Good Strategy Bad Strategy; Review

What It's About

Richard Rumelt taught strategy for decades at the University of California in Los Angeles, and he consulted for companies and governments on the side. In 2011 he wrote this book to say one thing. Most of what gets called strategy contains no strategy at all. It is a list of goals with big words stacked where the decision should be. He quotes a major retail bank whose plan said its fundamental strategy was customer-centric intermediation. Strip the words down and the bank was promising to take deposits and make loans. That is what a bank is.

Against that he sets what he calls the kernel, the working core every real strategy has. It starts with a diagnosis, a plain statement of the problem you are actually facing. From there you commit to a guiding policy, the approach you will take against that problem. The actions come last, and they have to work together instead of fighting each other for money and people. He also lists the marks of a bad strategy. Fluff is the first one. Dodging the problem is the second. The third is calling goals a strategy, and the fourth is a to-do list of objectives that solves nothing. The back half of the book covers where strategic power comes from, with focus and leverage doing the most work.

What I Think

I thought it was a pretty good book. I like the writer's voice and his delivery made sense. The man knows strategy, and this book is a clear example.

What got me was how convoluted these huge companies get with fake strategies. Layers of planning staff producing yearly documents nobody can act on. And the most famous entrepreneurs are the ones who tore those things down to a focused strategy, and that led to success. Rumelt's Apple case is the cleanest version. Steve Jobs came back in 1997 to a company a few weeks from broke, and he cut. Dozens of models went down to a handful. Whole product lines died. Asked what his long-term plan was, Jobs said he was going to wait for the next big thing. Everybody remembers the next big thing. The part worth studying is the cutting that kept the company alive long enough to catch it.

I watched the other side of this for a long time. I was active duty in the United States Air Force, and later I served as a federal civilian in the United States Space Force. Both places ran tons of fluff and dressed-up goals being called strategy. The briefings had vision statements and priority lists a page long, and nobody ever named the problem we were supposed to be solving. Rumelt spends a chapter on exactly those slides. Reading it put me right back in those conference rooms.

The delivery is what makes it land. He writes like a teacher grading real papers. He quotes an actual plan and shows you the empty spot where the decision should be. He never yells about it. He just keeps asking the same quiet question, what is the problem here, and watches the document fail to answer. After a few chapters you start asking the question yourself, and you can't stop. I ran it on every plan I could remember signing off on. Most of them failed.

What It Gets Right

The diagnosis comes first, and that ordering is the whole book. Naming your real problem is hard because it forces a choice, and every choice has a loser in the room. So organizations skip it. They write the goal instead, growth of 20 percent, excellence in service, and everyone nods because nothing was decided. Rumelt says the skip is a choice too. Bad strategy is what dodging the hard call looks like on paper. There is a whole industry of consultants and template decks selling cover for that dodge, and he names the racket plainly.

The best story in the book is about a company chairman Rumelt calls Chad Logan. Logan ran a graphics arts firm and hired Rumelt to help with strategy. His plan was called the 20/20 plan, revenue up 20 percent a year, profit margin at 20 percent. Rumelt asked what problem stood in the way and what the company would do differently to hit those numbers. Logan had no answers and wanted none. He wanted the numbers blessed and a push behind them. Rumelt explained the difference between a goal and a strategy, and Logan heard him out, and then asked him to deliver the 20/20 plan anyway. Rumelt walked away from the job. Another consultant took the check. That story tells you why so much bad strategy exists. There is always somebody willing to sell the push.

His other cases carry the argument with numbers. Wal-Mart beat Kmart while both ran the same discount stores, and Rumelt asks his students why. The answer took him years to see. Conventional wisdom said a full-line discount store needed a town of 100,000 people to survive. Sam Walton put stores in small towns anyway, because he never bet on one store. He bet on about 150 stores feeding from one distribution center, trucks and data moving between them daily. Kmart saw a competitor with worse locations. It was actually facing a network, and it never adjusted. The Desert Storm case makes the same point from the other direction. The 1991 left hook into the Iraqi flank was in the doctrine, and reporters had guessed it out loud on television. It still worked, because a real plan with focus behind it beats an opponent who spread himself everywhere.

And here is the part I care about. The kernel costs nothing. There is no license to buy and no minimum headcount. A giant with a forty-person planning department can produce fifty pages with no strategy in them, and it does, every year. A five-man shop can write one paragraph that has all three parts of the kernel in it. It's a real lesson to small firms trying to build on real strategy. Don't dodge the problems, don't fluff the solution. Focus.

What It Gets Wrong

The cases show their age. The book came out in 2011, and some of the companies he studied were already gone when it printed. Digital Equipment, a computer giant of the 1980s, had been dead for years, and the graphics-chip fight he covers ended two decades ago. The lessons still hold, but a reader in 2026 does some translating. And the back half is slower than the front. The chapters on bad strategy read quick, and the chapters on sources of power take more effort. None of that sinks the book. It just costs you a little patience in the second half.

What I'd Add

I want to put one current example next to Rumelt's old ones, because I watched it happen. The contracting side of the military has been pushing a delivery method called progressive design-build, moving away from traditional design-bid-build. In the traditional method the government finishes a design, contractors bid on it, and the low qualified bid wins. In the new method one team gets picked early and designs and builds under a single contract. The goal I kept hearing was to be more like projects downtown.

The problem they name is delay, red tape like the Federal Acquisition Regulation (FAR), the rulebook for how the government buys things. But often those regulations are what keeps the playing field level for competing contractors. Downtown firms choose their favorite contractors and stick with them. That is what building without a rulebook looks like. We all know what happens when you start dropping regulations. It opens the door for blatant abuse. The Army Corps of Engineers was talking about combining 5 huge multi-million-dollar projects into 1 award going to one prime contractor. Only a handful of giant primes can carry that kind of bonding and financing, so the field of competitors shrinks to them.

Run that through Rumelt's kernel and it fails at step one. Nobody briefed a diagnosis of why design-bid-build was failing or what the red tape actually protects. They named a goal, be like downtown, and reached for a fix that happens to serve the biggest players. That story deserves its own piece, and it will get one.

Verdict

I plan to use this book to guide me. My company is 90A, a small shop in Brevard County, Florida. I am using the diagnosis and the focus discipline right now, targeting the correct markets and building an actual strategy to execute. That is the honest test of a business book, whether the reader does anything different on Monday.

I think it's a good read for anyone interested in building a real strategy. If you run a small shop, read it before you write your next plan. Then write your problem down in plain words before you write a single goal. One page is enough. If you can't fill that page, the book already told you what you have instead of a strategy.