort on a few critical areas.

Source: Zaki, S. "Good Strategy Bad Strategy by Richard Rumelt." LinkedIn, 2023. https://www.linkedin.com/pulse/good-strategy-bad-richard-rumelt-shahzad-zaki-ultjf

3. What Makes Strategy Bad?

Rumelt identifies the hallmarks of bad strategy:

1. Failure to define or recognize the challenge: Bad strategy skips the diagnosis entirely. It jumps straight to goals without understanding the problem.
2. Mistaking goals for strategy: "We will grow 20%" is not a strategy. It's an objective. Strategy explains how you will achieve it.
3. Lack of coherent action: A strategy without coordinated actions is just a wish. If everyone on the team can agree on it, it's probably too vague to be a strategy.
4. Spreading effort too thin: Trying to do everything at once. "Mediocre work across a lot of objectives doesn't achieve any business result."
5. Avoiding the dead moose: Not facing the real problem head-on. Leaders avoid acknowledging the hard truth.

Bad strategy is long on goals and short on policy or action.

Source: Rumelt, R.P. "Good Strategy Bad Strategy." Crown Business, 2011. (Cited via LinkedIn summary by Zaki, S.) https://www.linkedin.com/pulse/good-strategy-bad-richard-rumelt-shahzad-zaki-ultjf

When leaders have no capability to make choice, bad strategy occurs. Bad strategy doesn't just mean lack of good strategy — it also means lack of coordinated action and negative mental attitude.

Source: Medium, "Book Review: Good Strategy Bad Strategy by Richard Rumelt," 2023. https://medium.com/the-innovation/book-review-good-strategy-bad-strategy-by-richard-rumelt-8f6e66fb8659

If everyone on the team can agree to it, I'd argue it's almost definitionally a bad strategy. In a good strategy choices are made, some areas are resourced, others are starved, and some are discontinued.

Source: The Right Questions, "Book Review of Good Strategy, Bad Strategy," 2020. https://therightquestions.co/book-review-of-a-top-book-on-strategy

4. Sources of Strategic Advantage (The 9 Powers)

Rumelt identifies nine fundamental sources of power that good strategies use to create leverage:

Concentrate your efforts on the fewer, more limited set of pivot points which generate larger payoffs. Constraints guide the need to prioritize and concentrate resources in the first place.

Source: Rumelt, R.P. "Good Strategy Bad Strategy." Crown Business, 2011. (Cited via Evans Samek, Substack) https://evansamek.substack.com/p/good-strategy-bad-strategy-by-richard

Entropy makes it necessary for leaders to constantly work on maintaining an organization's purpose, form, and methods even if there are no changes in strategy or competition.

Source: Rumelt, R.P. "Good Strategy Bad Strategy." Crown Business, 2011. (Cited via Zambrano, LinkedIn) https://www.linkedin.com/pulse/good-strategy-bad-richard-rumelt-juan-carlos-zambrano

Many investments are subject to threshold effects, where some critical level of investment is required to affect the system. This is why doing mediocre work across a lot of objectives often doesn't achieve any business result.

Source: Evans Samek, "Good Strategy Bad Strategy by Richard Rumelt," Substack. https://evansamek.substack.com/p/good-strategy-bad-strategy-by-richard

5. Why Bad Strategy is So Common (The Pathology)

Rumelt dedicates an entire chapter to why bad strategy proliferates. The root causes:

1. Ambition is mistaken for strategy: "We will disrupt everything" sounds bold but is not a strategy. Strategy requires choice and sacrifice.
2. Leadership incompetence: Many leaders cannot or will not make the hard choices that strategy requires. They want the glory of a vision without the discipline of a diagnosis.
3. Flattery and groupthink: Strategy documents get diluted by committees until every competing view is in the final draft.
4. Analysis paralysis: Endless data gathering without ever reaching a diagnosis.
5. The "innovation" myth: The tech industry's unquestioned faith in growth — VC-backed companies expected to grow as fast as possible. Rumelt argues: "Most companies don't need to be, and can't be, as big as Google, Facebook, Apple, and Amazon."

