What Most Companies Call “Strategy” Is Just Wishful Thinking.

There is a particular kind of meeting that happens in boardrooms, off-sites, and strategy decks around the world. Someone stands up, clicks to a slide that reads something like “Our Vision: To be the #1 trusted global leader in innovative solutions”, and nods as if they’ve just said something meaningful.

Richard Rumelt, professor at UCLA Anderson and one of the most respected strategy thinkers alive, has a name for this: bad strategy.

His 2011 book Good Strategy Bad Strategy: The Difference and Why It Matters is uncomfortable reading. Not because it’s dense (it’s actually compulsively readable), but because it holds a mirror up to a lot of what passes for strategic thinking in modern organizations. The reflection isn’t flattering.

The Core Claim: Strategy Has a Shape

Rumelt’s central insight is deceptively simple. Good strategy has a recognizable structure, what he calls the kernel. It has three parts:

1. A diagnosis: an honest assessment of the challenge. Not a vague observation (“the market is competitive”) but a sharp framing that simplifies the complexity of the situation and identifies certain aspects as critical.
2. A guiding policy: an overall approach for dealing with the obstacles identified in the diagnosis. This doesn’t define what will happen but rules out a vast universe of actions and focuses attention.
3. Coherent actions: steps, resource commitments, and practical moves that carry out the guiding policy.

That’s it. Diagnosis, policy, actions. The genius of this framework is in what it excludes: goals, vision statements, financial targets, and aspirational platitudes don’t belong in a strategy. They might belong somewhere, but they are not strategy.

The Four Hallmarks of Bad Strategy

Rumelt is unusually direct about what bad strategy looks like. He identifies four telltale signs:

1. Fluff

Fluff is repackaged conventional wisdom dressed up in jargon to sound profound. “We will leverage our core competencies to deliver synergistic value across our stakeholder ecosystem” tells you nothing. It sounds like strategy but has the nutritional content of a rice cake.

2. Failure to face the challenge

A strategy that doesn’t name the actual problem can’t solve it. Many organizations are so averse to acknowledging difficulty (internally or publicly) that their strategies are built around a more comfortable fiction. The result is a plan that addresses the problem they wish they had rather than the one they actually face.

3. Mistaking goals for strategy

“Increase market share by 15%” is a goal. It describes a desired outcome but says nothing about how. Rumelt is merciless here: a list of objectives, however ambitious or smartly formatted into a 2×2 matrix, is not a strategy. Goals without mechanisms are wishes.

4. Bad strategic objectives

These are objectives that either (a) fail to address the critical issues or (b) are impractical, floating so far from current capability that they offer no real guidance. A good strategic objective is what Rumelt calls a “proximate objective”: something actually achievable, whose accomplishment creates new possibilities.

What Good Strategy Actually Does

The book’s most enduring idea is that good strategy creates advantage through coherence. Most organizations have plenty of resources and capable people. What they lack is focus: the willingness to say “we are going to concentrate our strength on this, and not on that.”

Rumelt uses the story of Apple’s return under Steve Jobs in 1997 as a clean example. Apple was near bankruptcy, producing a sprawling line of products nobody could keep track of. Jobs’s strategy wasn’t to “win the consumer electronics market.” It was a diagnosis (we’re scattered and unfocused), a guiding policy (ruthless simplification), and coherent action (cutting the product line to four items, putting everything into making those exceptional).

The result wasn’t just good products. It was the compounding effect of concentrated effort. This is what Rumelt means by leverage: finding the point where focused energy produces disproportionate results.

The Pivot Problem and Why “More” Isn’t Strategy

One of the book’s more quietly devastating observations is about how organizations respond to strategic failure. Usually, the answer is more: more initiatives, more goals, more priorities. The logic is that if one thing isn’t working, we should try several things at once.

But this is the opposite of strategy. Every additional priority dilutes the ones before it. Every “strategic initiative” that gets added to a list without removing something else is evidence that the list isn’t really strategic. It’s political. It reflects what everyone agreed to rather than what actually matters.

Good strategy requires saying no. Not politely declining, but actually choosing: accepting that some opportunities, some markets, some investments will be left on the table. This is genuinely hard for organizations, because it creates losers internally. People whose projects aren’t prioritized feel (correctly) that they’ve lost. Which is why so many strategies are designed to make everyone feel included, which is to say, why so many strategies are bad.

The Uncomfortable Truth About Leadership and Strategy

Rumelt doesn’t spare leaders. Bad strategy, he argues, often flows from two sources:

The first is the desire to avoid hard choices. When leadership teams can’t agree on direction, they often paper over the disagreement with vague language that everyone can sign onto. The strategy becomes a treaty rather than a plan.

The second is “template-style” strategic planning. The strategy industry (consultants, business schools, and planning frameworks) has created a comfortable ritual where organizations fill in the blanks: mission, vision, values, objectives, initiatives. Following the template feels like doing strategy. It isn’t. The form is there, but the thinking isn’t.

Real strategy requires someone (usually the leader) to make a judgment call about what the real challenge is and what the best response looks like. It’s an act of intellectual courage as much as analytical skill.

Why This Book Still Matters

Good Strategy Bad Strategy was published in 2011 and hasn’t dated at all, which tells you something. The pathologies Rumelt diagnoses aren’t the product of any particular era. They’re the product of human nature and organizational incentives, which don’t change quickly.

If anything, the proliferation of strategic frameworks, OKRs, flywheels, moats, and other strategic vocabulary has made the core problem worse. We have more language for strategy than ever, and possibly less actual strategy.

The book’s lasting gift is a simple, repeatable test you can apply to any strategy document: Does it name the real challenge? Does it offer a coherent approach to that challenge? Does it connect that approach to specific, concrete actions? If the answer to any of those is no, you don’t have a strategy. You have something that looks like one.

That’s a useful thing to know before you build a business on top of it.