1. Thematic Strategy: Building a strategy that gets stronger as the world changes

2. The Art of Leadership: How to give feedback that actually helps people

3. Operating at Scale: How to ensure a rollout lands everywhere, not just the pilot

Read time: 7 minutes

_{THEMATIC STRATEGY}

Building a strategy that gets stronger as the world changes

There are dozens of strategy frameworks that promise to help you outperform your competitors. For my PhD at ESCP Business School I went looking for the companies that had actually managed it, screening 8,430 firms listed on the US stock market across 81 industries for a dominant share of their industry’s profits over five consecutive years.

Just 11 firms cleared the threshold, 0.13% of the sample.

What those 11 have in common is the framework I now call Thematic Strategy. They were not better informed than the companies they beat, and their competitors paid attention to the same external changes. What separated them is that they committed the business to three or four of those changes and stayed with them for a decade.

Which reduces to a single question you can ask about your own strategy:

Have we aligned our positioning and capabilities to leverage the most important drivers of transformation?

You answer it with three questions, and the order is the framework:

1. Foresight. What long-term changes outside this business could open an opportunity or become a threat?

2. Positioning. Given those changes, how do you leverage them to differentiate yourself from your competitors?

3. Capabilities. What do you have to build to deliver on that position?

Most firms have a strategy, and most of them start by improving the firm from the inside. The best firms do the opposite.

Remember:

1. Start outside the firm

2. Align with massive, fast-growing transformations

3. Focus relentlessly on riding the wave

Then put this to your team:

Name the three changes outside this business that we are organised around, and the last thing we funded because of one of them.

The changes will come easily. If the funding does not, you have a foresight process that produces reports.

Read the research

_{THE ART OF LEADERSHIP}

How to give feedback that actually helps people

In 1996, Avraham Kluger and Angelo DeNisi published a meta-analysis in Psychological Bulletin covering 23,663 observations. They wanted to know whether telling people how they were doing improved how they did.

On average, it did. But that average hides the finding that made the paper famous. In over a third of cases, the feedback made performance worse.

Feedback works by redirecting someone’s attention. Where attention is redirected to the task, performance improves because the person now has something specific to work on. Where it directs attention to the self, performance falls, because they start managing how they are seen instead of how they are doing.

Which gives you a check that takes about four seconds. Write down the main thing you intend to say, then find its grammatical subject. Is it the work, or is it them?

Here’s two examples:

1. You need to be more commercial at this level. The subject is the person. It names no piece of work, so they spend the following weeks trying to look commercial.

2. The paper didn’t say what we would stop doing to fund this, and that is the first thing the committee will ask. The subject is the work, and the work can be fixed.

The theory does not spare praise, either. You’re a star points at the person as squarely as you’re not detail-oriented does, and it directs attention to the same place. Encouragement that never names anything specific changes almost nothing.

Being specific requires you to have read the paper or watched the meeting. General feedback about a person’s character is what you give when you have not done the work of looking, and it feels kinder while leaving them with nothing to work on.

Sometimes the thing you have to raise really is about the person. Then anchor it to one occasion. Not you’re too defensive in exec meetings, but:

When Sarah pushed on the timeline on Tuesday, you answered the challenge rather than the question, and she stopped asking.

Name the occasion, describe what happened, then stop talking and let them answer.

And when you find that you cannot be specific, that is itself the finding. It means you are not ready to give feedback, and the conversation is premature.

This is a meta-analysis from 1996, drawn heavily from controlled settings rather than executive committees. It will not tell you which of your own conversations sit in the damaging third, and checking the subject of a sentence will not make you right about the person. It will stop you saying the worst version of what you were going to say.

Access to study

_{OPERATING AT SCALE}

How to ensure a rollout lands everywhere, not just the pilot

In 2007 I was given 71 Halifax branches to run, leading around 1,300 people. I was 31, and it was the biggest thing anyone had handed me.

What I saw quickly was that the branch teams had almost nothing by way of a performance process. A job description, sometimes a target, barely any feedback, and no development discussion at all. That struck me as an obvious gap, and one I could close.

So I downloaded our standard forms and asked the manager of my largest branch to try them with her team of 55. It worked. She liked it, her people engaged with it, and I had my proof. I planned a proper launch and delivered it across all 71.

Then I did my usual round of branch visits, and I could not find it running in a single branch.

The feedback I got was harsh, and it was right. What works for a branch with a team of 55 does not work for a branch with six part-time colleagues and a manager who also serves customers. And the harder point: not everyone wants a development plan. Some of those people had worked in that branch longer than I had been alive. They wanted to come to work, do the job well, and go home.

I never did the arithmetic. Across 71 branches and 1,300 people the average team is about eighteen, and I piloted in a branch three times that size. I had not chosen a representative site, I had chosen the strongest one, because I wanted the test to work.

What I have used since is two sites and one question, and both are settled before the pilot starts.

Two sites means running the pilot in your strongest unit and your hardest one simultaneously. The strong one tells you whether the thing can work at all, which is worth knowing and is all I learned in 2007. The hard one tells you whether it can work everywhere.

One question is what you ask the manager of the hard site before either pilot starts, in these words:

If this were the only branch, what would you have to change to make this work?

Then listen. If it is something you need them to keep doing, change the process and leave the branch alone. If they cannot name anything at all, they have not understood what you are asking of them, and one conversation has made that clear.

I missed one thing in 2007 that this does not catch. The method tells you whether a process survives. Whether anyone wants it is a separate question, and a process that only runs while people are enthusiastic will stop when the enthusiasm does.

The other thing I got wrong. I had planned a launch, which is an event you run once. A rollout is months of going back to the sites least likely to have bothered.

This article is part of The Art of Leadership series, where I cover twelve principles of leadership that my research found underpin superior company performance. Read the full series here.

Among the executives who reached the chief executive’s job fastest, 97% had made at least one bold career move: a step sideways or down, a move into a job they were not quite ready for, or taking on a failing business.

That figure comes from the CEO Genome Project, a ten-year study by Elena Botelho, Kim Rosenkoetter Powell and Nicole Wong, published in Harvard Business Review in January 2018. They assembled more than 17,000 assessments of C-suite executives, studied 2,600 of them in depth, and then isolated the ‘sprinters’: the people who reached the top job faster than the average of 24 years from first job to chief executive.

Pedigree explained little. Only 24% of the sprinters held an MBA from an elite school. What set them apart was those three moves, which the authors call career catapults, and close to half of the sprinters had made at least two of them.

By the end of this article you will have a test to apply to any role you are considering to judge whether it will help progress your career, and how to handle the conversations that decide whether you are offered it at all.

The problem with doing your job well

The standard theory of a career is simple. Do the current job well, and the next one follows. Deliver and wait to be noticed.

In 2019, Alan Benson of the University of Minnesota, Danielle Li of MIT and Kelly Shue of Yale published a study in the Quarterly Journal of Economics using the performance records of sales workers across 131 companies. A worker who sold twice as much as a colleague was around 15% more likely to be promoted into management.

Then they measured what happened after the promotion. The stronger a manager’s own sales had been beforehand, the worse their team performed under them. A doubling of pre-promotion sales corresponded to a 7.5% fall in that manager’s value added, measured as the change in what their people produced.

Sales is a narrow setting, chosen because the performance measure is unusually clean, so the finding should not be generalised. But the same logic applies well outside sales. Companies promote on the evidence of your performance in the job you are doing now, and that evidence is a weak predictor of how you will do in the job above it.

So a career built on outperforming everyone at your own level earns you a promotion into a job you cannot yet do.

Making a bold move

The three catapults feel like risk-taking. But remember, each one gives experience the next level will require, years before you need it.

A failing business teaches you to decide with incomplete information and public consequences. Building a small unit from nothing gives you a full profit and loss account to run in a safe environment. And in a role above your grade, you have to lead people who know more than you do, providing an accelerated lesson in delegating authority.

Mary Barra’s route to the top of General Motors shows the pattern. In 2009, she was an engineer who had run the Detroit Hamtramck assembly plant and was made vice president of global human resources, in the year GM went through bankruptcy. By grade it was a sideways step.

She spent two years in the job, a period in which the company went through four chief executives, and in February 2011 she was given global product development, an operation of 36,000 people. She became chief executive in January 2014.

In 2009 none of that looked like a plan. What the HR job gave her was the labour relations, the talent pipeline, and the internal politics of a company in distress, which was exactly the experience a chief executive of GM would later need.

Who puts your name forward

Capability is half of it. The other half is determined by people who are willing to back you.

In September 2010, Herminia Ibarra, Nancy Carter and Christine Silva published a study in Harvard Business Review drawing on a Catalyst survey of over 4,000 high potentials. More women than men had mentors. They were still paid less, held lower-level positions and reported less career satisfaction. The explanation the authors offered was that mentoring and sponsorship had been treated as the same thing. A sponsor puts their own standing behind you at the moment a role is being appointed.

The study was about the gender gap, and the mechanism it identified applies to everybody. Advice is cheap to give and pleasant to receive, which is why there is so much of it. Advocacy costs the giver something, which is why you have to ask for it directly.

Ok, here is the practical part.

The test, and the two conversations

Before accepting any role, ask one question: does this job require me to make a decision I have not made before, and will the result be visible outside my own function?

