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Steve Hoy

The Kernel of Good Strategy

The Kernel is the basic underlying structure at the core of a good strategy that unites thought and action. It has three elements: a diagnosis, a policy, and a set of coherent actions. No grandiose language, visions or timelines.

All this is in Richard Rummelt’s book, Good Strategy Bad Strategy. I highly recommend buying a copy. (By the way, I get no affiliate income from recommendations on my blog).

Good strategy recognises the true nature of challenges and finds ways to overcome them. Bad strategy chases unattainable goals without a workable plan. I’ll describe only the kernel from the book here - the book has much more including specific things you can do to develop good strategy.

The are three elements to the kernel:

  1. Diagnosis: a definition of the challenge and the most critical aspect(s) of it.
  2. Guiding policy: a clearly outlined approach to cope with the challenge.
  3. Action plan: a set of coherent actions to accomplish the guiding policy.


The diagnosis aims to define the primary problem facing your company. Focus on one or two problems only - more means losing focus. Zero-in on the one thing that will affect all the other problems you face.

The diagnosis examines the situation and looks for patterns, resemblances to previous situations, and identifies areas which most need attention. In other words, “what’s going on here?”.

It’s hard to do. Much is uncertain about the present, let alone the future. The problem is probably ill-defined and there will be several levels of uncertainty at once, with some components being completely certain and others irreducibly uncertain, each component’s categorisation varying over time. Getting it wrong can send you in the wrong direction. Different people and groups within the company will have different perceptions of which problems are important, and will argue the case for a diagnosis that suits them. This becomes a leadership challenge: the leader must reject incorrect or self-serving diagnoses and look for a better one. This clarity is the heart of Leadership.


The policy is a clearly outlined approach to coping with the challenges identified by the diagnosis.

It is clearly outlined: no grandiose words, visions or timelines. No Mission or Vision statements, and no goals. It is an approach used by staff to guide their actions - what to do and what not to do. It copes with the challenges, directly addressing those and not other things. It focuses the advantages the company has onto the challenges and away from peripheral problems, or minor problems. It discourages ineffective actions.

Coherent Actions

The Diagnosis and the Policy are not enough. There needs to be a focused action plan, which is coherent.

Coherent means mutually dependent parts making a logical whole which is consistent. There should be no conflicts between actions (one cancelling another, for example).

Focused means the actions should follow the policies and address the challenge identified by the diagnosis. Importantly, there should be no actions which do not follow a policy and address the challenge - this means letting go of things which might draw attention and effort away. This is what Steve Jobs meant when he said “strategy is saying no to 10,000 things” - focus is not saying ‘yes’ to the thing you want to focus on, it’s also saying ‘no’ to the ten thousand other things which compete for attention.

The set of coherent actions (the action plan) coordinates operations to carry out the Policy. Resources are directed to these actions and no other things. The action plan is coordinated and overseen by senior management and guides the actions of all divisions and departments in the company - only a centralised plan can ensure that everyone is following it and not doing work which falls outside the strategy. The strategy must be executed across the board, by everyone.

A coherent action plan that adheres to all policies, implemented by all divisions and departments offers the greatest chance of success.

There’s more

There is much more to the book, of course. The elements of good strategy are explored, advice is given on how to think like a strategist, and there are plenty of case studies and anecdotes throughout.

This is the definition of Strategy that I use. It helps me see the fluff and strategy-adjacent stuff, and pay those the appropriate level of attention, which isn’t much. “We will be the Number One supplier of choice for our preferred customers” is meaningless in guiding action, so why bother with it? Lists of values, such as “Teamwork, Respect, Integrity, Professionalism” are just words someone found in a list. Staff want to believe the company knows what it’s doing and a properly made Strategy is key to that.