EP 40 Good Strategy, Bad Strategy: How to Think Clearly and Win Big

Episode Summary

In this episode of The Business Book Club, we explore Good Strategy Bad Strategy by Richard Rumelt—a modern classic that cuts through the noise around strategic thinking. In a world where every lofty goal or buzzword-filled plan is labeled “strategy,” Rumelt lays out what real strategy is—and what it isn’t.

We unpack the powerful kernel framework at the heart of effective strategy: diagnosis, guiding policy, and coherent action. We also dive into the warning signs of bad strategy, from fluffy language to vague goals that masquerade as plans. Whether you're leading a company, launching a product, or navigating a complex challenge, this episode gives you practical tools to sharpen your strategic edge and avoid common traps.

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Key Concepts Covered

The Kernel of Good Strategy

✅ Diagnosis – Identify the real problem. Go beyond facts to uncover the core obstacle.
✅ Guiding Policy – Define a clear, general approach to address that obstacle.
✅ Coherent Action – Design specific, aligned actions that implement the guiding policy in a focused way.

Strategy Is a Hypothesis

✅ Strategy isn’t a static plan—it’s a hypothesis about what will work.
✅ You must test, observe, and adjust based on results.

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Four Signs of Bad Strategy

1. Fluff – Buzzwords without substance.

2. Failure to Face the Challenge – Avoiding the real problem.

3. Mistaking Goals for Strategy – Ambition ≠ plan.

4. Bad Strategic Objectives – A messy list of unrelated or unrealistic actions.

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Sources of Strategic Power

✅ Leverage – Focused effort in the right place yields outsize results.
✅ Proximate Objectives – Set achievable near-term goals to build momentum.
✅ Chain-Link Systems – Identify and fix the weakest link in your system.
✅ Focus – Concentrate your energy on fewer, high-impact areas.
✅ Advantage – Build and protect value others can’t easily copy.
✅ Waves of Change – Anticipate and position yourself to ride major shifts.
✅ Anticipation – Predict how rivals or markets will respond—and act ahead.

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Actionable Takeaways

✅ Use the kernel framework to assess or build your strategy:
– What’s the real challenge?
– What’s your guiding approach?
– Are your actions coherent and aligned?

✅ Identify signs of bad strategy in your current plans. Be honest.
✅ Pinpoint your sources of power—leverage, focus, or differentiation—and invest in them.
✅ Practice judgment as a skill. Question assumptions. Avoid bias. Focus on what truly matters.

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Top Quotes

📌 “A good strategy honestly acknowledges the challenges being faced and provides an approach to overcoming them.”
📌 “The kernel of strategy contains a diagnosis, a guiding policy, and coherent actions.”
📌 “Bad strategy is not simply the absence of good strategy—it’s an active force in itself.”
📌 “A long list of things to do, often mislabeled ‘objectives’ or ‘strategies,’ is not a strategy. It is just a list.”

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Resources Mentioned

📖 Good Strategy Bad Strategy by Richard Rumelt – [Get the book here]

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Next Steps

Want to sharpen your strategy and cut through the noise? Start by applying the kernel: define your diagnosis, pick a clear guiding policy, and align your actions to support it. Strategy isn’t about saying more—it’s about thinking better.

If you enjoyed this deep dive, subscribe to The Business Book Club for more practical insights from the most powerful books in business.

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