Both parts have to hold. A new decision taken somewhere the rest of the business never sees will build the capability and leave no one able to vouch for it. The reverse case, visibility with no new decision, gives you a reputation you will not be able to operate at the next level.

Then have two conversations. Both are short, and neither is easy to say out loud.

The first is with your manager.

“I want to run something that isn’t working. If there’s a business, a market or a function that’s behind plan and needs someone to take it on, I’d like to be considered for it, at my current grade if that’s what it takes. The one I have in mind is [name it]. What can I do to make this happen?”

Managers hand the difficult assignments to people who are already making their own job easier. If you have not been that person, start there.

The second conversation is with the most senior person who has taken an interest in you.

“You’ve been generous with your advice and it has helped me. I want to ask you for something different. When the next set of appointments is discussed, I’d like you to put my name forward for a role running a P&L. If that isn’t something you’re able to do, please tell me, because I need to know where I stand.”

The final sentence gives the other person permission to decline, and their answer tells you within a minute whether you have a sponsor.

Where this goes wrong

The CEO Genome data I referred earlier in this article is drawn from people who reached the C-suite. It cannot show you the executives who took a failing division and never recovered from it. Bold moves have a failure rate, and this study did not measure it, so treat the three catapults as what separates the fast from the slow among people who made it, which is a narrower claim than the headline suggests.

There is also a version of this advice that does damage. Take on a mess without the authority or the budget to fix it, and you will be accountable for an outcome you have no way to change. Before accepting one, establish who holds the decisions, what you are permitted to spend, and how long you have. If any of those answers are vague, the assignment is testing your willingness to volunteer. When you are the one allocating roles, remember that responsibility without authority is how organisations lose their best people.

None of this is an argument for constant motion either. Two years is rarely long enough to see the consequences of your own decisions, and someone who leaves before the results arrive never finds out whether they were right. Changing employer is a weaker lever than it looks.

What next?

Put one question to whoever decides your next role: which experience am I missing that would make me an obvious candidate for the job above this one? If they cannot answer it, you have learned something useful about where you stand. If they can, you have your next assignment.

Then write down the three most consequential decisions you have personally made in the past two years. Not the ones you contributed to or recommended. The ones only you could have made. If that list is short, doing your current job better will not add to it.

This article is part of The Art of Leadership series, where I cover twelve principles of leadership that my research found underpin superior company performance. Read the full series here.

Two senior people disagree about something that matters. Instead of settling it between themselves, each goes separately to the chief executive to argue their case. The chief executive hired both of them so that exactly this kind of thing would not need their attention, and now finds themselves carrying messages between two adults who ought to be talking to each other.

The leader in this situation has usually done everything the standard advice prescribes. And yet every decision of consequence still comes back to the leader, because the people below pass the hard decisions upward the moment they become difficult.

This is the distinction most discussions of delegation miss. Delegation is commonly understood as the distribution of work. Its harder and more consequential form is handing over authority, and the two are not the same thing.

A leader who hands over the execution but retains every decision has not delegated in any meaningful sense.

They have relocated the labour and kept the power, and in doing so they have often made themselves busier rather than less busy, because they must now supervise the work as well as approve its every turning.

Why the distinction matters

The task view of delegation is appealing because it feels safe. Handing someone a defined piece of work, with a deadline and a review at the end, leaves the essential control undisturbed. The leader still decides; the subordinate simply executes. Nothing of real consequence has been surrendered, which is exactly why this form of delegation so rarely relieves the pressure it was meant to address.

Authority is different because it transfers the right to be wrong. To delegate a decision is to accept that it may be made differently from how the leader would have made it, and occasionally made badly, without the matter returning for correction. That is a materially harder thing to concede, and the evidence suggests that many leaders do not concede it.

The consequences of withholding that authority compound as an organisation grows. In the earliest phase of a company, centralised decision-making is not a flaw but an advantage; the founder can take every decision, and this is the right call. The difficulty is that organisational demand does not grow in a straight line. Each new hire creates coordination, each new customer creates exceptions, each new product line creates decisions, while a single person’s capacity is capped by a fixed ceiling of hours and attention. At some point, usually reached sooner than expected, the leader who was the engine of the company becomes the brake on it.

A question of temperament, not technique

Much of the writing on delegation treats the failure to hand over authority as a skills deficit, correctable with the right process or the right template. A less comfortable explanation is that it reflects something about the person at the top.

A 2021 study published in the Journal of Organization Design examined the relationship between a chief executive’s personal dominance, a stable character trait marked by a strong desire for influence and control, and the way that executive designed the organisation beneath them. Linking measures of dominance drawn from earnings calls to data on reporting structures across large US corporations, the authors found that more dominant chief executives maintained a significantly wider personal span of control and delegated fewer decision rights than their less dominant counterparts. The reluctance to distribute authority, in other words, is visible in the shape of the organisation chart, and it tracks a trait that tends to intensify rather than soften as a person reaches positions of ultimate authority.

This finding reframes the problem. If the concentration of decision rights were a matter of technique, better technique would resolve it. If it is partly a matter of temperament, then the leaders most in need of distributing authority are, by disposition, the ones least inclined to do so, and the correction has to begin with self-awareness rather than with a new process.

What it costs the people below

When leaders hold on to authority, the problem is usually examined from their own side, as a drain on their time. Its more serious cost may fall on the people denied it.

Capable employees do not remain for long in roles that carry responsibility without authority. Decades of research into psychological ownership indicate that control over one’s work, the sense that a domain is genuinely one’s own to shape, is what produces the engagement and commitment that organisations depend on. Where decisions are participative and authority is real, ownership follows; where every judgement must be ratified above, it does not.

The reason is not hard to see. A talented person given a title but not the authority that should accompany it learns quickly that their judgment is not trusted, and that the interesting decisions will always be made elsewhere. Some tolerate this for a time. The best rarely do, because they can find, without much difficulty, an organisation prepared to let them decide. A leader who hoards authority not only slows the company but also steadily selects for people willing to work without it, which is not the population any organisation wishes to retain.

Distributing authority without losing it

Distributing authority well is not the same as abandoning it. The fear that the two are the same is exactly what stops leaders from doing it.

The most effective approach observed across studies of delegation begins not with tasks but with decisions, and specifically with the decisions an organisation makes repeatedly: pricing exceptions, hiring approvals, refunds, procurement, and the allocation of marketing spend. For each recurring decision, a single owner can be named, together with an explicit statement of the boundaries within which they may act alone, the threshold beyond which they must consult, and the point at which a matter escalates. What this framework provides is not a loosening of standards but a clarification of them, converting authority from something granted case by case, and therefore constantly renegotiated, into something structural.

The harder discipline lies in what happens next, at the first moment the newly delegated authority produces a decision the leader would not have made. Delegation fails when leaders reclaim authority at the first sign of discomfort. The instinct to intervene is strongest precisely when intervention is most damaging, because a reasonable decision taken independently is often worth more to an organisation than a marginally better one that reinforces its dependence on a single person. The aim is not to eliminate error, which is unattainable, but to build an organisation capable of acting and learning without waiting for one individual to be available.

What the argument is not

None of this amounts to a case for the leader’s disengagement, for the wholesale surrender of judgment in the name of empowerment. Some decisions properly belong at the top and should never be delegated: the direction of the enterprise, the most consequential appointments, and the few choices that guide the entire strategy. Distinguishing these from the far larger set of decisions that have merely accumulated at the top through habit is itself part of the skill.

Nor is the argument that any distribution of authority is better than none. Authority handed to the unprepared, without the boundaries and standards that make its exercise safe, is not delegation but abdication. The claim is narrower and more specific: that handing over decision rights, bounded and deliberate, is a different and more demanding act than handing over tasks, and that it is the one on which an organisation’s ability to outgrow its founder ultimately depends.

Implications

The most revealing exercise available to a leader who suspects they have become the bottleneck is not to audit their tasks but to audit their decisions. Over the course of a fortnight, the decisions that reach them can be sorted into those that genuinely needed them and those that came up only because no one below had been given the authority, or the confidence, to make them without permission.

For most leaders the second category is far larger than the first, and its size is a measure of authority withheld rather than work undone. The organisations that outgrow their founders are not those whose leaders learned to distribute tasks more efficiently. They are those whose leaders learned to distribute the right to decide, and then, at the first uncomfortable test of that decision, declined to take it back.

This article is part of The Art of Leadership series, where I cover twelve principles of leadership that my research found underpin superior company performance. Read the full series here.

Jeff Bezos has described his working day as an exercise in restraint. He gets eight hours of sleep, schedules nothing demanding before ten in the morning, and considers his day finished by late afternoon. The reasoning he offers is this: a senior executive, he has said, is paid to make a small number of high-quality decisions.

Set that standard against the evidence on how senior leaders actually spend their time.

When Michael Porter and Nitin Nohria tracked 27 chief executives around the clock for 13 weeks, they assembled some 60,000 hours of data on where executive time goes. Roughly 72% of it was spent in meetings. Only 28% was spent working alone, and much of that was fragmented into blocks of an hour or less. The activity that most determines whether a company has a future, sustained thinking about its direction, received the smallest and most interrupted share.

