Good Strategy Bad Strategy, Richard Rumelt, 2017

In Good Strategy Bad Strategy, Richard Rumelt argues that strategy is discovering the critical factors in a situation and designing a way of coordinating and focusing actions to deal with those factors. Good strategy has a kernel with three elements: diagnosis (defining the nature of the challenge), guiding policy (overall approach to cope with obstacles), and coherent action (coordinated steps). Bad strategy is long on goals and short on policy and action.

Top 3 Learnings:

1. The kernel of good strategy: diagnosis, guiding policy, coherent action. A good diagnosis simplifies overwhelming complexity by identifying critical aspects. A guiding policy is an overall approach chosen to cope with obstacles—it should provide advantage relative to the diagnosis, anticipate actions and reactions, reduce complexity, and leverage effort. Coherent actions are coordinated steps designed to carry out the guiding policy. Good strategy is coherent action backed up by an argument.

2. Strategy is focus and choice—tradeoffs are essential. Good strategy emphasizes focus over compromise. It’s a very short list of the most important things. Underperformance is a result—the true challenges are the reasons for underperformance. If you don’t know the obstacles, you don’t have strategy, just stretch goals. Strategy is a lever that amplifies. Always focus instead of spreading—the main challenge is aligning everyone against their own interests.

3. Use mental models to check your strategies. The kernel: better understand problems in workshops. Problem-solution: what problem are we actually solving for the customer? Create-destroy: virtual expert panel in your head to shoot down ideas or find new ones. Practice judgment: always question assumptions. Good strategy can’t be calculated—in a changing world, good strategy has an entrepreneurial mindset. Strategy is a hypothesis, implementation is an experiment.

Why and when to read it:

Read this when you need to develop or evaluate strategy for your organization, team, or product. It’s especially valuable for leaders, strategists, and anyone responsible for making strategic decisions. The book provides a clear framework for distinguishing good strategy from bad, making it perfect for teams that struggle with vague goals, lack of focus, or strategy that doesn’t translate into action.