Leaders may create bad strategy by mistakenly treating strategy work as an exercise in goal setting rather than problem solving.

Source: LinkedIn, "Good Strategy Bad Strategy by Richard Rumelt" (Zambrano, J.C.) https://www.linkedin.com/pulse/good-strategy-bad-richard-rumelt-juan-carlos-zambrano

The opportunity is this: "The big 'aha' to gain sustainable competitive advantage — in other words, a significant, meaningful insight about how to win."

Source: The Right Questions, "Book Review of Good Strategy, Bad Strategy," 2020. https://therightquestions.co/book-review-of-a-top-book-on-strategy

6. Good Strategy in Practice: Key Lessons

6.1 Strategy is a hypothesis, not a decree

Since a strategy can't be proven to be right, Rumelt recommends considering a strategy a "hypothesis" that can be tested and refined over time. Leaders should listen for signals that their strategy is or is not working, and make adjustments accordingly.

Source: Zych, J. "Notes from 'Good Strategy / Bad Strategy.'" https://jlzych.com/2018/06/27/notes-from-good-strategy-bad-strategy

6.2 Coordination is a source of advantage

Coordination alone can be one of the most basic and enduring sources of advantage because a well-coordinated strategy is hard to copy.

Source: EA Forum, "Book Summary: Good Strategy, Bad Strategy by Richard Rumelt." https://forum.effectivealtruism.org/posts/xgTet5fGGsQr5G8zv/book-summary-good-strategy-bad-strategy-by-richard-rumelt

6.3 The IKEA example of coherence

IKEA's highly coordinated system — flat-pack design, self-serve, in-store restaurants, Swedish naming conventions — demonstrates how coherent actions (every choice reinforcing every other choice) create durable competitive advantage that is extremely difficult to replicate.

Source: EA Forum, "Book Summary: Good Strategy, Bad Strategy by Richard Rumelt." https://forum.effectivealtruism.org/posts/xgTet5fGGsQr5G8zv/book-summary-good-strategy-bad-strategy-by-richard-rumelt

6.4 The GM decay story (entropy in action)

General Motors had a tightly coordinated and highly successful product line under Sloan's management. Then, over subsequent decades, individual brands expanded into price points that competed with each other — destroying the coherence that made GM dominant. Entropy set in because the strategy was not carefully managed over time.

Source: Samek, "Good Strategy Bad Strategy by Richard Rumelt," Substack. https://evansamek.substack.com/p/good-strategy-bad-strategy-by-richard

7. Strategy vs Vision vs Goals

A critical distinction that Rumelt draws:

Source: Zaki, S. "Good Strategy Bad Strategy by Richard Rumelt." LinkedIn, 2023. https://www.linkedin.com/pulse/good-strategy-bad-richard-rumelt-shahzad-zaki-ultjf

8. Why Good Strategy Matters for IT Organizations

IT organizations especially need good strategy because:

• Digital transformation is not an end in itself: It's a guiding policy, and it needs a diagnosis first (what specific business problem does digital solve?)
• IT governance frameworks (COBIT, ISO/IEC 38500) provide structure but not strategy: Frameworks tell you how to govern; strategy tells you what to govern and why
• The kernel applies directly: Diagnosis (what's the IT challenge?) + Guiding Policy (what's our approach?) + Coherent Actions (which projects, tools, and teams align?)
• Entropy is real in IT: Without constant maintenance of purpose and architecture, IT systems decay into legacy spaghetti — the same way GM's product line decayed
• Leverage points in IT: A well-designed API strategy, a single coordinated data platform, or a unified identity management system can create disproportionate advantage vs. 10 point-solutions

Quote: "The first natural advantage of good strategy arises because other organizations often don't have one."

Source: LinkedIn, "Good Strategy Bad Strategy by Richard Rumelt" (Zaki, S.). https://www.linkedin.com/pulse/good-strategy-bad-richard-rumelt-shahzad-zaki-ultjf

References