Lessons from "Good Strategy Bad Strategy: The Difference and Why It Matters" by Richard Rumelt

 Is your strategy a sharpened blade or just a dull stick? Because most people, most businesses, most entire industries are swinging wildly—chasing visions, setting lofty targets, rallying behind grandiose mission statements—without ever realizing they don’t have a strategy at all.

Think about it. If strategy is the art of winning, then why do so many companies, so many leaders, and so many individuals—armed with MBAs, billion-dollar budgets, and endless consultants—still fail spectacularly?

Because what they call "strategy" is often just a collection of buzzwords wrapped around a wish. A mirage of progress that feels smart, sounds impressive, but accomplishes nothing.

Richard Rumelt’s Good Strategy Bad Strategy is shocking for one reason: it exposes just how little real strategy exists in the world. He lays out why most so-called strategies are nothing more than empty slogans—like a general marching soldiers into battle with a motivational poster instead of a battle plan. It’s not just a book—it’s a dismantling of the corporate delusion that saying something makes it so.

Consider this: in 2008, General Motors was on the verge of collapse. A company that had dominated the auto industry for decades, brought to its knees—not by lack of ambition, not by insufficient effort, not by external forces beyond its control, but by the absence of a clear, decisive strategy. It had a sprawling empire of brands—Pontiac, Saturn, Hummer—each competing for attention, each demanding resources, each drifting without direction. GM’s executives insisted they had a plan. They talked about "synergies," "market penetration," and "expanding consumer touchpoints." And yet, the reality? A chaotic mess, hemorrhaging billions, failing to recognize the fundamental problem: they were trying to be everything to everyone, which meant they stood for nothing.

Then there’s NASA. Once a beacon of human achievement, a symbol of boundless ambition. By the 1990s, however, it had become bloated, bureaucratic, sluggish—stuck in endless cycles of budget overruns and half-executed projects. Meanwhile, a startup with a fraction of the resources, led by a man with a singular vision, took a different approach. Instead of scattering efforts across half a dozen different objectives, SpaceX focused on one thing: making rockets reusable. A precise diagnosis, a clear guiding policy, and a series of coherent actions. That’s strategy.

Strategy isn’t about setting goals. It’s about identifying the obstacle in your way, creating a guiding approach to overcome it, and aligning every action with that plan. It’s about using leverage—finding the pressure points that will create the biggest impact.

The truth is, bad strategy is everywhere. In governments, in businesses, in personal lives. And the cost of bad strategy? It’s wasted time. Wasted money. Wasted potential. It’s the difference between dominance and irrelevance.

So the question isn’t whether you have a strategy. The real question is—do you have a good one? Or are you just swinging a dull stick, hoping it somehow cuts?

The Problem with Bad Strategy

They call it strategy. They present it in PowerPoint slides, wrap it in buzzwords, and nod at each other in meetings as if something profound has just been said. But here’s the brutal truth—most “strategies” are nothing more than wishful thinking dressed up as leadership.

Consider this: a struggling company declares, “Our strategy is to become the industry leader in innovation!” or “We will achieve 10x growth by 2028!” It sounds bold. Inspiring, even. But look closer—there’s no diagnosis, no coherent plan, no understanding of the challenge ahead. It’s not strategy. It’s just a dream with a deadline.

Richard Rumelt calls this “bad strategy,” and the most dangerous thing about it? It feels like progress. Leaders walk away from these meetings feeling accomplished, as if setting a goal is the same as creating a path to get there. It’s like a ship captain standing at the helm, pointing at the horizon, and declaring, “We shall reach that land!” without checking if the ship has enough fuel, if the currents are against them, or if there’s even land in that direction.

Let’s talk about one of the most common—and most laughable—forms of bad strategy: fluff.

Fluff is the illusion of insight. It’s when companies take an obvious fact, wrap it in jargon, and pretend it’s strategic wisdom. Imagine a fast-food chain saying, “Our strategy is to leverage core competencies to drive synergies in the quick-service restaurant sector.”

Translation? “We sell burgers.”