A Bain study published in Harvard Business Review a decade earlier had reached a similar conclusion by a different route. Senior teams, it found, met to discuss strategy for only about three hours a month, and as much as 80% of top management’s time was devoted to issues that accounted for less than 20% of a company’s long-term value.

The two findings describe the same phenomenon from opposite ends. Bezos frames the executive’s job as a handful of decisions that truly matter. The research suggests that in most organisations those decisions are precisely the ones that never receive sustained attention, because something else has consumed the day. That something is almost always operational: the firefighting that feels like the substance of leadership, resembles it closely, and displaces the work that only the most senior person can do.

The problem is not that leaders are careless or poorly organised. It is that urgent work is, in fact, urgent. What appears to be a failure of discipline is better understood as a structural mismatch between the work that drives attention and the work that deserves it.

The structural advantage of the urgent

Most leaders can articulate the difference between the urgent and the important. The distinction rarely changes behaviour, because the urgent enjoys three structural advantages that the important cannot match.

The first is specificity. An escalating customer, weekly sales getting off track, a key person who is unhappy: each of these has definite edges. It can be seen, grasped, and resolved, and its resolution delivers a small, clean sense of completion. Important questions, such as where a business should stand in five years, have no edges and offer no comparable moment of closure.

The second is that the urgent is often personal. Someone is waiting on the resolution and watching to see whether the leader responds. Nobody, by contrast, waits in the doorway to ask whether the competitive landscape has been thought through lately. Strategic work has no one chasing it, which is a large part of why it slips.

The third is that the urgent signals effort. Resolving a live problem in front of the organisation both feels like leadership and looks like it. Sitting alone in thought looks like little at all. In a culture that rewards visible activity, a leader who reserves a morning to think can feel faintly derelict, and may be perceived that way by others.

Taken together, these advantages make the outcome close to inevitable. The important work loses out day after day because it never wins a direct contest against something concrete, human, and immediate. Executive attention, in this reading, is the scarcest resource an organisation possesses and the one it guards least carefully. Few leaders would allow an unbudgeted claim on their capital. Many allow almost any claim on their afternoon.

A test for what deserves attention

One question separates the work that genuinely requires a particular leader from the work that has merely arrived at their desk: if this were not handled personally, would the outcome be meaningfully worse?

Applied honestly, the question disqualifies much of a typical executive day. The routine status meeting proceeds without its most senior attendee. The approval that functions as a rubber stamp could be done by someone else. The problem being escalated frequently arrives with several people already capable of resolving it, who have learned that escalation is easier than decision.

A smaller set of activities passes the test. Setting direction is one. The two or three relationships that cannot be delegated are another. So is the decision that properly belongs to the leader, and the signal that leaders send, whether they intend to or not, through the choice of what they attend to. These deteriorate materially when the most senior person steps away, and it is for these that executive attention exists.

The instructive point is that the two lists are of very different sizes. The work that passes the test might occupy a single focused morning. The work that fails it will expand to fill every hour it is permitted to fill.

How attention is protected

Identifying the important work is rarely the difficulty. Protecting time for it, against an organisation that will fill any gap left open, is where the discipline lies. Several practices distinguish the leaders who manage it.

They tend to reserve time for strategic work before other commitments accumulate, rather than hoping to find it once the calendar fills. A block placed in an otherwise empty week survives; the same block, inserted into a crowded one, is displaced the first time something urgent appears. The distinction matters more than it seems, because it determines whether the important work is scheduled at all.

They also build routes for urgent work to travel somewhere other than to them. Much of what reaches a senior leader arrives there because no one below has been given a path to resolve it. Each time such a matter is handled personally, the organisation learns to bring the next one, and the flow increases rather than abating. Establishing the route once and holding to it even when personal intervention would be quicker is what interrupts the pattern.

The most effective leaders match their hardest thinking to the hours at which they think best rather than to whatever gap the calendar offers. Bezos reserves his best hours for consequential decisions and declines to make important ones late in the day. The underlying principle generalises: strategic questions, given the tired end of the afternoon, tend to receive second-rate answers.

Finally, they judge a week by what was protected rather than by what was cleared. An empty inbox is not evidence of a well-spent week; often it is evidence that the week was spent on other people’s priorities. Porter and Nohria recommend that executives review, each quarter, whether their use of time in fact matched their stated priorities. Most who conduct the exercise are unsettled by the result.

What the argument is not

None of this amounts to a case for withdrawal, for closing the door on the business in order to contemplate its future undisturbed. The urgent work is real, and a good deal of it is important in its own right. Customers do escalate, figures do move, people do require answers. The claim is narrower: that most of this work does not require the particular individual it reaches, and that treating tasks any capable person could handle as though they demand the organisation’s most senior figure is a failure of focus that presents itself, persuasively, as diligence.

The relevant test is therefore not whether a task is important. Almost everything is important to someone. The test is whether it represents the most valuable use of the one form of attention the organisation cannot replace. Firefighting is both important and endlessly abundant. The work of setting direction is important and available from only one source.

Some fires do require the chief executive, and part of the skill lies in recognising which. But a leader who personally fights every fire has not demonstrated commitment so much as revealed that no organisation was ever built capable of fighting its own, which is itself a consequence of the strategic work left undone.

Implications

The exercise that most sharpens the argument is a retrospective one: an honest account of where last week’s hours actually went, as distinct from where they were intended to go. How many were spent on work that would have turned out much the same in the leader’s absence, and how many on the small number of things that only that leader could have done.

For most executives the ratio is uncomfortable, and the discomfort is the useful part. Bezos organised an entire working day around the protection of a few consequential decisions. The evidence suggests that most leaders protect almost nothing of comparable value, and then find themselves wondering why the strategic work never advances. It does not advance because the time it required was never defended.

This article is part of The Art of Leadership series, where I cover twelve principles of leadership that my research found underpin superior company performance. Read the full series here.

Sixty people report directly to Nvidia CEO Jensen Huang. Sales, engineering, software, and finance leaders, senior vice presidents among them, all report to a single individual at the head of a company valued in the trillions of dollars.

There are no one-on-one meetings and no written performance reviews. No piece of information reaches Huang’s senior staff without reaching everyone else at the same time. Speaking at the Stanford Institute for Economic Policy Research, he noted that there is nothing he tells his executives that he does not also tell the rest of the company.

Nearly every management convention of the past forty years suggests this arrangement should fail. The recommended span of control is roughly seven to eight direct reports; one-on-ones are widely treated as a foundation of people management; and written reviews are assumed to be the mechanism through which development is structured. Removing all three should, in theory, produce an overloaded leader, a disconnected senior team, and an organisation unable to decide anything.

Instead, the company is worth around $4.8 trillion.

The structure creates the culture

Huang has described his reasoning. In an interview with Lex Fridman, he explained that individual one-on-ones are effectively impossible at that scale; problems are instead placed in front of the entire group, and the group works on them together.

In a conventional organisation, one of the most valuable assets an executive holds is information: what the CEO is thinking, sensitive data about performance, what was discussed at the board. That information functions as a form of currency, and the hierarchy exists in part to control how it is distributed. Remove the scarcity, and much of that apparatus has little left to do.

Huang has framed the intent explicitly. The company, he has said, was designed for speed, so that information moves as quickly as possible and people are “empowered by what they are able to do, not what they know.” When no one can accumulate status through privileged access, the remaining currency is contribution.

The design also changes the nature of disagreement. Because Huang reasons through problems in front of the group rather than announcing conclusions, colleagues can challenge the logic rather than the verdict.

The larger point is that the structure was chosen to produce a particular culture. Once private information is removed, status has to be earned elsewhere. In the absence of written reviews, feedback becomes continuous and public or it does not happen at all. And a leadership team of sixty cannot sustain an inner circle, because there is no outer circle to distinguish it from. The organisational design generates the cultural outcome, rather than the reverse.

What follows is a three-part diagnostic for identifying what a culture actually is, as opposed to what leaders hope it is, along with a method for changing it.

Culture is not what you value

An organisation’s values are what it says it cares about. Its culture is how its people actually behave. These are distinct, and when they conflict, behaviour prevails, because people trust observed actions over stated intentions.

Consider how a new employee comes to understand a culture. It is rarely learned in onboarding. It is learned in the first month by observation: who was promoted and what they were like, who was moved aside, how leadership responded when a project failed, and how it responded when someone delivered inconvenient news. Within weeks, the employee has constructed a working model of what is safe and what is rewarded, and that model tends to govern behaviour for years.

Culture, in this sense, is less a sentiment than a response to leadership behaviour. People continuously observe how leaders are likely to react and calibrate accordingly, and each of those judgements is assembled from evidence leaders supply, often without realising they are supplying it.

The three signals

A culture can be diagnosed along three dimensions.

The first is what gets rewarded: what produces promotion, budget, visibility, and status. If the people who advance are consistently those who hit their targets irrespective of method, that is the operative culture, whatever the values statement asserts.

The second is what gets tolerated: the behaviours that are noticed and allowed to pass. When someone is attacked in a meeting and no one intervenes, tolerance is not neutral; it is a decision, and the organisation reads it as permission.

The third is what gets punished, whether formally through process or informally through exclusion.

