Good Strategy Bad Strategy by Richard Rumelt
The Big Idea: A good strategy is a clear diagnosis of a critical challenge, a guiding policy to address it, and a set of coherent actions—no fluff, no wishful thinking.
Introduction: Overwhelming Obstacles
Key Concepts: Strategy is about confronting a real obstacle, not grand visions or feel‑good slogans.
Example: Strategic challenge definition is vital; many organizations skip it and jump to goals.
Takeaway: Always start by asking: “What is the real obstacle?” Then design your strategy to address it directly.
Chapter 1: Good Strategy Is Unexpected
Key Concepts: The best strategies focus tightly and often surprise competitors.
Example: Jobs at Apple simplified product lines and waited for a true breakthrough (iPhone).
Takeaway: Surprise through focus beats breadth every time.
Chapter 2: Discovering Power
Key Concepts: Strategic power comes from asymmetry – a strength others don’t see or can’t copy.
Example: Wal‑Mart viewed stores as a network, not standalone outlets; that reframing disrupted retail norms.
Takeaway: Look for scale, timing, or framing advantages your rivals ignore. Ask: “Where do we have an unfair advantage?”
Chapter 3: Bad Strategy
Key Concepts: Bad strategies include “fluff,” no diagnosis, mistaking goals for strategy, and unfocused objectives.
Examples: Buzzwords like “customer‑centric intermediation”; long laundry lists of unconnected initiatives.
Takeaway: Cut fluff. Get specific. Name the obstacle.
Chapter 4: Why So Much Bad Strategy?
Key Concepts: Leaders avoid making hard calls, so they settle for bland consensus.
Example: Universal buy‑in often signals superficial consensus, not genuine strategic clarity.
Takeaway: Say “no” more often. Real strategy excludes options.
Chapter 5: The Kernel of Good Strategy
Key Concepts: All good strategies contain three parts: Diagnosis, Guiding Policy, Coherent Actions.
Examples: In medicine, diagnose the disease, set therapeutic policy, then prescribe treatments.
Takeaway: Good strategy = clear diagnosis, clear approach, clear action.
Chapter 6: Using Leverage
Key Concepts: Strategy multiplies impact by applying pressure where it matters most.
Example: Hannibal at Cannae used a focused troop movement to disrupt the larger Roman army.
Takeaway: Find leverage points. Focus resources there.
Chapter 7: Proximate Objectives
Key Concepts: Strategy fails when goals are too far out.
Example: JFK’s moon landing goal was ambitious, but technically clear and bounded.
Takeaway: Set reachable goals that build momentum.
Chapter 8: Chain‑link Systems
Key Concepts: A system is only as strong as its weakest link.
Example: GM’s failure to improve quality was rooted in broken processes across the system.
Takeaway: Fix the bottleneck to optimize the whole.
Chapter 9: Using Design
Key Concepts: Strategy is a system, not a checklist.
Example: IKEA’s self-service model, flat-pack logistics, and showroom design all support low prices.
Takeaway: Build interconnected parts, not isolated initiatives.
Chapter 10: Focus
Key Concepts: Focus creates force.
Example: Nvidia bet everything on GPU tech when others zigged toward general computing.
Takeaway: Eliminate distractions. Drive deep into one direction.
Chapter 11: Growth
Key Concepts: Growth is not a strategy. It’s a result of strategic strength.
Example: Apple grew by creating irresistible products through focus and integration—not by targeting growth.
Takeaway: Don’t pursue growth. Pursue the strategic advantage that generates growth.
Chapter 12: Using Advantage
Key Concepts: Exploit different kinds of advantage: scale, reputation, design, reframing.
Example: US military pushed technological asymmetries to force Soviet defense reallocation.
Takeaway: Exploit what others can’t replicate.
Chapter 13: Using Dynamics
Key Concepts: Strategy must anticipate and adapt.
Example: Microsoft shifted from desktop to cloud after recognizing long-term infrastructure trends.
Takeaway: Think like a chess player – two moves ahead.
Chapter 14: Inertia and Entropy
Key Concepts: Organizations drift off course.
Example: IBM nearly collapsed before a painful pivot from hardware to services.
Takeaway: Periodically refocus. Cut dead weight.
Chapter 15: Putting It Together
Key Concepts: A complete strategy weaves together kernel structure, leverage, and design.
Takeaway: Synthesize your diagnosis, policy, and actions into a unified, adaptable design. Strategy is architecture, not a task list.
Chapter 16: The Science of Strategy
Key Concepts: Strategy is a testable hypothesis, not a mission statement.
Takeaway: Don’t bet the company on vision alone. Build your strategy around assumptions you can test and adjust.
Chapter 17: Using Your Head
Key Concepts: Strategic thinking is about structured problem-solving, not gut instinct.
Takeaway: Thinking clearly beats thinking fast. Avoid hunch-based strategy. Use frameworks, analogy, and disciplined thinking.
Chapter 18: Keeping Your Head
Key Concepts: Strategy dies when ego, bias, or groupthink take over.
Example: Global Crossing. 2008 financial crisis.
Takeaway: Actively seek dissenting views and uncomfortable truths. Avoid hype-driven fads. Stay humble.