It’s meaningless, but it sounds important. And that’s the problem—fluff creates the illusion of action while concealing the absence of real thought. Companies love it because it makes them feel sophisticated. Investors eat it up because it sounds impressive. But the market? The market doesn’t care.

Bad strategy is often just avoidance—avoidance of hard truths, avoidance of real problems. And without an honest diagnosis of the challenge, no amount of vision, ambition, or motivation will matter.

Take Yahoo in the early 2000s. Once a dominant force on the internet, it had every opportunity to shape the future. But instead of defining its real challenge—competing against an increasingly powerful Google—it spread itself thin, acquiring companies with no clear direction. Flickr, Tumblr, even a potential acquisition of Facebook that it fumbled. It had no guiding policy, no coherent action plan—just a series of disjointed moves that led to irrelevance.

Meanwhile, its competitor? Google had a clear strategy: organize the world’s information. It identified its core advantage—search—and built everything around that. No fluff. No distractions. Just ruthless focus.

One of the deadliest mistakes in business—and in life—is confusing a goal with a strategy. A company says, “We will increase revenue by 20%!” or “We will expand into new markets!” Great. But how?

Look at the difference between two tech giants in the smartphone race. One, Nokia, dominated the market for years. It had goals. It had resources. But when Apple launched the iPhone, Nokia’s leadership didn’t diagnose the real challenge—it wasn’t just a new phone, it was an entirely new ecosystem. Nokia responded with more models, more features, more attempts to push forward with what had worked before. Apple, on the other hand, had a strategy: a tightly integrated hardware-software experience, an app-based ecosystem, a user-friendly interface. The result? Nokia collapsed. Apple thrived.

Because a goal without a plan is just a wish.

Governments do this. CEOs do this. Even individuals do this. Someone struggling with their career says, “I’m going to be successful!” but doesn’t define what success means, doesn’t create a strategy to achieve it, doesn’t make coherent decisions that align with that vision. They just float, hoping ambition alone will get them there.

It never does.

Bad strategy is seductive. It feels good. It sounds impressive. But in the real world, where competition is ruthless and stakes are high, it crumbles.

Good strategy, as we’ll see, doesn’t rely on wishful thinking. It’s sharp, precise, and above all—real.

Strategy isn’t about setting goals, making predictions, or crafting an inspiring vision statement. It’s about solving problems—decisively, effectively, and with ruthless precision.

Richard Rumelt breaks down good strategy into three essential components: Diagnosis, Guiding Policy, and Coherent Action. Think of them as the foundation, the blueprint, and the execution. Without all three, you don’t have a strategy—you have wishful thinking.

1. Diagnosis:

Imagine you’re a doctor. A patient walks in complaining of chronic fatigue. You don’t just prescribe an energy drink and send them on their way—you run tests, analyze symptoms, and determine the root cause. Is it stress? A sleep disorder? An underlying disease? The treatment depends entirely on the correct diagnosis.

Business is no different. The first step of a good strategy is a clear-eyed, unflinching diagnosis of the real problem.

Take the early days of Starbucks. In the 2008 financial crisis, sales were plummeting, and most businesses in their position would have panicked—cut prices, launched aggressive promotions, expanded their menu. But Howard Schultz, returning as CEO, didn’t do that. He identified the real issue: Starbucks had lost its essence. It had become too much like a fast-food chain—over-commercialized, too focused on efficiency, not enough on the experience. His diagnosis? Starbucks wasn’t in a price war. It was in a quality war.

With that insight, he crafted a strategy that wasn’t about competing on price, but about restoring the Starbucks experience—closing stores for barista retraining, bringing back high-quality coffee, and re-establishing its identity as the "third place" between home and work. Sales rebounded.

Now, compare that to businesses that misdiagnose their problems. Struggling airlines often think their issue is pricing—so they slash fares. But the real problem? Customer experience, operational inefficiencies, and bloated costs. Until they diagnose that correctly, they keep spiraling downward.

