The first business book I read in 2024 is a ‘good’ one, pun intended.
The book, Good Strategy Bad Strategy by Richard Rumelt gives a clear definition on what separates the two.
I’ve pulled the meat of it below, mostly to give myself a quick reference point in the future when formulating strategy:
Good Strategy
- Diagnoses the Problem
- Clearly identifies the critical challenges or opportunities.
- Focuses on the root causes of the problem rather than symptoms.
- Defines a Guiding Policy
- Establishes a coherent approach or overarching principle to tackle the diagnosed issue.
- Avoids vague goals and sets a clear direction.
- Outlines a Set of Coherent Actions
• Provides specific, coordinated actions or steps that align with the guiding policy.
• Each action reinforces the other to create momentum toward achieving the objectives.
Bad Strategy
- Lacks Focus
- Attempts to pursue too many goals at once or sets objectives that are disconnected.
- Often consists of wishful thinking without a clear plan.
- Confuses Strategy with Goals
- Treats ambitious targets or motivational slogans as strategy (e.g., “Be number one in our market”).
- Fails to address how those goals will be achieved.
- Avoids Facing Challenges
- Avoids tough decisions or ignores the existence of obstacles.
- Resorts to vague buzzwords and platitudes rather than confronting real problems.
In summary, a good strategy requires critical thinking, a clear understanding of the challenge, and well-aligned actions, while bad strategy often hides behind empty statements, ignores obstacles, and lacks coherence.
This is a broad view of strategy. In action, there are tactical and operational levers that are pulled, such as effectively sequencing the right priorities, measuring output, and iterating as new data is presented.