Good Strategy Bad Strategy: The Difference and Why It Matters

by Richard P. Rumelt

Extending a competitive advantage requires looking away from products, buyers, and competitors and looking instead at the special skills and resources that underlie a competitive advantage. In other words, “Build on your strengths.” The idea that some corporate resources can be put to good use in other products or markets is possibly the most basic in corporate strategy.6 Its truth is undeniable yet it is also the source of great mischief. Bemused by the idea that their company’s competitive strength lies in vaporous generalities such as “transportation,” “branded consumer products,” or “management,” companies may diversify into products and processes they know nothing about.