Good strategy starts with brutal honesty. What is the actual challenge? The real bottleneck? Diagnose that, and everything else falls into place.

2. Guiding Policy: 

A diagnosis is useless without direction. This is where a guiding policy comes in—it’s the bridge between knowing what’s wrong and deciding how to fix it.

Let’s take Nvidia. In the early 2000s, they were just another semiconductor company competing in the cutthroat world of graphics processing. But their leadership saw a bigger opportunity—artificial intelligence and deep learning. Their guiding policy? Double down on GPUs for AI, not just gaming. Instead of chasing multiple markets, they made a bold, focused bet.

The result? While competitors fought over the PC gaming market, Nvidia became the backbone of AI computing—powering everything from autonomous vehicles to machine learning algorithms. Today, their chips are at the heart of the AI revolution, and their stock has skyrocketed.

A good guiding policy is focused, actionable, and built on leverage. It doesn’t try to do everything—it concentrates effort where it will make the biggest impact.

Now, contrast that with companies that lack a clear guiding policy. Think of businesses that try to be everything to everyone—expanding into unrelated industries, launching a dozen different product lines, reacting to competition instead of setting their own course. They don’t have a strategy. They have chaos.

A strong guiding policy acts as a filter. It tells you what to do—but more importantly, it tells you what not to do.

3. Coherent Action: 

If diagnosis is the what and guiding policy is the how, then coherent action is the execution that ties everything together. Every move a company makes should reinforce its strategy, not contradict it.

Look at IKEA. Their strategy is simple: affordable, stylish furniture for the masses. Their guiding policy? Keep costs low through self-service, flat-pack design, and warehouse-style stores.

Now, imagine if IKEA suddenly started offering luxury, hand-carved furniture. Or high-end delivery services with personal assembly. It wouldn’t just be a new product—it would break their entire strategy. That’s why they don’t do it.

Coherent action means alignment. It means your choices reinforce each other, creating momentum instead of friction. When every decision pushes in the same direction, strategy becomes unstoppable.

Companies that lack coherent action, on the other hand, are constantly contradicting themselves. They say they want to be premium, but they cut corners. They claim they’re innovative, but they play it safe. They want to be dominant, but they scatter their resources.

Strategy is like chess. Every move matters. If your guiding policy says attack, but half your pieces are retreating, you don’t have a strategy. You have confusion.

et’s bring this all together.

Diagnosis: Identify the real challenge.
Guiding Policy: Set a clear, focused direction.
Coherent Action: Align every move with that direction.

Steve Jobs did this when he returned to Apple.

Diagnosis: Apple was drowning in complexity—too many products, too little focus.
Guiding Policy: Simplify and concentrate on a few great products.
Coherent Action: He killed off 70% of Apple’s product line and focused on a few core devices: the iMac, iPod, and eventually, the iPhone.

The result? A company on the brink of bankruptcy became the most valuable in the world.

Bad strategy is vague, scattered, and reactive.
Good strategy is sharp, focused, and disciplined.

So ask yourself: Are you just setting goals, or are you actually solving problems? Because the difference between success and failure—between greatness and irrelevance—comes down to this simple truth:

Strategy isn’t about dreaming. It’s about cutting through the noise and making the right moves.

A lion doesn’t chase two gazelles. It picks one. It locks in. And it runs.

In strategy, focus is leverage. It’s the force multiplier that allows a smaller, nimbler player to outmaneuver giants. It’s what separates the winners from the exhausted masses, those who spread themselves too thin, chasing everything and catching nothing.

Most companies don’t fail because they lack resources. They fail because they squander them—scattering their efforts, trying to be everything, chasing every market, reacting to every competitor. But strategy isn’t about doing more. It’s about concentrating firepower where it matters most.

The Myth of Doing Everything

Think about Sony. In the early 2000s, it was an undisputed tech titan, dominating everything from TVs to cameras to gaming consoles. But then, it made a classic mistake—it started chasing every opportunity at once. Smartphones, music streaming, laptops, tablets, even movies. It had the brand, the talent, and the money, but its focus was shattered.