Applied to Nvidia, the pattern is coherent. Contribution is rewarded rather than access, because access has been rendered largely worthless. Being wrong in public is routinely tolerated, since reasoning happens in the open and no one is correct every time. And information hoarding is constrained structurally rather than personally, because little remains to hoard. Read together, these three signals make the flat structure look less eccentric than inevitable, the only configuration that could deliver what Huang intended. The same diagnostic can be applied to most organisations, and it does not take long to run.

Why leaders lose control of the culture they build

Few leaders set out to create a culture they would be ashamed of, yet many do. Three mechanisms are usually responsible.

The first is that a leader’s reactions are read by the entire organisation. When someone raises an inconvenient truth and the leader responds by defending the decision, or by asking who was responsible before asking what happened, the lesson that challenge is risky propagates well beyond the individual conversation. No formal punishment is required. Visible discomfort, once, in front of the right audience, is sufficient to shape behaviour.

The second is that culture is effectively set one or two layers below the top. A senior leader may be genuinely open, but the more consequential question is whether the manager two levels down is, because that manager’s reactions are what most of the organisation actually experiences. This is the cascade problem that undermines accountability in large organisations, and it is the problem Huang addressed by removing layers rather than attempting to reform them.

The third is that measurement overwhelms rhetoric. When an operational review interrogates delivery dates in forensic detail while treating quality in general terms, the organisation infers the real priorities regardless of what is said aloud. People direct their attention towards whatever they expect to be asked about, which is why what leaders attend to communicates more than what they declare.

How to change what a culture rewards

Culture responds to changed consequences far more than to communication. Four interventions are useful, roughly in sequence.

Audit recent promotions. Examine the last several people to advance and ask what behaviour was in fact being rewarded. If every promotion went to reliable on-time delivery and none went to someone who surfaced a difficult problem early, the culture has been identified, along with its cost, which typically includes the departure of the strongest people, who read the pattern sooner than anyone.

Remove a piece of privileged information. This is a scaled-down version of the Nvidia approach. Take something currently shared only with the senior team and distribute it broadly, then observe how the behaviour of the former information-holders changes. The exercise reveals how much of the hierarchy performs a genuine function and how much simply guards a channel.

Recognise the right behaviour publicly and specifically. When an individual surfaces a problem that averts a costly decision, the recognition should be explicit: naming the person, describing what they raised, and connecting it to the outcome. Generic praise for “speaking up” accomplishes little; a concrete, publicly credited example gives everyone else a specific behaviour to emulate, and tends to outperform any formal values programme.

Make the tolerated visible. Identify one behaviour that has been allowed to pass, state plainly that it needs to stop, and then act the first time it recurs. The enforcement is the entire point. Announcing a standard and failing to uphold it is worse than silence, because it teaches the organisation that stated standards carry no consequences.

What this is not

None of this describes a soft or uniformly comfortable environment. By most accounts Nvidia is a demanding place to work; ten current and former employees told Bloomberg of seven-day weeks, workdays ending at one or two in the morning, and meetings that escalated into open conflict. Huang has said he would rather “torture you into greatness” than dismiss someone, framing the intensity as belief in the individual. Asked on 60 Minutes whether he is demanding and difficult to work for, he agreed, adding that extraordinary results should not come easily.

And yet Nvidia’s voluntary turnover in 2023 was 2.7%, against a semiconductor-industry average of 17.7%. One of the sector’s most demanding employers loses its people at roughly a sixth of the prevailing rate.

This is the element most culture programmes misread. A strong culture is defined by clarity about expectations. Transparency is not the same as leniency, and openness does not imply diminished standards. What Nvidia appears to have is a culture with unusually legible signals: employees know what is rewarded, what is tolerated, and what the standard is. People will absorb considerable difficulty when they know precisely where they stand; what they tend not to tolerate is ambiguity.

Nvidia’s particular intensity is not the point, and it is a reasonable thing to reject. What no organisation can reject is the fact that its culture is already transmitting these three signals, whether or not anyone designed them deliberately.

Implications for leaders

Huang built a structure suited to a company of engineers solving shared technical problems at speed, and it would not transfer cleanly to a retailer or a bank.

What transfers is the method. Huang treated culture as a design problem. Rather than issuing a values statement about transparency, he removed the conditions under which privileged information could exist, and allowed the culture to follow from the structure.

The practical starting point is an honest audit. What does the organisation in fact reward? What does it allow to pass? And what, formally or otherwise, does it cost an individual to tell senior leadership that it is wrong? The answers to those questions describe the culture that exists, which is the only one that matters.

This article is part of The Art of Leadership series, where I cover the principles of leadership that my research found underpin superior company performance. Read the full series here.

On 5 August 2025, the board of STAAR Surgical agreed to sell the company for $1.5 billion.

The logic was sound. STAAR makes implantable lenses that correct short-sightedness, and its largest market, China, had turned hostile. Government procurement reforms were squeezing prices, and inventory had built up. Revenue was under pressure. Then Alcon, the Swiss eye-care giant, offered $1.5 billion in cash, a premium of roughly 59% over STAAR’s average share price for the previous three months.

Chief executive Stephen Farrell put it plainly: the China headwinds had damaged STAAR’s viability as a standalone business, and this deal was the best path forward for shareholders. The board agreed unanimously.

But a month later, a different group of intelligent, well-informed people looked at precisely the same evidence and reached the opposite conclusion.

The dissent

In September 2025, Broadwood Partners publicly opposed the sale. Broadwood owned 30.2% of STAAR’s stock, making it by some distance the largest shareholder, and it had been invested in the company for years.

Its argument was not that the China problems were challenges. Broadwood accepted the thesis. What it disputed was the conclusion drawn from them: that temporary market pain justified selling a business with a distinctive technology at what Broadwood considered a low point in its cycle. Yunqi Partners, holding 5.1%, took the same view.

Then the disagreement spread. In October, the proxy advisory firm Glass Lewis recommended that shareholders vote against the deal, and Egan-Jones followed. Together with the dissenting shareholders, the opposition now spoke for more than a third of the company.

And in November, something unusual happened. STAAR’s board split, and the company disclosed it.

In supplemental proxy materials, STAAR revealed that one director had dissented when the board approved amended merger terms. The dissenting director argued that shareholders had already voiced concerns, and that the revised arrangements risked discouraging other bidders from coming forward. A source close to the company framed the split as evidence that the board took internal debate seriously.

Most boards bury this. A split vote becomes “the board approved,” with the disagreement recorded in the minutes. STAAR put it in a public filing during a contested takeover, which took a certain amount of nerve.

In December, Alcon raised its offer to roughly $1.6 billion, or $30.75 a share. On 6 January 2026, after four postponements, shareholders voted it down anyway.

The market’s verdict

Here is where it becomes interesting.

The moment the result was announced, STAAR shares fell sharply, trading around a third below the price Alcon had been willing to pay. Alcon walked away within hours. Its chief executive, David Endicott, noted that throughout the process the company had remained disciplined on price and risk.

Analysts at BTIG were unimpressed with the outcome, and did not expect any “meaningful operational improvements given all the noise.”

So at the close of business on 6 January, the scoreboard was unambiguous. The board had been right. The dissenters had just destroyed a third of the company’s value by blocking a generous premium, and the market had said so within minutes.

Broadwood pressed on regardless. A cooperation agreement expanded the board and installed three investor-aligned directors, including Broadwood’s founder Neal Bradsher. Farrell left the board and stepped down as chief executive at the end of January. Two interim co-chief executives took over and began operating: pausing shipments into China to clear the excess inventory, cutting costs, and accelerating manufacturing capacity in Switzerland to manage rising tariffs.

Four months later, STAAR reported first-quarter results. Net sales reached $93.5 million, the highest first quarter in the company’s history, against analyst expectations of $78.74 million. Earnings came in at $0.10 per share, double the consensus of $0.05. US sales grew at a double-digit rate and passed $6 million for the quarter. The headline figure of 119.6% year-on-year growth flattered the picture, since the comparison period had been the depths of the China inventory crisis, but the direction was unmistakable. The business the board had said could not stand alone was standing perfectly well.

This is important: In August 2025, both the board’s and Broadwood’s positions were defensible on the available facts, because the facts that would settle the argument had not yet occurred. And here is what almost every leader gets wrong about disagreement. You were taught to treat it as a process for finding the right answer. In the decisions that matter most, there is often no single right answer available at the moment you must decide, and pretending otherwise is how organisations talk themselves into false confidence.

By the end of this article you will have four practical mechanisms for running a disagreement properly, and a clearer sense of why the quality of the argument matters more than the accuracy of the conclusion.

Let’s get into it.

Disagreement is not a search for the right answer

Here’s a familiar scenario:

You go into a contested decision believing that if the debate is rigorous enough, the right answer will emerge from it. More analysis, better data, one more session, and the decision will clear. So when the argument ends without that clarity, it feels like a failure of process. Somebody, somewhere, did not do the work properly.

Look at what actually happened at STAAR. Five months of argument. The best-informed people in the industry on both sides. Investment banks, proxy advisers, hundreds of pages of analysis, a board that split, and a shareholder base that had supported the company for years.

The argument produced no answer at all. It produced a decision.

That is not a defect in how STAAR ran the process. It is what a disagreement actually is. When two capable, well-informed people reach opposite conclusions from the same evidence, it is usually because the thing itself is uncertain, not because one of them has reasoned badly. The disagreement is a property of the decision, not a defect in the person you are disagreeing with.

