Good Strategy Bad Strategy: The Difference and Why It Matters

by Richard P. Rumelt

One of the most important resources a business can have is valuable privileged information—that is, knowing something that others do not. There is nothing arcane or illicit about such information—it is generated every day in every operating business. All alert businesspeople can know more about their own customers, their own products, and their own production technology than anyone else in the world.

Being strategic is being less myopic—less shortsighted—than others.

The kernel is a list reminding us that a good strategy has, at a minimum, three essential components: a diagnosis of the situation, the choice of an overall guiding policy, and the design of coherent action.

good strategies are usually “corner solutions.” That is, they emphasize focus over compromise. They focus on one aspect of the situation, not trying to be all things to all people.

Good strategy grows out of an independent and careful assessment of the situation, harnessing individual insight to carefully crafted purpose. Bad strategy follows the crowd, substituting popular slogans for insights.

Being independent without being eccentric and doubting without being a curmudgeon are some of the most difficult things a person can do.

People talk as if products have costs, but that is shorthand easily leading to confusion. Choices, not products, have costs.