Meanwhile, another company—one that had never made a phone before—took a different approach. Apple didn’t try to enter every market at once. It focused entirely on a single device: the iPhone. And it didn’t just make a phone—it made the phone.

While Sony was drowning in its own complexity, Apple leveraged its focus. One product. One ecosystem. One clear strategic bet. The result? The iPhone alone became more profitable than Sony’s entire empire.

This is the power of leverage.

Finding the Pressure Point

Leverage in strategy means finding the pressure point—the smallest effort that produces the greatest impact. It’s not just about focusing—it’s about focusing on the right thing.

Southwest Airlines did this in the 1970s. While its competitors were locked in price wars, trying to outdo each other with frills—first-class lounges, elaborate meals, multiple aircraft types—Southwest identified a single pressure point: operating efficiency.

Their strategy? One type of plane (the Boeing 737), no assigned seating, fast turnaround times. While legacy airlines played a complex, expensive game, Southwest cut through the noise. They weren’t the biggest airline. They weren’t the flashiest. But they were the most profitable, year after year, because they focused relentlessly on what mattered.

Now, contrast this with airlines that lack focus. The ones that add luxury cabins while trying to be budget-friendly. The ones that expand into every possible market without understanding where they can actually win. The ones that chase every trend instead of doubling down on their strengths.

That’s not strategy. That’s chaos.

Concentration Creates an Unfair Advantage

The best strategies feel unfair—because they are unfair. They concentrate effort so effectively that competitors simply can’t keep up.

Amazon did this with logistics. It didn’t try to compete with Walmart on store locations or product selection. Instead, it focused all its energy on one thing: building the most efficient supply chain in history.

Every warehouse, every algorithm, every data point—perfectly aligned to make delivery faster and cheaper. Now, while other retailers struggle to match its speed, Amazon doesn’t even have to compete on price. It already won the game before others realized what was happening.

This is how the best strategies work. They make the battlefield smaller. They pick a fight where they have the advantage, concentrate resources, and dominate.

Leverage in Action: How Focus Wins Wars

Great generals don’t fight on every front. They concentrate their forces where they can break the enemy’s defenses.

Julius Caesar didn’t conquer Gaul by fighting every tribe at once. He defeated them one by one, leveraging alliances and choosing battles carefully.
Napoleon didn’t win because he had the largest armies. He moved faster, hit harder, and forced opponents into battles they weren’t prepared for.
Alexander the Great didn’t just march forward blindly. He identified weaknesses, concentrated his forces, and struck decisively.

The same principles apply in business. The companies that dominate aren’t necessarily the biggest—they’re the ones that focus their energy with precision.

Why Most People Resist Focus

If leverage is so powerful, why don’t more companies—and more people—use it?

Because focus feels uncomfortable. It means saying no to opportunities. It means ignoring distractions. It means committing to one thing while others hedge their bets.

But the world rewards bold decisions.

Tesla focused entirely on electric vehicles while others dabbled. Now, it owns the space.
Shopify focused on empowering independent merchants while Amazon chased dominance. Now, it’s an e-commerce giant.
Nike focused on performance athletes while Reebok chased trends. Today, Nike is the king of sportswear.

Leverage isn’t just about working harder. It’s about working smarter—choosing battles, stacking the odds in your favor, and hitting where it counts.

Because in strategy, just like in war, victory doesn’t go to the one who does the most. It goes to the one who focuses on what matters—and executes relentlessly.

There’s a lie that’s been fed to every entrepreneur, every leader, every struggling business, every exhausted worker grinding away at their desk at 2 a.m. The lie? That success is just about working harder. That if you put in more hours, push through more pain, sacrifice more sleep, and out-hustle the competition, victory is inevitable.

It’s seductive because it feels fair. It gives people control—the belief that if they just keep pushing, they’ll break through. But here’s the truth: hard work alone doesn’t win. Smart work does.

Why Effort Without Strategy is Useless

Picture two people digging a well. One is swinging a shovel furiously, drenched in sweat, convinced that if they just keep going, they’ll hit water. The other? They pause, study the landscape, and drill exactly where the underground stream runs. Who wins?

