Notes from the Book "Good Strategy Bad Strategy"

Today I will be sharing the summary of the book, “Good Strategy Bad Strategy” by Richard Rumelt which is a widely respected book that explores the essence of strategy, clearly distinguishing between effective (good) strategy and what the author calls “bad strategy,” which is often mistaken for real strategic thinking.

Most organizations claim to have a strategy, but many of these “strategies” are really just aspirations, buzzwords, or vague goals. Good strategy is clear, focused, and grounded in realism, while bad strategy avoids tough choices and lacks coherence.

Part 1: Good and Bad Strategy

Bad Strategy

Bad straegy is long on goals and short on policies.

• Fluff: Buzzwords and vague statements masquerading as strategy.
• Failure to face the problem: Avoiding the real challenges and pretending everything is fine.
• Mistaking goals for strategy: Saying “we want to grow 20%” is a goal, not a strategy.
• Bad strategic objectives: Including too many unrelated goals or setting targets without concrete means.

Good Strategy

In a good strategy, there are goals and actions are clear to achieve these goals. It is a coherent action backed by an argument, an effective mixture of thought and action. It has a kernel consisting of three elements:

• Diagnosis: A clear-eyed definition of the challenge.
• Guiding Policy: A broad approach for dealing with the challenge.
• Coherent Actions: Coordinated steps to carry out the policy.

Example: In WWII, Churchill’s strategy of “Europe First” was a guiding policy that led to coherent actions prioritizing the European theatre.

 

 

Part 2: Sources of Power (Leverage for Good Strategy)

Rumelt introduces “sources of power”, which can give strategy leverage:

• Leverage: Concentrating efforts where they will make the biggest difference.
• Proximate Objectives: Achievable goals that move things forward.
• Chain-link Systems: Understanding how interconnected parts of an organization affect each other. The weakest link will break all system.
• Design: Strategy as design—intentionally crafted to fit the problem.
• Focus: Concentration of resources for high impact.
• Growth: Recognizing patterns and engines of growth.
• Advantage: Identifying and strengthening unique capabilities.
• Dynamics: Understanding industry and technological change.
• Inertia and Entropy: Overcoming internal resistance and organizational decay.

Part 3: Thinking Like a Strategist

Good strategy is at the end about what will work, what does not work and why. It is an hypothesis which should be validated by actions.

• Thinking Strategically involves creative insight, judgment and choosing where to concentrate effort.
• Strategy requires willingness to say no and focus on what’s important, rather than trying to please everyone.
• Leaders must be able to diagnose situations deeply and realistically, avoiding wishful thinking.

Key Takeaways

1. Good strategy is not a long list of aspirations but a thoughtful response to a specific challenge.
2. Strategy is about making choices, often difficult ones.
3. A good strategy focuses energy and resources on a critical objective that can break a bottleneck or create advantage.
4. Organizations fail strategically not from a lack of vision, but from a lack of coherent action.