This matters because it changes what you are listening for. If you believe the argument should produce truth, then whoever fails to persuade you is wrong, or obstructive, or protecting something. That is precisely how the STAAR fight turned personal, with each side eventually questioning the other’s motives rather than their reasoning. Accept that the argument will not produce truth, and you start listening for something far more useful: which of us has tested our position hardest, and what would have to happen for either of us to change our mind?

Confidence and consensus are not the same thing. You can be entirely confident in a decision that half your leadership team argued against, provided the argument was real, and you listened to it properly. It is exactly the standard senior leaders should be demanding.

Remember: the STAAR board did not fail because it disagreed with Broadwood. Both sides argued their cases at length, with evidence. The disagreement worked exactly as it should. What it could not do, because nothing could, was to know in advance which position was correct.

Why leaders get disagreement wrong

Three failures, and I suspect at least one will be familiar.

You treat the outcome as the verdict on the argument. This is the most seductive error. Broadwood turned out to be right, so we conclude Broadwood argued better. But on 6 January, when the shares fell, exactly the same logic would have proved the board right. Judging the quality of a disagreement by its eventual outcome is a mistake, because you are grading the argument using information that nobody had when the argument took place. This is the same trap that makes foresight so difficult to practise: the evidence that would settle the question arrives long after the decision is made. Judge the process instead. Was every position tested, was the evidence honestly presented, did the people who disagreed get a real hearing?

You mistake unanimity for alignment. A board that always votes unanimously is not necessarily aligned. It may simply have learned that dissent is unwelcome, and the cost of that lesson is invisible until something goes badly wrong. STAAR’s decision to disclose its dissenting director was uncomfortable and probably damaged the deal. It was also a signal that the argument had been real, which is worth more over time. I have written before about how a leader’s reactions teach the organisation what is safe to say.

You let the disagreement stay private. The most dangerous version of dissent is the kind expressed in corridors and side conversations. It carries all the cost of division and none of the benefit, because the decision never gets tested by it. Broadwood’s opposition was public, documented, and aimed at the people who owned the consequences. That is why it changed the outcome.

How to run a disagreement properly

Ok, here is the practical part. Four mechanisms, each of which you can put in place immediately.

Name the two positions before you debate them. Most leadership arguments are messy because no one has clearly stated the competing cases. Before the discussion, write both down in a sentence each. “We sell now because the China risk is structural and the premium is generous” versus “we hold because the technology is distinctive and this is a cyclical low.” When the positions are explicit, people argue about the substance rather than talking past one another.

Assign the counter-case to someone credible. Give the strongest available argument against the plan to someone whose judgement the team respects, and give them time and access to build it properly. If disagreement is a formal assignment, nobody has to spend personal capital to express it.

Ask what would have to be true. This is the single most useful question in a contested decision, and it works because it moves the argument from opinion to evidence. What would have to be true for the sale to be the right call? What would have to be true for standing alone to work? Then ask which of those conditions you can actually test now. Some can be. The rest are the real uncertainty, and stating them is far better than pretending the analysis has resolved them. It belongs alongside the other questions that reveal how your team actually thinks.

Record the reasoning, not just the decision. Write down why you chose what you chose, what the strongest counter-argument was, and what you expect to see if you are wrong. This takes twenty minutes and it is the closest thing to a superpower available to a leadership team. It stops you rewriting history after the fact, and it gives you an honest basis for reviewing your own judgement later.

It’s not a debating society

A well-run disagreement is fast, because it is bounded. The positions are defined, the counter-case is evaluated, the uncertainty is stated, and then somebody decides. What actually slows organisations down is the objection nobody voiced that surfaces three months later, the executive who never really agreed and withholds effort, or the decision that gets relitigated because it was never properly argued the first time.

STAAR’s disagreement took five months and was brutal. But the decision it produced has stuck, the board now reflects its shareholder base, and management has been able to act with unusual clarity. Compare that to the alternative, where the deal completes over unspoken misgivings and the doubts leak out afterwards.

What next?

The most useful thing about the STAAR story is that it has no comfortable ending.

Yes, the numbers now favour the dissenters. But four months of results is not a verdict on a decade, and the China risk that worried the board has not vanished. If the recovery slows, the people who blocked a 59% premium will look reckless again. The argument that seemed settled in May could reopen at any point, which tells you something important: in consequential decisions, the disagreement is rarely resolved by the facts. It is resolved by a decision, and then judged over time.

Which leaves you with only one thing you can actually control.

Not whether you are right, because you cannot know that yet. Whether the decision you are about to make has been properly argued, by people who were free to disagree, with the strongest case against it fairly heard.

So look at the significant decision you have to make. Who has made the case against it? If the answer is nobody, you do not have agreement.

This article is part of The Art of Leadership series, where I cover twelve principles of leadership that my research found underpin superior company performance. Read the full series here.

In March 2026, Nvidia’s CEO stood on stage and forecast one trillion dollars of AI computing demand by 2027. The market barely blinked, because by then, Nvidia’s dominance of AI infrastructure was simply a fact.

But here is what most people forget. Nvidia did not stumble into that position when ChatGPT launched. It had been building toward it for nearly two decades.

Back in 2004, Nvidia began investing in a software platform called CUDA that enabled its graphics chips to handle general-purpose computing. For years, this looked like a strange bet. CUDA cost money, added complexity, and served a market that barely existed. Analysts questioned why a company that made gaming graphics cards was pouring resources into scientific and parallel computing. The answer was that Nvidia’s leadership had made a judgment about where computing was heading, and they organised around it.

Twenty years later, when the AI era arrived, every large language model on earth needed exactly the kind of parallel computing that Nvidia had spent two decades perfecting. The bet did not just pay off. It made Nvidia one of the most valuable companies in history.

Now consider Intel.

Intel had every advantage Nvidia lacked. It was larger, richer, and utterly dominant in the market that mattered most for decades: the CPU. It had the money, the talent, and the manufacturing capability to build anything it wanted. And across the same twenty-year period, it made a series of decisions that look, in hindsight, like a masterclass in the absence of foresight.

Intel declined to build the chip for Apple’s iPhone, closing the door on the mobile computing era. Its then-CEO considered acquiring Nvidia for around $20 billion; the board balked. It had the opportunity to invest in OpenAI and passed, prioritising short-term returns over an uncertain future. Each decision was individually defensible, yet together they left Intel cutting 15,000 jobs as revenue fell 30%, its stock down from over $60 to under $20.

Two companies in the same industry facing the same transformative force. One built for the future. The other optimised the present.

And then something happened that makes this story far more interesting.

The third player

In August 2025, the US government converted $8.9 billion of CHIPS Act funding into 433.3 million Intel shares at $20.47 each, taking a 9.9% stake in a company that had just missed the defining technology shift of its era. At the time, it was widely mocked. Critics called it a bailout of a firm that had lost the AI race.

But look at what the government was actually doing.

It was not looking at Intel’s AI chip roadmap. It was looking at a different structural change entirely: the fact that the world’s most advanced semiconductor manufacturing had become dangerously concentrated in Taiwan, ninety miles from a country that has declared reunification inevitable. As the Center for Strategic and International Studies put it, Intel was the linchpin of American efforts to reduce dependency on chips manufactured abroad and regain leadership in semiconductor manufacturing technology. The deal even included a golden share giving Washington veto power over any future sale of Intel’s foundry business.

The market was valuing Intel on whether it could compete with Nvidia in AI chips. The government was valuing it on whether America could make advanced chips on its own soil.

Intel’s stock had surged over 190% for the year, its best performance on record. Q1 revenue rose 7% to $13.6 billion, data centre revenue jumped 22%, and earnings came in at $0.29 per share against a consensus of roughly one cent. Apple agreed to manufacture some of its chips at Intel’s foundry. Nvidia itself took a $5 billion equity stake. The government’s $8.9 billion position was worth more than $46 billion, an unrealised paper gain of over $35 billion.

This is important: three parties looked at the same company. The market saw a firm that had lost the AI race. Intel’s own leadership had spent two decades protecting a profitable present. And the US government saw a structural change nobody else was pricing, geopolitical concentration of chip manufacturing, and organised around it while everyone else was arguing about GPUs.

That is what foresight looks like. And it is available to anyone who learns to look properly. By the end of this article, you will understand why most leaders are bad at this, and you will have a practical method for getting better.

Let’s get into it.

Foresight is not prediction

Let me clear up the most common misunderstanding first. Foresight is not prediction.

Prediction is trying to guess what will happen: who wins the election, where interest rates land, which product takes off. Prediction is mostly a mug’s game, and leaders who stake their strategy on specific predictions usually get burned.

Foresight is different. Foresight is pattern recognition applied to structural changes that are already in motion but have not yet impacted in your results. Nvidia did not predict ChatGPT two decades ago. Few people did. What Nvidia’s leadership saw was a structural direction: computing was becoming more parallel, more data-intensive, and more demanding of exactly the capabilities their chips provided. They did not need to know the specific application that would prove them right. They needed to recognise the direction of travel and commit to it.

The same logic applies to the Intel stake. Washington did not predict that Apple would sign a foundry deal or that Q1 earnings would beat by 2,000%. It recognised a structural change, the securitisation of semiconductor supply chains, and acted on it before the market had priced it in.