This is what separates strategy from brute force.

Look at companies that tried to "outwork" their competition instead of out-thinking them. Remember MySpace? It had a massive head start in social media. It threw money at ads, cranked out features, expanded aggressively. But while MySpace was grinding away, Facebook had a strategy.

Diagnosis: Social networking wasn’t about features, it was about exclusivity and real-world connections.
Guiding Policy: Start with elite universities to build prestige and desirability.
Coherent Actions: Expand in carefully controlled waves, ensuring each new group wanted to join.

MySpace had more effort. Facebook had better strategy. We all know who won.

The Law of Diminishing Returns

The problem with "just work harder" is that effort has limits. The first few hours of work? High impact. The next few? Less so. After a point, every extra hour is just diminishing returns—more fatigue, more mistakes, more wasted motion.

Think of Henry Ford. Before the assembly line, manufacturing cars was exhausting, slow, and expensive. Automakers were grinding, working long hours, squeezing out tiny improvements. Then Ford changed the game. Instead of working harder, he worked smarter—creating a streamlined system that built cars faster, cheaper, and with less labor.

It wasn’t hustle. It was leverage.

Why “Out-Hustling” the Competition is a Losing Game

Companies love to glorify hustle culture. They brag about 100-hour workweeks, all-nighters, and “grinding until you make it.” But let’s be clear:

If your business depends on outworking competitors, you’re already losing.
If your team is constantly at burnout levels, you don’t have a strategy. You have chaos.
If your success relies on working harder forever, you’re just delaying collapse.

The best companies don’t win by being the most exhausted—they win by being the most effective.

Take Warren Buffett. One of the richest men in history. Does he grind for 18 hours a day? No. He reads. He thinks. He makes a few high-leverage decisions that move billions. Because in strategy, one great decision beats a thousand hours of busywork.

The Smartest Play is to Change the Game

Let’s talk about Southwest Airlines again. Other airlines were in a brutal arms race—offering luxury cabins, cutting ticket prices, adding more routes. Southwest? They ignored all of that.

One type of aircraft.
No assigned seats.
Fast turnaround times.

They weren’t working harder than competitors. They were playing a different game. While other airlines scrambled to outwork each other, Southwest simply out-positioned them.

How Individuals Fall into the Hard Work Trap

This isn’t just about businesses. Individuals fall into this trap all the time.

A struggling entrepreneur thinks the answer is more hours, when what they really need is better pricing, a niche, or automation.
A job seeker applies to 100 jobs with the same resume, instead of targeting 10 with a tailored approach.
A student studies longer, instead of learning smarter—using active recall, spaced repetition, and deliberate practice.

Hard work feels productive, even when it isn’t. That’s why people default to it. It’s easy to measure hours. It’s harder to measure effectiveness.

Leverage Over Labor: The True Secret of Success

The most successful people and companies in history weren’t the ones who worked the hardest. They were the ones who used leverage.

Jeff Bezos didn’t build Amazon by packing boxes himself—he focused on automation and logistics.
Elon Musk didn’t make Tesla successful by personally assembling cars—he changed the economics of electric vehicles.
Oprah didn’t become a media mogul by hosting one show at a time—she built a network.

Success isn’t about running faster in the same race. It’s about changing the race entirely.

So, What’s the Alternative?

Instead of asking, "How can I work harder?" ask:

What’s the real problem I need to solve?
Where can I apply the least effort for the biggest impact?
What system, tool, or strategy can replace my effort?

Because at the end of the day, the market doesn’t reward effort. It rewards results. And the ones who get results? They aren’t the ones grinding themselves into exhaustion.

They’re the ones who understand that strategy—not sweat—wins the game.

Understanding strategy is one thing. Applying it is another. Because in the real world—whether you’re running a business, leading a team, or navigating your own career—decisions aren’t made in a vacuum. There’s competition. Uncertainty. Noise.

