Most people think strategy is about having a vision. Or a "north star." Or maybe just a really long PowerPoint deck filled with words like synergy and optimization.
They're wrong.
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Strategy is about power. Specifically, it's about finding a way to apply your limited resources to the point of maximum leverage. If you aren't making a hard choice, you aren't doing strategy. You’re just setting goals. And while goals are fine, they won't save a dying company or help a startup disrupt a giant.
Richard Rumelt, basically the godfather of modern strategic thinking, laid this all out in his 2011 book. It's been over a decade, and yet, walking into most corporate boardrooms today feels like a fever dream of good strategy bad strategy confusion. You see leaders mistaking "we want to be number one" for a plan. That’s not a plan; that’s a wish.
The Kernel: What a Real Strategy Actually Looks Like
A real strategy has a structure. Rumelt calls it "The Kernel." It’s not fancy. It doesn't require a McKinsey consultant to explain it.
First, you need a diagnosis. You have to look at the mess in front of you and say, "Okay, what is actually happening here?" This is where most people fail. They skip the "why are we losing?" part and jump straight to the "let's win!" part. A good diagnosis simplifies the complexity of reality by identifying certain aspects of the situation as critical.
Imagine you’re a doctor. If a patient comes in with chest pain, your strategy isn't "make the patient feel better." Your diagnosis might be "blocked artery." That diagnosis then dictates everything else.
Next comes a guiding policy. This is an overall approach for overcoming the obstacles identified in the diagnosis. It’s like a guardrail. It doesn't tell you exactly what to do every minute of the day, but it rules out 90% of the distractions.
Finally, you have coherent actions. These are the steps you take. And they have to work together. If your guiding policy is "low-cost leader" but your marketing team is buying Super Bowl ads, your actions aren't coherent. They’re fighting each other.
Why Bad Strategy Is So Tempting
Bad strategy isn't just a mistake. It's a choice.
Usually, it's the result of a leader who is too afraid to say "no" to anyone. If you have ten different departments and they all want budget, a "bad strategy" is to give them all a little bit of money and call it "growth."
It feels good. It avoids conflict.
But it’s suicide for the business.
Bad strategy is often just "fluff." It’s a bunch of high-sounding words that mean absolutely nothing. When you see a company say their strategy is "to provide customer-centric solutions through innovative excellence," you should run. That’s a signal that nobody has actually sat down to figure out how to beat the competition.
Another hallmark of the bad stuff? Failure to face the problem. If you can’t define the challenge, you can’t have a strategy to overcome it. Instead, you get a "strategic plan" that is just a list of budget numbers and milestones.
Real World: The 1997 Apple Turnaround
Think back to 1997. Apple was about two months away from bankruptcy. They were making everything—printers, servers, desktops, laptops. They had dozens of versions of the Macintosh.
When Steve Jobs came back, he didn't set a goal to "increase shareholder value by 15%."
He did the opposite.
He slashed the product line. He cut it by 70%. He fired people. He got rid of the peripherals. He focused on just four products.
The diagnosis was: Apple is too spread out and making mediocre junk.
The guiding policy was: Focus on a tiny number of high-end products.
The coherent action: Kill everything else and put the best engineers on just those four things.
That is good strategy bad strategy in action. Most CEOs in that position would have tried to save every department. Jobs realized that to save the ship, he had to throw most of the cargo overboard.
The Difference Matters Because Resources Are Finite
If we had infinite money and infinite time, strategy wouldn't matter. You could just do everything. You could be the low-cost leader and the luxury brand at the same time.
But you can't.
Every time you say "yes" to a project, you are saying "no" to something else, even if you don't realize it. Strategy is the art of making sure those "nos" are intentional.
The Logic of Leverage
Good strategy works by focusing energy on a pivotal objective.
Think of it like a lever. If you put the fulcrum in the right place, a small amount of force can move a massive rock. In business, that fulcrum is often a "threshold effect." This is a point where a certain amount of effort produces a disproportionate result.
Take 19th-century naval warfare. Admiral Nelson at the Battle of Trafalgar faced a larger French and Spanish fleet. Traditional strategy said you line up your ships parallel to the enemy and shoot at each other until someone sinks.
