Good Strategy/Bad Strategy: The Difference and Why it Matters.

Good Strategy/Bad Strategy is a brilliant book by Richard Rumelt, Professor of Business & Society at UCLA Anderson.
In fact, it’s one of the best strategy books I’ve ever read.

Incredibly well researched and written, Rumelt uses a wealth of examples and stories to illustrate the differences between good strategy and bad. He details the diagnosis and actions companies should use to create powerful and successful strategies, and he specifies the ‘fluff’ companies should avoid.

Rumelt states that 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.

He introduces the concept of The Kernel for developing and implementing good strategy. The Kernel consists of three parts:

1. A diagnosis that defines the nature of the challenge and identifies certain aspects of the situation as critical.
2. A guiding policy for dealing with the challenge and overcoming the critical factors identified in the diagnosis.
3. A set of coherent actions designed and implemented to accomplish the guiding policy.

In the last part of the book ‘Thinking like a strategist’, Rumelt states that you must have a variety of mind-tools for guiding your own attention and fighting your own myopia. He offers The Kernel (diagnosis, guiding policy, coherent action), Problem-Solution, Create-Destroy and invoking your panel of virtual experts, a richer source of advice than abstract theories or frameworks.

Secondly, he argues that you must develop the ability to question your own judgement. If your reasoning cannot withstand a vigorous attack then your strategy cannot be expected to stand in the face of real competition.

Last of all, you must cultivate the habit of making and recording judgements so that you can improve.

Good strategy is unexpected.

So what constitutes bad strategy?

1. Fluff (such as slogans)
2. Failure to face the challenge
3. Mistaking goals for strategy
4. Bad strategic objectives.

Rumelt dedicates a chapter to why there is so much bad strategy and how it is derived, from template-style ‘fill in the boxes’ strategies to failure by companies or teams to make decisions or choices.

I highly recommend Good Strategy/Bad Strategy.