So how do you take the principles of Good Strategy Bad Strategy and use them to win?

Most failures happen because people don’t diagnose the real issue—they treat symptoms. If sales are declining, most businesses panic and launch more ads, slash prices, or blame external factors. But what if the real issue isn’t marketing? What if it’s customer retention? What if your product is flawed? What if your audience has changed?

Diagnosis means asking better questions.

Why are customers leaving?
What’s actually stopping growth?
Where is the real leverage point?

When Ford faced declining car sales, its response was predictable—more models, more ads, more discounts. Tesla, on the other hand, diagnosed the real issue: consumers wanted electric cars, but the market lacked charging infrastructure and affordable options. So instead of competing on traditional auto industry terms, Tesla built an entirely new ecosystem—batteries, charging networks, direct-to-consumer sales.

One company played the old game harder. The other changed the rules.

Takeaway: Before you act, make sure you’re solving the right problem.

Once you’ve diagnosed the problem, you need a guiding policy—a clear, overarching approach that aligns every decision. This is where most people fail. They either try to do everything or they don’t commit to anything.

A good guiding policy is:
✅ Focused – It picks a lane and ignores distractions.
✅ Simple – It gives clear direction to every action.
✅ Built on leverage – It maximizes strengths, minimizes weaknesses.

Walmart’s guiding policy is Low prices, no frills. Everything—store layouts, supplier negotiations, logistics—aligns with that. Target, in contrast, chose a different approach: affordable but stylish. That guiding policy affects product selection, branding, store experience.

Both dominate in their own space. The companies that fail? They try to be everything at once.

If you don’t have a guiding policy, you don’t have a strategy.

This is where execution happens. Coherent action means every move reinforces the strategy. No contradictions. No wasted effort.

Think of it like this: If your strategy is to be a premium brand, you can’t also compete on price. If your strategy is speed, don’t waste time adding unnecessary complexity.

IKEA’s strategy is affordable, stylish furniture for the masses. Everything aligns with that:

Flat-pack design keeps costs low.
Warehouse-style stores reduce overhead.
Self-service model allows scale.

Now, imagine if IKEA suddenly started selling luxury furniture with white-glove delivery. It would break the strategy. That’s why they don’t do it.

Every action should reinforce your strategy, not contradict it.

Success isn’t about doing everything—it’s about doing the right thing.

Instead of working harder, change the game.
Instead of expanding blindly, double down on what works.
Instead of spreading effort, focus firepower.

Before the pandemic, video conferencing was dominated by big names—Microsoft, Cisco, Google. Zoom didn’t try to out-spend them on ads. It didn’t try to build a massive suite of products.

Instead, it focused on one thing: making video calls seamless.

Faster connection times
Better compression algorithms
Fewer dropped calls

That single focus became leverage. When the world suddenly needed remote work solutions, Zoom had already optimized the key pain point. The result? It crushed competitors.

Find your leverage. Apply pressure there.

This is where most businesses and individuals fail. They refuse to make hard choices. They want to be premium and affordable. They want to scale and stay hands-on. They want to dominate one industry while chasing another.

But strategy is about trade-offs.

Ferrari doesn’t try to compete with Toyota on volume. It stays exclusive—fewer cars, higher prices, luxury branding. Toyota, on the other hand, dominates mass production—efficiency, affordability, reliability.

Both are massively successful. The companies that fail? They try to do both.

Winning isn’t about doing more. It’s about choosing better.

These lessons don’t just apply to corporations. They apply to everything.

For Entrepreneurs – Stop chasing every opportunity. Pick a niche, diagnose what customers actually need, and execute relentlessly.
For Career Growth – Stop spreading yourself thin. Find the one skill, one expertise, or one unique angle that gives you leverage—and own it.
For Decision-Making – Stop reacting to everything. Diagnose, decide, and align every move with your long-term strategy.

Most people and businesses fail not because they lack ambition, but because they lack focus.

They mistake effort for strategy.
They mistake movement for progress.
They mistake goals for execution.

But now, you know better.

The question is—what will you do with it?