The Kernel of Good Strategy

The purpose of strategy is to offer a potentially achievable way of overcoming a key challenge. So what does a good strategy actually consist of? According to business professor Richard Rumelt in his book Good Strategy, Bad Strategy, a good strategy has at its essence three parts:

  • “A diagnosis that defines or explains the nature of the challenge. A good diagnosis simplifies the often overwhelming complexity of reality by identifying certain aspects of the situation as critical.
  • A guiding policy for dealing with the challenge. This is an overall approach chosen to cope with or overcome the obstacles identified in the diagnosis.
  • A set of coherent actions that are designed to carry out the guiding policy. These are steps that are coordinated with one another to work together in accomplishing the guiding policy.”

Rumelt cautions against bad strategy, which can be identified by its four hallmarks: fluff, failure to face the challenge, mistaking goals for strategy, and bad strategic objectives.