The Ultimate Guide to Good Strategy vs. Bad Strategy for Winning in Business

In today’s fast-paced business environment, having a good strategy is what sets successful companies apart from the rest. But what makes a strategy good, and why do so many companies fall into the trap of bad strategy? Richard Rumelt’s book Good Strategy/Bad Strategy lays out the differences in a way that makes it clear: strategy isn’t about complexity; it’s about focus and execution.

Let’s dive into the key lessons from Rumelt’s book and break down what truly defines a good strategy.

Bad Strategy is Vague and Ambiguous

Bad strategy often sounds like a motivational speech. It’s all about broad goals, high ambitions, and fluffy visions. But when you dig deeper, you find there’s no actionable objectives to guide progress.

As Rumelt puts it: “Like a quarterback whose only advice to teammates is ‘Let’s win,’ bad strategy lacks the focus needed to achieve success.” You’ve probably encountered this in corporate environments—endless buzzwords that sound impressive but don’t lead to real action. The danger here is that it leaves everyone in the company unclear about what needs to be done, causing effort to scatter in too many directions. A coherent strategy, on the other hand, focuses on critical issues that can have a meaningful impact.

Bad Strategy is Fluffy

Fluff in strategy is when vague statements masquerade as deep insights. For instance, take a company saying, “Our strategy is customer-centric intermediation.” This sounds impressive, but what does it really mean? It’s just fluff—dressed-up jargon designed to cover up a lack of real strategy.

Rumelt points out that bad strategies mistake goals for strategy. Just stating that you want to be “the best” or “the most innovative” isn’t enough. If you fail to address the real challenges, all you have is an empty list of desires, not a strategy.

Bad Strategies are Prescriptive

Bad strategies are often created through templates that ask for a “vision,” “mission,” and “values,” followed by a list of lofty goals. It’s an easy shortcut for executives to feel like they’ve created a strategy without doing the hard work of analyzing the true challenges. This leads to generic statements that sound good on paper but lack the rigor needed to guide real actions.

Good strategy isn’t about filling in blanks with a vision statement—it’s about making tough decisions, setting priorities, and identifying exactly where to focus efforts for maximum impact. It’s about addressing weaknesses such as the weakest link in the system and turning it into a strength.

Good Strategy is Innovative and Ambitious

A good strategy isn’t afraid to challenge the status quo. It’s about identifying and capitalizing on opportunities, focusing on the key actions that will move the needle. Rumelt emphasizes that a good strategy recognizes the real challenges and focuses efforts on overcoming them. It requires leadership to make decisions that might not always be popular, including saying “no” to things that don’t align with the strategy.

Good strategy is ambitious, but it’s not aimless. It’s targeted, focused, and coordinated action designed to deliver a punch where it counts. It also recognizes the value of strategic objectives that are both challenging and achievable.

The Kernel of Good Strategy: Diagnosis, Guiding Policy, Coherent Action

According to Rumelt, every good strategy has a core structure, which he calls the kernel. The kernel contains three elements:

• Diagnosis – The diagnosis simplifies the situation, identifying the critical issues and highlighting what needs attention.

• Guiding Policy – The guiding policy provides an overall approach for dealing with the obstacles identified in the diagnosis. It’s not a detailed action plan, but a clear direction.

• Coherent Actions – These are the specific actions and decisions that align with the guiding policy. They are designed to implement the policy and overcome the obstacles identified in the diagnosis.

The kernel provides a simple, focused framework for addressing complex challenges. By applying educated judgment, leaders can navigate obstacles with precision.

The Power of Focused Action

Leverage is the heart of a good strategy. It’s about applying focus, energy, and resources at the right moment to create the biggest impact. Good strategists find the "pivot points"—places where small changes can lead to significant results. This isn’t about spreading yourself thin; it’s about concentrating effort where it counts.

Rumelt talks about the power of anticipation and insight—knowing where to focus resources and when to strike. Strategic leverage amplifies the effect of your actions, turning small investments into big returns. This approach also aligns with operational targets that ensure your actions are consistent and goal-oriented.

Find a Proximate Objective

A good strategy also includes clear, achievable objectives—what Rumelt calls proximate objectives. These are short-term goals that are close enough to be feasible objectives, but significant enough to make a real difference. These objectives keep teams focused and motivated.

For example, President Kennedy’s goal of landing a man on the moon by the 1960s was an ambitious, yet proximate objective. It was clear, achievable with the right resources, and specific enough to guide action. Similarly, actionable objectives like improving bargaining power or producing superior products can drive a company toward long-term success.

By breaking down larger goals into smaller, attainable objectives, a good strategy provides the direction and momentum necessary for long-term success.

The Role of the Chain-Link System

In some cases, strategy is akin to a chain-link system, where the strength of the whole depends on its weakest link. A good strategy ensures that all links are reinforced and aligned with the guiding policy. This alignment prevents inefficiencies and creates a coherent response to challenges.

Take Action: Implement Good Strategy with HivePowered.Ai

Now that you’ve learned what makes a good strategy, it’s time to put these lessons into action. Whether you’re a business owner, marketer, or entrepreneur, implementing a good strategy can be the difference between success and failure. At HivePowered.Ai, we help businesses develop cutting-edge strategies with the power of AI to streamline operations, improve marketing, and create impactful, results-driven campaigns.

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