This is the crucial distinction. You do not need a crystal ball. You need the discipline to identify the deep currents that are already flowing in your own industry, and the courage to build for where they lead, even when the destination is not yet visible in your results. Frankly, that courage is rarer than the insight, because the insight costs nothing and the commitment costs everything.

Remember: the structural changes that will reshape your industry over the next decade are almost always visible today, if you know how to look. They are just not yet urgent, which is precisely why most firms ignore them.

Why most leaders are bad at foresight

If foresight is so valuable, why is it so rare? Three reasons, and you will recognise all of them.

The present is noisy and the future is quiet. This quarter’s numbers demand attention. The competitor’s new product demands a response. The customer complaint requires resolution. The structural shift that will matter in ten years makes no noise at all, so it loses every fight for the leadership team’s attention. Intel’s CPU business was enormously profitable right up until it wasn’t. That profitability was exactly what made it so hard to look up and see the shift coming.

Foresight requires acting before the evidence is conclusive. By the time a structural change is obvious enough that the data proves it, the window to build a leading position has usually closed. Nvidia committed to parallel computing when the evidence was thin. If it had waited for proof, it would have been just another company scrambling to catch up when AI arrived. The US government bought Intel at $20.47 when the consensus was that Intel was finished. Both acted before the evidence was conclusive. That is not recklessness. That is the entire point.

Success is the enemy of foresight. This is the cruellest pattern, and it may be the one that applies most to you. The more dominant you are in your current business, the harder it is to invest in the thing that will replace it. Intel’s decades of CPU dominance did not help it see the future. They actively blinded it, because every instinct in the organisation was tuned to protect and extend the business that was already winning. As one analysis of Intel’s decline put it, moving beyond your historical advantage is hardest precisely when you are still profitable and change seems slow. But that is exactly when you have the resources to prepare for what comes next.

The foresight discipline

Here is the practical part. Foresight is not a personality trait that some leaders have and others lack. It is a discipline you can build. Here is how.

Separate structural changes from noise. Not everything that is happening is a structural change. Most of what fills the business press is noise: temporary trends, hype cycles, and things that will not matter in three years. A structural change has three properties. It has been building for years. It crosses multiple industries. And it is driven by deep forces, technological, demographic, economic, or regulatory, that are not going to reverse. Apply those three tests, and most of the noise falls away, leaving the handful of changes actually worth building around. I have written about these three tests in more detail.

Look where nobody else is looking. Everyone in the chip industry was looking at AI performance. The US government was looking at a map. The most valuable foresight rarely comes from analysing the same variables as your competitors more skilfully. It comes from noticing a change that sits outside the frame everyone else is using. If your foresight process only examines the factors your industry already tracks, you will see what your competitors see, at roughly the same time they see it.

Look where the researchers are looking. One of the most reliable early signals of a structural change is academic and scientific research. AI research was growing exponentially for a decade before the business world noticed. The deep currents show up in laboratories and journals years before they show up in revenue. If you want to see the future of your industry, look at what the smartest people in adjacent fields are working on now.

Ask the ten-year question, deliberately and often. Most leadership teams never ask “what will be true in ten years that is not true today?” They are too busy with this quarter. Build the question into your rhythm. Once a quarter, force the leadership team to lift its eyes from the present and debate the structural changes reshaping the environment. I have described how to build this into a repeatable foresight process.

Invest before it is comfortable. Foresight without commitment is just observation. The whole point is to act before the evidence is conclusive, which means allocating real capital and talent to a structural change while it still feels early. This is the hardest part, because it means diverting resources from the profitable present to an uncertain future. But that discomfort is the price of a leading position. Nvidia paid it for twenty years. Washington paid it in a single transaction that the entire market thought was foolish.

What foresight is not

You might be thinking, “This sounds like an argument for chasing every shiny new trend.” It is actually the opposite.

Foresight is disciplined, not fashionable. It means committing to a small number of deep structural changes and building around them for years, not lurching toward whatever is trending this month. The metaverse was fashionable in 2021. Firms that chased it were not exercising foresight; they were following hype. The difference between a structural change and a fad is exactly what the discipline is designed to detect.

Nvidia’s foresight was not that it jumped on every emerging technology. It was that it identified one deep structural direction, parallel computing, and committed to it with a consistency that lasted two decades. That is what foresight looks like in practice: not restlessness, but disciplined, patient conviction about where the world is heading.

What next?

The Intel story has a final lesson.

Intel is now recovering. Under a new CEO, with government backing, an Apple foundry deal, and an Nvidia partnership, the company that missed mobile and missed AI is up 190% and building chips on American soil. But notice who created that recovery. It was not the twenty years of internal strategy. It was an outside party that saw a structural change Intel’s own leadership had not organised around, and acted on it.

If your firm is not exercising foresight, someone else will exercise it on your behalf. A regulator. An investor. An acquirer. A government. And you will spend the next decade executing someone else’s judgement about your future.

The structural changes that will define your industry in 2036 are visible right now. They are operating in the background, they are not yet urgent, and they are losing the daily fight for your attention against this quarter’s demands. That is exactly why building around them is a source of advantage: because almost everyone else is ignoring them too.

Ask yourself the question Intel failed to ask, and Nvidia never stopped asking: what is changing in the world that will reshape my industry over the next decade, and am I building for it, or just optimising what I already have?

You still have time to ask it. Ask it today.

This article is part of The Art of Leadership series, where I cover twelve principles of leadership that my research found underpin superior company performance. Read the full series here.

In the summer of 2026, three of the world’s best-known companies admitted the same thing.

In July, Microsoft’s Xbox division announced the most significant restructure in its history. The reason its CEO gave was not competition or technology or the market. It was complexity. In some parts of the business, work passed through as many as 14 layers of management. Platform teams had grown 40% larger even as the player base declined. “That complexity has slowed decisions, blurred accountability, and made it harder to deliver,” the CEO wrote. The remedy? “Great technology gets better when it gets simpler, not bigger.”

That same month, Lucid, the electric vehicle maker, brought in a new CEO who halved the number of executives reporting directly to him, framing the move as a way to simplify the structure and sharpen accountability.

And a few weeks earlier, at its June annual general meeting, the Volkswagen Group made reducing complexity the first of eight strategic priorities. The CEO committed to building fewer models, fewer variants, and fewer platforms, concentrating resources on the vehicles that sell rather than maintaining a sprawling lineup of middling performers.

Three companies. Three industries. Three continents. One diagnosis.

None of them said “we have a strategy problem” or “we have a talent problem” or “we have a technology problem.” Each of them said, in effect: we have become too complicated to compete.

This is important: these are not isolated stories. They reflect the single most underrated leadership challenge of our time. Complexity accumulates gradually in your products, processes, organisation, and strategy, until one day it strangles the business. And by then, fixing it requires the kind of painful restructuring that Xbox, Lucid, and Volkswagen are now going through.

The leaders who avoid that fate are the ones who treat simplicity not as a one-time cleanup, but as a discipline. By the end of this article, you will have a single test you can apply to any part of your business, a framework for spotting the three patterns that create unnecessary complexity, and a process for cutting through them before they force your hand.

Let’s get into it.

Why complexity accumulates

Here is the thing about the Xbox story that should worry every leader. Nobody at Microsoft decided to build 14 layers of management. It accumulated. One reorganisation at a time, one new team at a time, one well-intentioned hire at a time, until the structure had become something nobody would have designed on purpose.

That is how complexity always arrives. Not through a single bad decision, but through a thousand reasonable ones.

A product launches with four features. Customers ask for a fifth. Then a sixth. Then a configuration option. Then a variant for a different market. Nobody ever says “let’s make this complicated.” Each addition makes sense in isolation. But five years later, the product has 40 features and nobody can explain what it does. This is precisely the trap Volkswagen fell into, launching more than 30 new models in a single year until its own lineup became too complex to manage.

The same thing happens to processes. A procurement system starts with three steps. An audit adds a fourth. A compliance requirement adds a fifth. A new regulation adds a sixth. Each step is defensible on its own. Together they produce a system so slow that people find workarounds, which creates a shadow process alongside the official one, which is now more complex than ever.

And it happens to strategy. Every planning cycle, new priorities are added. Old ones are never removed. The list grows from five to eight to twelve to twenty, and at some point it stops being a list of priorities and becomes a catalogue of everything the firm cares about. A strategy with twenty priorities is a strategy with zero priorities.

Remember: complexity is almost never designed. It is the residue of decisions that were individually rational but collectively suffocating. And because each piece was added for a good reason, nobody feels empowered to remove it.

That is the leader’s job. Xbox’s leadership left it so long that the correction required cutting thousands of jobs. The discipline of simplicity is what stops you from ever reaching that point.

The simplicity test

Here is a test you can apply to anything in your business. A product, a process, a team structure, a strategy, a customer journey, a meeting cadence. Anything.

Can someone who has never seen it before understand how it works in under two minutes?

If yes, it is simple enough. If no, it needs to change.

Let me make this concrete.

Products. Can a new customer understand what your product does and why they need it without a demo, a sales call, or a 30-page brochure? Apple’s iPhone launched with a single sentence: “An iPod, a phone, and an internet communicator.” Three things. One device. Everybody understood. Volkswagen’s problem is the opposite: a range so vast that customers themselves struggle to navigate it, which is exactly why “make navigating the range easier” became an explicit goal of its transformation.