Nelson didn't do that.
He broke the line. He drove his ships straight at the enemy's flank. He created a local advantage where he was stronger than the specific part of the enemy line he was hitting. He accepted the risk of being fired upon while approaching to gain the reward of breaking their formation.
He transformed a numerical disadvantage into a local victory.
Why People Get Confused
The word "strategy" has been hijacked by the self-help movement.
You’ll hear people talk about "strategic manifesting" or "strategic mindset." It’s all very vague. This "positive thinking" approach has bled into business. Managers think that if they just believe in the vision hard enough, the market will magically provide.
This is dangerous.
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Strategy is closer to engineering than it is to motivation. It’s about the hard, cold reality of what your organization can actually do. If your "strategy" requires your employees to suddenly become 200% more productive or for your competitors to just stop trying, you don't have a strategy. You have a hallucination.
How to Spot Bad Strategy in the Wild
You can usually smell a bad strategy from across the room. It has a specific scent.
- The Fluff: Using big words to hide a lack of ideas. "Integrated platform-agnostic deliverables." (What?)
- The "Dogs That Don't Bark": A strategy that fails to mention the biggest, most obvious problem the company is facing.
- Mistaking Goals for Strategy: A list of "where we want to be" without a single "how we get there."
- Blue Sky Objectives: Statements that are just "we want to be the best." Who doesn't?
If you're reading a company's internal documents and you can't tell what they are choosing not to do, then they don't have a strategy.
The Hard Truth About Choice
The reason good strategy bad strategy is such a persistent issue is that choice is painful.
To have a good strategy, you have to tell talented people that their projects aren't a priority. You have to tell loyal customers that you're no longer supporting their favorite old product. You have to take a stand.
And taking a stand means you might be wrong.
If you write a "bad" strategy that is just a list of vague goals, you can never really be "wrong." If the company fails, you can just say the market shifted or the team didn't execute well enough. But if you say, "We are betting everything on this one specific niche," and it fails, it's on you.
Most leaders choose the safety of vagueness over the risk of clarity.
Practical Steps to Build a Real Strategy
If you're sitting in a position where you need to actually fix things, stop looking at "vision statements."
- Identify the Crux. What is the one thing that is holding everything back? Is it a technical debt issue? Is it a competitor with lower costs? Is it a changing regulation? Find the hardest part of the problem that you actually have the power to solve.
- Create a Guardrail. Write down a guiding policy that is no longer than one sentence. "We will only build tools for professional creators, not hobbyists." That sentence should make future decisions easier.
- Audit Your Actions. Look at your calendar and your budget. If 80% of your time isn't going toward the "Crux" you identified in step one, you're drifting.
- Kill the "Ands." If your strategy has the word "and" in it more than twice, it’s probably just a list. "We will be the fastest AND the cheapest AND the most reliable." No, you won't. Pick one.
Strategy is about sacrifice. If it doesn't hurt a little bit to commit to it, it's probably not a strategy.
Final Thoughts on the Strategic Edge
In the end, the difference between success and failure often comes down to who was willing to be honest about their situation.
Good strategy is rare because it requires honesty. It requires admitting that you can't do everything. It requires the courage to focus.
Bad strategy is common because it’s the path of least resistance. It keeps everyone happy in the short term while the ship slowly sinks.
If you want to win, you have to stop planning and start strategizing. Look at your current "plan." If it’s just a list of hopes, throw it away. Find the bottleneck. Build a policy to break it. And then act like you mean it.
Next Steps for Implementation
- Review your current "Strategic Plan" and highlight every sentence that could apply to any other company in your industry. Delete those sentences.
- Conduct a "Strategy Stress Test" by asking your team: "What are we explicitly choosing NOT to do this year?" If they can't answer, your strategy isn't clear enough.
- Identify your "Local Advantage." Where are you naturally stronger than your competitors, even if it's a very small area? Double down on that specific point rather than fighting on a broad front.
- Simplify the Kernel. Write your diagnosis, guiding policy, and coherent actions on a single sheet of paper. If it doesn't fit, it's too complex to execute.