Lenny's Podcast: Good Strategy, Bad Strategy | Richard Rumelt

Gurus make "strategy" seem complex—but what if it's actually simple? 🌱

In his classic Good Strategy, Bad Strategy, Richard Rumelt shares how the best strategies are less about lofty goals and more about solving the right problems with focused action.

☑ Make Strategy an Action Agenda
↳ Forget endless mission statements and broad visions. Strategy starts with a clear challenge.
↳ Ask: “What’s the main problem we can solve now?”

☑ Use the 3-Part Kernel
↳ Start with a diagnosis of your challenge.
↳ Set a guiding policy: decide what’s first (not a laundry list).
↳ Then, coherent actions: take steps that work together—not against each other.

☑ Power is Focus
↳ Every effective strategy tackles an asymmetry—a key advantage others lack.
↳ Example: Microsoft invested early in AI partnerships to leverage its strengths against competitors.

☑ Avoid Common Pitfalls
↳ Bad strategy is a wish list, not an action plan. Goals without an approach create zero impact.

Rumelt’s insight: When you clarify the hardest challenge, take fewer actions, and align them, you’re on the path to a winning strategy.

Part of the problem is that the concept of strategy has been so beaten up by thousands, hundreds of books, and thousands of more websites that people have a hard time trying to figure out how to create a strategy, because they're drawn up, down, left, right. So my two pieces of advice, anybody that's actually trying to do this is, A, state the problem, and, B, don't call it a strategy, call it an action agenda, that you're not creating a strategy, you're creating an action agenda. What are we going to do about this problem? That's essence of what you're doing.

Begin to try to identify the one or two key challenges that can actually be addressed and what are we going to do about it?

A strategy is a design for overcoming a high-stakes challenge

Strategy is always about dealing with an issue, a challenge, a problem

All strategy is problem-solving. It's a form of dealing with challenges

The guiding policy is sort of the strategy. It's the core of it. It's, here's how we're dealing with the situation

Focus, it's the fundamental source of power and strategy

For a strategy, you need to exploit an asymmetry of some kind

A list of all the different things you wish would happen is not strategy

Ambitions are not a strategy

One of the problems in doing strategy is that it's somehow been displaced by this literary form about mission

Organizational dynamics are often the biggest hindrance to winning strategies

Insight is critical. Insight is not magical; it comes from immersing yourself in the nature of the problem

A skilled designer focuses on what makes the problem hard, and then by focusing on the difficulty, they see a way around it

The action agenda has to be quick adaptation to changing conditions

If you can't do the crux, don't do the climb

Strategy tends to be surprising when we see it work because we don't expect it

To undertake a strategy that you think will work, you've got to have a reason that it makes sense, and that reason is derived from some source of power, some source of advantage

You need a source of power. I say power, I don't say advantage or efficiency, because there are different ways in which power is exhibited

Call it an action agenda. Here's what we're going to do—not here's all the things we wish would happen

Strategy isn't picking a strategy out of a list of common strategies; it's looking at the problem, what makes that problem hard, and seeing a way to solve it

The biggest economic fact of the last 150 years, you don't know why it happened

If you want to get better at strategy, spend a lot more time diagnosing the problem and finding the biggest challenge that is keeping you from what you're trying to achieve

Strategy is not mysterious. It's about solving problems, the most important problem you're facing that you actually can do something about

We need a hierarchy of power, because there has to be some mechanism for deciding what we're going to do

If you have any chance of succeeding, you have a target market and a solution to the target market's problem in mind

Each time you say yes, you risk turning a nascent good strategy into a bad strategy

Focus is...when I was nine years old, I was at summer camp and had my parents send me a magnifying glass...Focus is the fundamental source of power in strategy

Strategy is about focus, not trying to do too many different things

In a complex organization, it's hard to focus energy because of all the different interests