FORTUNE — He’s a leading professor of business strategy. She’s a wildly successful author of urban fantasy novels for teenagers. Together, they’re one of the more unusual father-daughter pairings.
Richard Rumelt, 69, is the dad. He’s been at the UCLA Anderson School of Management since 1976. His Good Strategy/Bad Strategy was shortlisted for the 2011 Financial Times and Goldman Sachs Business Book of the Year. Cassandra Clare (born: Judith Rumelt), 39, has been writing the Mortal Instruments series since 2004—following a decade of writing for entertainment magazines and tabloids, and occasional posting of fan fiction online. Set in modern New York City, the series centers on the adventures of the demon-fighting Nephilim (also called Shadowhunters). Clare has sold more than 10 million books and recently signed two multi-book deals for $10 million. The first Mortal Instruments movie, City of Bones, is shooting in Toronto and will be out next summer from Sony Pictures (SNE).
Rumelt and Clare talked to David A. Kaplan at Fortune’s offices this summer about creativity, marketing, and parental influence. Below is an edited transcript of their conversation.
Richard, you’re a well-known academic and have sold tens of thousands of books. Cassandra, you’re a well-known author for a certain segment of the mass market—and have sold even more books. Is there a connection between the two careers?
RUMELT: It’s all genetics [laughter]. I’m very proud of her. She’s blossomed fantastically.
CLARE: My father is a big believer in nature over nurture.
Did he think that way when you were 13?
RUMELT: When she was 13, I thought it wasn’t genetics—or at least not my side of the family.
CLARE: I think that there’s an enormous amount that my father has influenced in my career. We as artists are actively encouraged—by other authors, your agent, publisher, and society—not to think about money, strategy, how to manage your career, how to create a brand, because we’re supposed to focus on the art.
So, your father helped you to think of yourself as, well, a corporation?
CLARE: Yes! I grew up listening to him talk about strategy and management. I’ve read his book obviously. And he’s always pressed upon me that the person who had a strategy is going to win out over the person who doesn’t. So when I come into a situation, my immediate question is, “Well, what’s the strategy?” And I think that’s unusual for a writer.
RUMELT: One kind of bad strategy is where people have aspirations, but no plans. And Judy read one of my chapters on that in draft form. A couple weeks later, she told me, “Well, my publisher said, ‘We have high hopes for your next book.’” And she said, “And you’re going to – ?”
CLARE: We were in the boardroom. The publisher [Simon & Schuster] said, “Our plan is to raise the profile and increase the sales.” And I said, “What are your concrete plans to achieve that?” They said, “Well, we’re going to get the book more attention and sell more copies.”
As opposed to a plan to sell fewer copies?
RUMELT: They were naming goals instead of actions. She gets that sensibility of distinguishing between the two.
CLARE: I asked them to come back in a week or two with a list of things they were going to do—advertising, print run, special promotions, third-tier stores like Costco (COST) they were targeting. For Target (TGT), I asked if we were on the planogram. They’ve looked on me as if I were an alien. “You’re not supposed to know these words!”…But they did what I asked.
Richard, I don’t profess to understand the field of business strategy because it sounds redundant. If you’re running something, don’t you have to have some overall strategy?
RUMELT: You would think so.
RUMELT: The United States has a national security strategy. It has 12 points. President Obama created it. One point is “We’ve fallen behind in education.” Therefore, part of the national security strategy is to (a) reform public schools and (b) have the highest percentage of college graduates in the world.
You have some snark in your tone.
RUMELT: This is absurd. First of all, why is this a national security issue? It’s not. Second, there’s no diagnosis of why have we fallen behind in education. Unless you understand the nature of the problem, you can’t solve it. Is having more college graduates, more people studying art history going to solve our national security problem? That’s what passes for strategy in the highest levels of government and in many, many corporations. Corporations would be even more vacuous. “We want to be the company that is the go-to company for whatever!”
Is there a novel to be written about intrigue at companies and their inability to strategize?
CLARE: Only if someone was murdered during one of the board meetings.
RUMELT: There would have to be some sex and violence.
Judy, how many books have you sold?
CLARE: Over 10 million.
So J.K. Rowling is secure for another year or two?
CLARE: Nobody sells books like J.K. Rowling. We have a rule in publishing: Never compare anything to Harry Potter because it’s like lightning in a bottle.
RUMELT: It’s like comparing things to Steve Jobs. Walter Isaacson’s book is just brilliant. But you can miss what [Jobs’] strategy was, which had a couple of very simple elements. The first thing he wanted to do is get out from under Microsoft and Intel. And the only way he could do that is go to mobile platforms, where it wasn’t the Intel chip and the Microsoft operating system. And to get into that space, he went with this music thing and then with the phone thing and then with the [tablet] thing.
Do you the two of you discuss strategy for Judy’s books?
CLARE: I do talk to my father about things I can do as an entrepreneur. We just had an interesting conversation about digital publishing. And I have a strong desire to have the publisher give away my first book in the series online because I believe it can be a loss leader. There are seven books in the series. If you give away the first for free, hopefully people will want the rest and buy those. It’s advertising. My dad asked, “Isn’t there a model for this kind of thing?”
RUMELT: The [videogame] Doom model worked fantastically.
So are you going to do that?
CLARE: There’s a big resistance in publishing to the idea of giving away books. I’m going to fight for it…I do think one great thing with Simon & Schuster is that over the years they’ve been open to ideas I’ve generated. Some have been enormously successful, and a lot have been ideas that I’ve sorted out by talking to my dad.
RUMELT: I told Judy over lunch when she mentioned this that I wrote a research paper back in 1985 about software piracy and how for certain kinds of software it’s probably better to let people steal it because it builds the user base, which then creates corporate demand. Corporations aren’t going to steal it…The CFO of one company I advised in 1981 to give away copies of a database program looked at me and said, “Jeez, we’re going to sell this for $700 times 10,000. Look how much we would lose.” That’s the kind of myopic logic you’re fighting.
You could be advisor to drug dealers and razor-blade manufacturers.
RUMELT: They don’t need that advice. It’s CFOs who do.
CLARE: I’m thinking of another thing that I also ran by my dad. When my fourth book came out, which was called City of Fallen Angels, we were having our marketing meeting [at the publisher]. And they were saying they were concerned about dwindling print sales for all books. And I said, “Let’s something experimental—put something in the books you can’t get in ebooks. In the back of the book we’ll affix a letter written by one of the characters to another character. It’ll look like a letter, with a little wax seal, a thing fans will want to collect. And as an analogue object you can hold in your hand, it’s something you can’t pull out of a Kindle.
CLARE: We tried it [at Barnes & Noble]. It was hugely successful. They had to reorder. Eventually they ran out of them… I was just at the board of directors meeting for Barnes & Noble (BKS) as a speaker. The CEO said to me, “You know, that thing you guys did for City of Fallen Angels was a brilliant piece of strategy. It was so successful for us that we’ve now gone and asked dozens of other authors to do the same thing. We call it City of Fallen Angels treatment.”
Will Richard have a cameo in the movie?
CLARE: No, but there is an evil dad in the movie.
RUMELT: I’d rather have my own film. I’m actually beginning a project of trying to video CEOs about certain strategy issues.
CLARE: I have asked specifically that they include my cat.