Processes. Can a new employee navigate your procurement system, your approval process, or your expense system without calling someone for help? If the process requires a training session, the process is too complex.

Teams. Can every person on your team describe their role and how it connects to the team’s objective in one sentence? If they cannot, the structure carries ambiguity that slows every decision. This is the Lucid problem and the Xbox problem: too many reporting layers, too many direct reports, accountability blurred across so many people that decisions bottleneck and nobody quite owns the outcome.

Strategy. Can you describe what your firm is building around and why in three sentences? Sentence one: what is changing in the world. Sentence two: what you are building in response. Sentence three: where the capital is going. If you struggle with any of these, the strategy has not been reduced to a form that can be embedded throughout the organisation.

Customer experience. Can a customer buy from you, get support, renew, or leave without encountering friction that exists only because your internal processes require it? Every step that serves your operations rather than your customer is a step that should be questioned.

Remember: the test is not “is this thing simple?” The test is “can someone understand it quickly?” Simplicity is about clarity, not minimalism. A complex product with a clear value proposition passes the test. A simple product with confusing positioning does not.

The three enemies of simplicity

Three patterns create unnecessary complexity in almost every organisation. You will recognise them, and you will recognise them in the stories above.

The addition habit. Adding is easy. Removing is hard. A product manager adds a feature because a customer asked for it. A compliance team adds a step because an audit recommended it. A leadership team adds a priority because the CEO asked for it. Each addition is a small decision. Nobody holds a meeting to discuss whether the cumulative weight of all those small decisions is crushing the thing underneath. Xbox added teams, layers, and investment “hoping for a better outcome,” in its CEO’s own words, until the additions themselves became the problem.

The discipline of simplicity is the discipline of subtraction. For every feature, every step, every priority you add, also ask: what am I willing to remove? If the answer is nothing, you are accumulating, not simplifying.

The hedge. A leadership team that cannot agree on three priorities compromises by including six, satisfying everyone and committing the firm to nothing. A product team that cannot decide between two directions ships both, confusing the customer. A process owner who cannot determine which steps are necessary keeps all of them, because removing one feels riskier than keeping twelve.

The hedge feels like consensus. It is genuinely an abdication of the most important leadership responsibility, which is to choose. The firms that dominated their industries chose three or four external changes to organise around. Their competitors hedged with more (or chose none at all, which is a different type of problem).

The jargon shield. Complex language hides unclear thinking. “We will leverage our core competencies to drive synergistic value across our ecosystem” means nothing. It could describe any firm in any industry.

Strip the jargon and ask: what are we actually doing, and why? If the answer is clear, the jargon is unnecessary. If the answer is not clear, the jargon is hiding that fact.

What simplicity actually demands

You might be thinking, “My business is genuinely complex. I cannot simplify it without losing something important.”

Of course your business is complex. Every business is complex. The question is whether your products, processes, structures, and strategy need to carry that complexity or cut through it.

Consider what Steve Jobs did when he returned to Apple in 1997. Apple had dozens of products across multiple categories, with overlapping lines and confused positioning. Jobs drew a two-by-two grid: consumer and professional across the top, desktop and portable down the side.

Four products. Everything else was killed.

That was not a simplification of a complex reality. It was a decision. Jobs decided what mattered and eliminated what did not. The complexity of Apple’s product line was real. The strategic response to it was radical simplicity, and that simplicity gave every person at Apple a framework for evaluating any proposal: does it fill one of the four boxes? If yes, proceed. If no, stop.

Think of it this way. Your business is like a radio signal. The clearer and stronger the signal, the further it travels, to your customers, your employees, your investors. Add noise, add static, add fourteen competing frequencies, and the signal degrades before it reaches anyone. Simplicity is what makes the signal travel.

How to simplify without losing substance

Here is the process. It takes discipline, and it will feel like you are losing something valuable.

You are not. You are finding what has always been there beneath the complexity. Stick with it.

Apply the two-minute test. Pick any product, process, team structure, or strategy in your business. Describe it to someone who has never seen it. Time yourself. If it takes more than two minutes, identify what is creating the length: too many features, too many steps, too many priorities, or unclear language. Each source of length is a candidate for reduction.

Subtract before you add. Before the next planning cycle, the next product release, the next process revision, establish a rule: for every new element added, one existing element must be removed. This sounds mechanical. It is. That is the point. Without a structural constraint, the addition habit will reassert itself in no time, and you will be Xbox in five years, cutting layers you should never have built.

Kill the hedges ruthlessly. If your strategy lists more than 4 priorities, reduce them. If your product serves more than three clear use cases, focus. If your approval process has more than five steps, question every one. The discomfort you feel when removing something is the feeling of making a real decision. Lean into it.

Test it on an outsider. Explain your product to someone who has never used it. Describe your strategy to someone outside your industry. Walk a new employee through your most important process without help. If they understand, you have achieved simplicity. If they do not, frankly, you have more work to do, and the work is in the substance, not the presentation.

What next?

The leaders at Xbox, Lucid, and Volkswagen are all now doing the hard, painful work of removing complexity that should never have been allowed to accumulate. Restructures. Layoffs. Written-down investments. The correction is expensive, and it is public, and it is a warning.

You do not have to end up there. Simplicity is a discipline you can practise continuously, long before complexity forces a crisis. And it is the foundation of everything else in leadership. You cannot tell a clear story if the underlying thinking is muddled. You cannot listen effectively if you do not know which signals matter. You cannot build products customers love, processes employees can follow, or strategies that survive contact with the real world if every one of them is buried under layers of accumulated complexity.

The two-minute test is waiting for you. Apply it to one thing in your business today. Your strategy. Your flagship product. Your hiring process. Your customer onboarding.

If it passes, move to the next one. If it does not, you have just found the most important problem to solve this quarter, while it is still your choice to solve it.

Start simplifying.

This article is part of The Art of Leadership series, where I cover twelve principles of leadership that my research found underpin superior company performance. Read the full series here.

You became a senior leader because you had good ideas and could express them clearly. You were promoted for the quality of your thinking, the strength of your arguments, and your ability to direct a conversation toward a decision.

And now that skill is working against you.

Because the higher you rise, the less you need to talk and the more you need to hear. The information that matters most to your strategy, the early warnings, the honest assessments, the things your team can see that you cannot, lives in other people’s heads. Your job is to get it out. And the mechanism is not asking better questions, though that helps, but learning to listen in a way that most leaders have never been taught.

Let me show you what I mean.

The listening problem at the top

Here is something nobody tells you when you become a senior leader. The quality of information you receive declines as your authority increases. This sounds counterintuitive. You have more access, more resources, more people reporting to you than ever before. And yet the information gets worse.

It gets worse because people filter what they tell you. They round the edges off bad news. They emphasise the things they know you want to hear. They read your body language, your tone, your previous reactions, and they calibrate their message accordingly. This is human nature, not dishonesty. People manage up because the consequences of telling a powerful person something they do not want to hear outweigh the consequences of staying quiet.

The result is that the person with the most authority to act on information is systematically receiving the least accurate version of it.

When INSEAD researchers Quy Huy and Timo Vuori studied Nokia’s decline, they found exactly this pattern. Middle managers knew the Symbian operating system was inferior to what Apple was building. They could see the structural shift happening. But senior leaders had a reputation for impatience with bad news, and the information stopped flowing upward. Nokia’s leadership was making strategic decisions based on a filtered, optimistic version of reality. The people closest to the problem had the clearest view. The people with the authority to act never heard it.

Nokia went from 56% of its industry’s profits to 7%.

This is important: Nokia did not have a strategy problem. It had a listening problem. And the listening problem created the strategy problem, because you cannot build a strategy around external changes you are not hearing about.

Why most listening fails

Most leaders, when they hear about the importance of listening, nod and think: “I do listen. I have an open-door policy. I ask for feedback. I run engagement surveys.”

None of that is listening. The question is what happens when someone walks through the open door and tells you something you do not want to hear.

Real listening is uncomfortable. It requires you to sit with information that challenges your assumptions, contradicts your strategy, or suggests that something you championed is not working. The natural response is to explain, defend, or redirect. And the moment you do any of those things, the person speaking learns that honesty has a cost. Next time, they will either filter their ideas or not bother sharing them.

The failure is not that leaders refuse to listen. It is that their reactions teach the organisation what is safe to say. You might never raise your voice. You might never punish a dissenter. But if your face tightens when you hear bad news, if you immediately pivot to solutions before the problem has been fully described, if you ask “who is responsible?” before you ask “what happened?”, your organisation is learning that honesty is risky. And they are adjusting accordingly.

The four modes of strategic listening

Let me give you a framework. There are four things you should be listening for in every conversation, every meeting, every report that crosses your desk. Think of them as four frequencies. Most leaders are tuned to one or two. The skill is hearing all four.

Listen for orientation. Is the person describing the world outside the firm, or the firm itself? When your head of product talks about the competitive landscape, does she describe the structural changes reshaping customer behaviour, or does she describe what competitors are doing? When your CFO presents the budget, does he frame it against the external shifts the firm is building around, or against last year’s numbers? The language people use tells you whether your strategy has given them an outward-facing frame or whether they have defaulted to an inward one.

