Good Strategy, Bad Strategy audiobook cover - The Difference and Why It Matters
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Good Strategy, Bad Strategy

The Difference and Why It Matters

Richard Rumelt

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EntrepreneurshipManagement & Leadership

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Good Strategy, Bad Strategy
Bad Strategy+
The Kernel of Good Strategy+
Strategic Focus & Choice+
Gaining Advantage+
The Strategist's Mindset+
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Quiz — Test Your Understanding

Question 1 of 9
According to the text, why is a goal like 'a 20 percent revenue increase' NOT considered a strategy?
  • A. It lacks a specific plan of action detailing how the goal will actually be achieved.
  • B. It focuses too much on financial metrics rather than customer satisfaction and retention.
  • C. It is usually too ambitious and sets unrealistic expectations for the company's employees.
  • D. It relies on overly complicated buzzwords instead of simple, actionable language.
Question 2 of 9
What are the three essential components that make up the 'kernel' of every good strategy?
  • A. A vision statement, a financial target, and an execution timeline.
  • B. A diagnosis, a guiding policy, and a set of coherent actions.
  • C. A market analysis, an isolation mechanism, and a central pivot point.
  • D. A strategic hypothesis, an outside view, and a competitive advantage.
Question 3 of 9
Why did Ford's strategy fail when they acquired brands like Volvo, Jaguar, Land Rover, and Aston Martin?
  • A. They failed to invest enough capital into the research and development of new models.
  • B. They relied too heavily on the 'outside view' and ignored their internal manufacturing data.
  • C. They lacked coherent actions by consolidating designs, which destroyed the unique qualities buyers wanted.
  • D. They focused entirely on economies of scale while ignoring the rising market demand for hybrid vehicles.
Question 4 of 9
What lesson can be learned from the computer manufacturer Digital Equipment Corporation (DEC) in 1988?
  • A. Strategies should always be built on compromise to keep different departments happy.
  • B. Early adoption of new technology guarantees a long-term competitive advantage.
  • C. Focusing entirely on a single product line is highly dangerous in a fractured industry.
  • D. A good strategy requires making a definitive choice to move in one specific direction.
Question 5 of 9
How did 7-Eleven in Japan gain leverage over its competitors in the soft drink market?
  • A. By lowering their prices to aggressively undercut all local supermarkets.
  • B. By identifying 'variety' as the central pivot point and rotating stock based on local tastes.
  • C. By manufacturing their own exclusive, high-margin line of soft drinks.
  • D. By expanding the physical size of their stores to stock all 200 available Japanese brands.
Question 6 of 9
When looking to gain the high ground during changing business circumstances, why should a strategist look for 'second-order effects'?
  • A. Because the most obvious effects of a change rarely offer any clear competitive advantages.
  • B. Because second-order effects are usually cheaper to implement than first-order effects.
  • C. Because second-order effects rely on isolation mechanisms to protect the brand.
  • D. Because focusing on immediate changes often leads to the 'inside view' fallacy.
Question 7 of 9
In the context of maximizing competitive advantage, what is the purpose of an 'isolation mechanism'?
  • A. To separate a company's profitable departments from its failing ones to protect overall revenue.
  • B. To shield the CEO and executives from the opposition of internal employees during a transition.
  • C. To limit competitors' opportunities and make it exceedingly difficult for them to create rival products.
  • D. To isolate a specific target audience so marketing efforts can be highly personalized.
Question 8 of 9
How did Howard Schultz's development of Starbucks demonstrate the concept of approaching strategy like a science?
  • A. He relied exclusively on quantitative data and historical market trends to launch his business.
  • B. He formed a hypothesis based on Italian coffee culture, tested it in America, and refined it based on customer behavior.
  • C. He implemented rigid, unchangeable rules for how coffee should be brewed and served to ensure scientific consistency.
  • D. He isolated his business model from competitors by patenting his unique coffee roasting technology.
Question 9 of 9
What is the 'inside view' phenomenon that often leads to fatal strategic mistakes?
  • A. The habit of relying too heavily on internal company data while ignoring macroeconomic trends.
  • B. The practice of promoting executives from within the company rather than hiring outside talent.
  • C. The failure to share strategic goals with lower-level employees, keeping the strategy 'inside' the boardroom.
  • D. The tendency to ignore lessons others have learned because you believe your specific situation is uniquely different.

Good Strategy, Bad Strategy — Full Chapter Overview

Good Strategy, Bad Strategy Summary & Overview

Good Strategy, Bad Strategy dissects good strategies by using historical examples from a variety of fields, and offers insight into developing our own effective strategies through practical advice and a solid blueprint.

This is a Blinkist staff pick

“My boss kept asking me, “Emily, what’s your strategy?” and I kept coming up empty (#truestory). This title is a smart start to wrapping your head around what it means to build an effective strategy and do good work to reach your goals.”

– Emily, Community & Engagement Marketing at Blinkist

Who Should Listen to Good Strategy, Bad Strategy?

  • Anyone interested in the different ways in which strategy can be applied to different fields
  • Anyone who has to make solid strategic decisions
  • Anyone interested in the history of business strategy

About the Author: Richard Rumelt

Richard Rumelt holds the Harry and Elsa Kunin Chair in Business and Society at UCLA Anderson School of Management. He has also been named by The Economist as one of the 25 living people with the strongest influence on management concepts and has been described as “a giant in the field of strategy” by McKinsey Quarterly.

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