name: good-strategy-bad-strategy
description: "Richard Rumelt's framework for crafting and evaluating strategy through diagnosis, guiding policy, and coherent actions."

dimensions:
domain: [strategy, business, problem-solving, leadership]
phase: [strategy-evaluation, diagnosis, strategy-formulation, problem-solving]
problem_type: [strategic-clarity, bad-strategy-detection, challenge-diagnosis, action-coherence]

contexts:
- situation: "evaluating an existing strategy"
use_when: "testing for hallmarks of bad strategy (fluff, no diagnosis, goals as strategy)"
- situation: "facing a complex challenge"
use_when: "need to diagnose the crux before choosing a response"
- situation: "strategy feels like fluff"
use_when: "cutting through jargon to find substance"
- situation: "actions feel scattered"
use_when: "checking if actions are coherent and mutually reinforcing"
- situation: "goals stated without path"
use_when: "distinguishing real strategy from aspirations"

combines_with:
- playing-to-win # complementary strategy frameworks
- thinking-fast-and-slow # avoiding cognitive biases in diagnosis
- zero-to-one # identifying the crux of what to build
- hard-thing-about-hard-things # diagnosing crisis situations

contrast_with:
- skill: playing-to-win
distinction: "Rumelt focuses on KERNEL (diagnosis, policy, actions); Playing to Win on CASCADE of choices"
- skill: lean-startup
distinction: "Good Strategy is DIAGNOSIS and COHERENCE; Lean Startup is VALIDATION and ITERATION"

Good Strategy Bad Strategy Framework

The Kernel of Good Strategy

Good strategy has a basic underlying structure - the kernel - with three elements:

┌─────────────────────────────────────────────────────────┐
│  1. DIAGNOSIS                                           │
│     What's going on? What's the challenge?              │
├─────────────────────────────────────────────────────────┤
│  2. GUIDING POLICY                                      │
│     Overall approach to overcome the obstacle           │
├─────────────────────────────────────────────────────────┤
│  3. COHERENT ACTIONS                                    │
│     Coordinated steps that carry out the policy         │
└─────────────────────────────────────────────────────────┘

Strategy is NOT goals, ambition, or vision. Strategy is a coherent response to a challenge.

1. Diagnosis

The diagnosis simplifies reality by identifying the critical aspects of the situation. It defines the challenge.

Good diagnosis:
- Names the obstacle or challenge clearly
- Simplifies complex reality into actionable insight
- Often reframes the problem in a revealing way

Example: "Our problem isn't execution - it's that we're organized around products while customers buy solutions."

Questions:
- What's really going on here?
- What's the critical challenge we face?
- What pattern explains our situation?

2. Guiding Policy

The guiding policy is the overall approach chosen to cope with or overcome the obstacle. It channels action without fully defining it.

Good guiding policy:
- Creates advantage by anticipating actions of others
- Reduces complexity by ruling out many possible actions
- Provides direction while allowing adaptation

Example: "We will focus exclusively on the premium segment, refusing to compete on price."

The guiding policy is NOT a goal. "Be #1" is a goal. "Concentrate on high-margin niches where our service advantage matters" is a guiding policy.

3. Coherent Actions

Actions are coordinated and mutually reinforcing steps that implement the guiding policy.

Good coherent actions:
- Are coordinated - they work together
- Build on each other - not a random list
- Focus resources - concentrate rather than spread thin
- Are feasible - within organizational capability

Incoherent actions undermine each other or spread resources too thin.

The Four Hallmarks of Bad Strategy

1. Fluff

Superficial restatement of the obvious, using inflated words and concepts to create the illusion of high-level thinking.

Red flags: "Leverage synergies", "customer-centric transformation", "best-in-class solutions"

Test: Remove jargon. Is there any content left?

2. Failure to Face the Challenge

When the challenge isn't named, the strategy can't be evaluated or refined.

Red flags: Strategy documents that never state what problem they're solving.

Test: Can you state the challenge in one clear sentence?

3. Mistaking Goals for Strategy

Stating desired outcomes without addressing how to get there.

Bad: "Our strategy is to grow revenue 20%"
Good: "We'll grow by acquiring the #3 player and cross-selling our service contracts to their customer base"

Test: Does this explain how, not just what?

4. Bad Strategic Objectives

Objectives that are either too vague (fail to address critical issues) or too impossible (blue sky).

Bad objectives:
- "Improve customer satisfaction" (vague)
- "Become the global leader in 18 months" (impossible)

Good objectives are proximate - close enough to be feasible, concrete enough to be actionable.

Proximate Objectives

A proximate objective names a target that is achievable and will make a difference.

Far: "Solve climate change"
Proximate: "Reduce our facility emissions 40% in 3 years by switching to renewable power"

Characteristics:
- Close enough to be feasible
- Concrete enough to be evaluated
- Challenging enough to be meaningful
- Resolves ambiguity about what to do next

Sources of Power (Competitive Advantage)

Good strategy leverages sources of power - asymmetries that can be exploited:

Strategy as Problem-Solving

Rumelt's approach to crafting strategy:

1. List the most important challenges facing the organization
2. Prioritize - which is the crux?
3. Diagnose - what's causing this?
4. Generate options - what are possible guiding policies?
5. Evaluate - which approach best leverages our strengths against the challenge?
6. Define coherent actions - what specific steps carry out the policy?

Evaluation Checklist

Testing for Good Strategy:
- [ ] Diagnosis names a specific, critical challenge
- [ ] Guiding policy addresses the diagnosis directly
- [ ] Actions are coordinated and reinforce each other
- [ ] Resources are concentrated, not spread thin
- [ ] Objectives are proximate (feasible and concrete)
- [ ] The strategy creates or exploits an asymmetry

Red Flags for Bad Strategy:
- [ ] Heavy jargon with little substance (fluff)
- [ ] No clear statement of the challenge
- [ ] Goals stated without a path to achieve them
- [ ] Long list of priorities (everything is priority = nothing is)
- [ ] Actions that pull in different directions
- [ ] "Strategy" is just budgeting or planning relabeled

Quick Diagnostic Questions

When someone presents a "strategy," ask:
1. What is the challenge this addresses?
2. What is being ruled out by this approach?
3. Why will this work when alternatives won't?
4. What's the first coherent action?
5. How do the actions reinforce each other?

If they can't answer these clearly, it's probably not a strategy.