This article examines Indonesia’s perceptions, strategies and policies towards the USA and China under the presidencies of Susilo Bambang Yudhoyono (2004–2014) and Joko Widodo’s first term and early second term (2014–2020). It argues that on a strategic level, Indonesia’s behaviours are in line with structural realist principles, where it adopts a prudent approach of maintaining its strategic autonomy. However, deviations from structural realism are identified in the operationalisation of this strategy into specific foreign and security policies. This article explains such deviations by employing Graham Allison and Philip Zelikow’s models of decision-making, and argues that such suboptimal policies are driven by two domestic political factors, namely, organisational behaviour and governmental politics. Specifically, the article highlights two key tendencies: (a) that policy makers tend to stick to some a priori guidelines within their organisations, despite changes in external pressures; and (b) that policies tend to be by-products of competition between government organisations. In Indonesia–China relations, these tendencies are most apparent in Indonesia’s approach in the South China Sea, where policies and narratives articulated by the government have been largely stagnant, despite increased intensity of China’s activities in Indonesia’s Exclusive Economic Zone. With regard to the USA, these factors manifest in the lack of tangible progress in defence and security cooperation between the two countries, due to a static interpretation of Indonesia’s Free and Active foreign policy maxim.