Good Strategy/Bad Strategy
Most teams start the year with a big list of goals. They look impressive, but they often lack one crucial thing: coherence. They aren't connected by a single idea or don’t align with the work of individual teams.
My team didn’t want to end up in that situation. Over the last few years, we adopted a strategy practice built on the principles found in Richard Rumelt’s books Good Strategy/Bad Strategy and The Crux.
Why We Choose This Approach
Rumelt redefines strategy not as a list of aspirational goals or financial targets, but as a disciplined form of problem-solving designed to apply strength against specific weaknesses.
As someone working in product development, these ideas felt familiar. It’s the same approach we take when solving a customer problem. By reframing strategy as internal problem discovery, I realized I could help myself and my team more actively engage with strategy. In Good Strategy/Bad Strategy, Rumelt establishes the "Kernel" of a good strategy:
A Diagnosis of the challenge
Guiding Policies to handle it
A set of Coherent Actions
His follow-up, The Crux, further asks that leaders identify the most critical challenge that is actually solvable by the current team. By focusing all energy on that specific problem rather than spreading efforts thin across conflicting priorities, you set your teams up for success.
Here is how we translated this theory into practice in my current team.
1. Diagnosis: Finding the "Primary Challenge"
Before we discuss goals, we start by asking: "What is the single, most difficult challenge we must overcome this year to achieve success?"
This isn't a list of every piece of work we have to do. There will always be "keep the lights on" (KTLO) tasks. (e.g. the small fixes, dependency upgrades, etc) This is about finding the one problem that, if left unsolved, renders everything else irrelevant.
The Rule: We write this as a problem statement, not a what we want to acheive. For example, instead of "We want 10% growth," we write, "Our growth is throttled because user retention drops after day 3."
The Constraint: We ensure the problem is actually solvable. If a challenge is "the economy," that is too big and out of our control. We must find the part of the problem we can actually influence.
2. The Guiding Policies
Once the Primary Challenge is identified, we define a set of guiding policies. ( This differs from Rumelt who recommends a single guiding policy.) This is not a detailed action plan, but a high-level approach that tells the team how we will tackle the challenge.
Crucially, a good policy also states what we won't do. It sets the guardrails. For example, "All new features can be self-enabled by customers" is a guiding policy that helps teams make trade-offs later.
These are so crucial to saving time in the future. A good set of guiding policies can help a team focus on the more important decisions and even completely remove some decisions the team needs to make.
3. Coherent Actions: Placing Our "Bets"
Finally, we define our Bets, the high-level areas where we will execute on our guiding policies.
We use "Bets" over "Actions" to acknowledge the uncertainty inherent in product work, but they serve the same function as Rumelt’s "Coherent Actions." This is not laundry list of features. They are the specific strategic initiatives that, taken together with the guiding policies, will solve the Primary Challenge.
Note: My teams set quarterly OKRs that measure the progress of these Bets in our Metrics Monday meetings. Learn more in my blog post here.
4. Stress-Testing: The Pre-Mortem
A brilliant strategy on paper is just an expensive assumption until it meets reality. Once we finalize the Primary Challenge, Guiding Policies, and Bets, we open the strategy for question and comments. We also take it a step further and engage a cross-functional group in a Pre-Mortem.
Unlike a standard Postmortem, which looks back after a failure has occurred, a Pre-Mortem looks ahead. We ask the team:
"Imagine it is the end of the year. We completely failed. Why?"
We ask them to look for the obvious and the less obvious:
"What are the hidden assumptions we are making?"
"What are you worried about that you don't think others are noticing?"
For example, our team might identify: "We failed because the engineering resources needed for the new design were pulled away for urgent bug fixes on our legacy product."
By leveraging the team’s collective knowledge, we can make an action plan to address these concerns in the first quarter of the year before they become a problem.
The Result: Clarity and Confidence
By grounding our strategy in a primary challenge, aligning our work through guiding policies, and vetting our assumptions through a collective Pre-Mortem, we achieve:
Focus: Everyone knows the problem we are solving (and what we are ignoring).
Buy-In: The teams implementing the strategy were directly involved in the creation and evaluation, increasing their commitment.
Reduced Surprises: We haven't eliminated risk, but we have proactively managed the known risks.
Strategy isn't about predicting the future; it's about creating a coherent path through it. Where could your team use more cohesion and focus?
* This page contains an affiliate link. If you click a link and purchase a book, I may receive a small commission. I only recommend books I have personally read and loved.
