When Strategy Succeeds and the Institution Fails

Picture a leadership meeting celebrating the completion of most of its initiatives, while customers quietly defect to a competitor that appeared nowhere in the plan. The projects are delivered, the budgets are spent, and the execution metrics look reassuring, yet the organization has become less relevant in the market. This hypothetical scene exposes a question that hides behind progress reports: are we advancing toward a stronger position, or executing with great efficiency a vision that has expired?

Strategy begins with a choice worth committing to. Which customers do we serve? Which problem do we solve? Why will they choose us over the alternatives? What will we decline to do, so that our resources are not dispersed? The project portfolio comes afterward. An organization may crowd itself with initiatives precisely because it has not settled its choices, allowing intense activity to postpone the question of direction.

For this reason, I find the contrast between "traditional" and "modern" strategy less useful than a different question: which strategic logic fits the environment in which we operate? In Your Strategy Needs a Strategy, Martin Reeves, Knut Haanæs, and Janmejaya Sinha argue for a plurality of approaches matched to the nature of the market. Some environments reward planning to secure a competitive position. Others demand repeated adaptation. Still others can be shaped through collaboration with other players. A single organization may need more than one approach at the same time.

This idea changes the starting point. Before asking about a five-year target, we must ask what we can know and what we can influence. Where the rules of the business are stable, planning precision carries great value. Where customers' willingness to pay is unknown, more detailed forecasts cannot substitute for testing. The first strategic task may be to discover whether the opportunity exists at all.

Here, experimentation takes on a different meaning. Suppose a company wants to launch an annual-subscription service. It can build a compelling financial case, but the venture still hinges on decisive assumptions: Does the customer need the service? Will they pay its price? Will they renew? I would recommend that funding begin by testing these questions, with expansion tied to evidence defined in advance. The organization then buys knowledge before taking on a commitment that is difficult to reverse.

None of this turns the enterprise into a permanent laboratory. An experiment that does not specify what will be built on its result can become endless activity. Before launch, we must know what outcome justifies expansion, what warrants adjustment, and when we stop. Decision flexibility demands sharper criteria, or it degenerates into perpetual reversals of opinion.

Learning, however, creates no advantage unless it changes how resources are allocated. This is what David J. Teece's Dynamic Capabilities framework illuminates: sensing opportunities and threats, seizing opportunities, and reconfiguring resources and capabilities. Recognizing a shift is only the first step. It must be followed by the ability to move capital, talent, and management attention to where competitive opportunity is changing.

Seen this way, an organization's problem may be that it knows more than it can act on. It sees the declining appeal of a legacy business but keeps funding it because that business holds internal influence, or because acknowledging its decline embarrasses its sponsors. It grasps the importance of a new line of business but leaves it with a marginal budget and limited authority. In such cases, the movement of resources reveals the real strategy far more than any board presentation.

The challenge deepens when the existing business is successful. How do we protect the source of profits while giving space to an activity that may change how those profits are earned? This is where Organizational Ambidexterity proves valuable, enabling an organization to combine different management approaches for businesses facing different conditions. The discipline suited to a stable business does not necessarily fit a venture still searching for a scalable model.

In practice, I translate this into different evaluation criteria. A mature business is held to account for quality, profitability, and operational efficiency. An emerging venture, within clear time and budget limits, is held to account for the hypotheses it has tested and the evidence it has gained. Subjecting both to the same yardstick risks closing a promising opportunity prematurely, or sustaining a weak experiment for years under the banner of innovation.

Adapting to the market is also not the only option. The Strategy Palette framework points to the possibility of shaping the market by coordinating the efforts of multiple parties. The value of a new service may depend on its integration with partners, distributors, and technology providers. The strategic question then becomes: how do we make others' success dependent on our own, and what position can we defend within this ecosystem?

The hardest question remains: when do we hold on, and when do we change course? I believe the answer begins by separating execution failure from a failed hypothesis. If customer demand persists and the profit logic remains sound, the task may be to fix execution and be patient with results. If the evidence undermines the very reason for the investment, further resources require a fresh justification. What we spent yesterday is not sufficient grounds for what we will spend tomorrow.

Boards should therefore ask, alongside completion rates: What have we learned that warrants changing a decision? Which critical assumption has weakened? Which activity deserves additional resources, and which commitment should be scaled back? Management, in turn, must document the reasons for every adjustment, so that learning can be distinguished from rationalization and flexibility remains open to accountability.

A mature strategy knows what deserves constancy and what evidence demands change. Its gravest failure is when the plan stops being a means of building the future and becomes a reason to defend the past.