Listen for gaps. What is not being said? This is the hardest frequency to hear. If nobody is raising concerns about a major initiative, the initiative may be going well. The absence of information is itself information, and it is often the most important kind.

Listen for fear. Is this person telling you what they believe, or what they think you want to hear? You can detect this with practice. People who are managing up tend to frame everything positively, avoid specifics, and hedge their conclusions. People who are being honest tend to be more direct, more specific, and more willing to say “I don’t know.” When everyone around you sounds confident and optimistic, you should be concerned. Genuine confidence sounds different from performed confidence, and the difference is worth learning to hear.

Listen for signal. The people closest to the work see things the leadership team cannot. A sales director hearing the same objection from five different customers is seeing a pattern that may not appear in the aggregated data for months. An engineer who has been struggling with a specific technical limitation is seeing a constraint that the strategy may not have accounted for. These signals are fragile. They arrive as anecdotes, as offhand comments, as concerns raised tentatively at the end of a meeting. If you are not listening for them, they vanish. And when they vanish, you lose the early warning system that the people closest to your customers and your operations provide.

The listening test

Here is a practical exercise you can run.

In your next five meetings or conversations, do not take notes during the meeting. Immediately afterwards, write down three things: what was said, what was not said, and what you think the person was really trying to tell you.

Compare the three. If “what was said” and “what they were really trying to tell you” are the same, the conversation was honest. If there is a gap, ask yourself what created it. Was it the topic? The setting? Your reaction to something earlier? The organisational culture?

Do this five times. The patterns will be unmistakable.

You might be thinking, “I can’t psychoanalyse every conversation.” You are right. You do not need to. You need to notice the patterns. If three out of five conversations have a gap between the surface and the substance, your organisation is filtering. And if it is filtering, your strategy is being built on incomplete information.

What changes when you listen well

When a leader genuinely listens, meaning listens without defending, without redirecting, without immediately solving, something shifts in the organisation. People start saying what they actually think. Information flows faster. Problems surface earlier. And the strategy becomes more accurate, because it is built on what is actually happening rather than on the filtered, optimistic version that most leadership teams receive.

The firms in my research that maintained their strategic commitment over decades did not do so by ignoring internal dissent. They did so by channelling it. Challenge the execution. Challenge the pace. Challenge the resource allocation. But do so honestly, with the confidence that the leadership will hear you rather than punish you.

That culture does not happen by accident. It happens because a leader decided to listen differently.

What next?

The paradox of senior leadership is that the further you rise, the more you need to hear and the less people are willing to tell you. Every promotion widens the gap between what is happening and what you are told is happening.

You cannot close that gap with surveys, town halls, or open-door policies. You close it by changing how you listen. By noticing what is not being said. By controlling your reactions when someone says something uncomfortable. By treating every conversation as an intelligence operation, not a performance review.

Storytelling is how you transmit your thinking to the organisation. Listening is how the organisation transmits its thinking back to you. Master one without the other and you are operating with half the information you need.

Start with the five-meeting exercise. See what you hear when you are actually listening.

This article is part of The Art of Leadership series, where I cover the principles of leadership that my research found underpin superior company performance. Read the full series here.

Here is a paradox at the heart of senior leadership.

The further you rise, the less actual work you do. You stop building the product. You stop closing the deals. You stop writing the code or running the analysis. Your hands leave the work entirely. And yet you become responsible for more of it than ever before.

So how do you achieve things you no longer do yourself? You do it through other people. Thousands of them, in some cases. People who will never sit in a meeting with you, who will make decisions you will never see, and who will act on their own understanding of what matters.

Which raises the question that determines whether you succeed or fail at the top: how do you transfer what is in your head into theirs?

The answer is story. And most leaders were never taught how.

Why story beats logic

Let me be direct about something that took me years to accept. People do not act on logic. They act on meaning.

You can present the most rigorous argument in the world, supported by flawless data, and watch it change nothing. Then someone tells a simple story and the response transforms. This is not a flaw in human nature to be corrected; it is how people are built, and the leaders who understand it have an advantage over the ones who keep believing that a better spreadsheet will win the argument.

A logical argument informs. A story makes it resonate. The difference matters because your job as a leader is to make your people act, not to make them understand. Understanding is necessary, but it is not sufficient. A team can understand your strategy perfectly and still do nothing with it, because understanding lives in the head and action comes from somewhere deeper.

Story reaches that deeper place. It creates context (here is the world we are in). It creates stakes (here is what happens if we change, and what happens if we do not). And it creates a role for the listener (here is where you fit, and why you matter). Logic gives people information. Story gives people a reason to care about it.

The story is a test of your thinking

Here is the part most leaders miss, and it is the most important idea in this article.

Constructing the story is not the final step of strategy. It is the test of whether your strategy is any good. Most leaders have this backwards, treating the story as something you produce once the strategy is decided.

When you sit down to tell the story of where your organisation is going, you are forced to answer questions that vague strategy lets you avoid. What is actually changing in our world? Why does it matter? What are we going to do about it? Where does each person fit? If you cannot answer these in plain language, simply and clearly, the problem may not be your storytelling. The problem may be that your strategy is not yet coherent enough to tell.

I have watched senior leaders discover this in real time. They begin trying to explain their strategy, stumble halfway through, and realise that the gaps in the story are gaps in the thinking. The story exposed them. That is exactly what it is supposed to do.

This connects to a diagnostic I have written about before: can a new employee understand your strategy well enough to make a decision based on it by the end of their first week? If they cannot, you do not have a communication problem. You have a clarity problem, and the story is how you find it.

This is important: if you cannot tell it simply, you do not yet understand it fully. The story is not the wrapping you put around a finished strategy; it is the instrument that tells you whether the strategy is finished at all.

The four elements of a leadership story

Let me give you a structure you can use. Every effective leadership story contains four elements, and they work in this order.

One: the change. Start with what is happening in the world outside your organisation. Not your internal goals or your targets. The external shift that makes action necessary now. “The way our customers buy is changing permanently.” “The technology our industry runs on is being rebuilt.” This is your “why now,” and it has to come first, because it establishes that the need is real and external rather than invented by management.

Two: the stakes. Make clear what happens if you respond, and what happens if you do not. Stakes create urgency. Without them, the change is just an interesting observation. With them, it becomes a reason to change. Be honest here. People can tell the difference between manufactured urgency and the real thing.

Three: the role. Tell each listener where they fit. This is the element leaders most often forget. A story about the organisation is not enough. People need to see themselves in it. The engineer needs to know what the story means for what she builds. The salesperson needs to know what it means for what he sells. A story that does not give the listener a role is a story they will admire and then ignore.

Four: the destination. Show where you are going together. A picture of what the organisation becomes if it succeeds. The destination is what makes the effort feel worthwhile, and it is what people hold onto when the quarterly results are noisy and the path gets hard.

Change, stakes, role, destination. Four elements. You can build a leadership story for any situation around them, from a company-wide transformation to a single difficult team meeting.

Where leaders get it wrong

Even leaders who understand the importance of story tend to fail in predictable ways. Let me name the four I see most often, so you can catch yourself before you make them.

The story is too complex to remember. If your people cannot repeat it, they cannot act on it, and they certainly cannot pass it on. A story that requires a slide deck is a briefing, not a story. Strip it down until it survives being retold by someone who heard it once.

The story is too abstract to act on. “We are on a journey of transformation” means nothing. It gives no one a decision they can make on their own. Specificity is what makes a story actionable.

The story is about the firm, not the world or the people. This is the most common failure of all. Leaders tell stories about their company: its goals, its performance, its ambitions. But the most powerful stories are about the change happening outside the firm and the people inside it who will respond to that change. I explored this at length in an earlier piece on the CEO as chief storyteller: the firms that dominated their industries told stories that pointed outward, at the world, not inward, at themselves.

The story is told once. This is the quiet killer. A leader presents the story at the annual gathering, feels the energy from the audience, and considers the job done. Three months later, nobody remembers it.

Repetition is not redundancy

You might be thinking, “If I tell the same story over and over, won’t people get tired of hearing it?”

Here is the truth that took me a long time to learn: a story told once has not been told.

You will be sick of your own story long before your organisation has fully heard it. That is normal, and it is not a reason to stop. The leaders who succeed at transmitting a strategy are the ones who repeat it with a consistency that feels excessive from the inside. Same story. Same frame. In the board meeting, in the team huddle, in the one-to-one, in the hallway conversation. Every interaction is a chance to reinforce the same narrative, adapted for the audience but anchored to the same core.

The repetition is the work. The single telling is just the beginning of it.

What next?

Try this. Write your own leadership story in four sentences, one for each element. The change. The stakes. The role. The destination.

Then read it aloud. If it takes more than a minute, it is too long. If you stumble, the thinking underneath it is not clear yet. Go back and fix the strategy, not just the words.

Then test it on someone outside your industry. A friend, a partner, someone with no context for your business. If they understand where your organisation is going and why it matters, your story is ready. If their eyes glaze over, you have more work to do.

The leaders who master this skill do not just communicate better. They think better, because the discipline of telling a clear story forces the clarity of thought that strategy requires.

Storytelling is not the thing you do after the hard work of strategy. It is the hard work of strategy, made visible.

Start writing yours today.

Eighteen months later, the returns have not materialised. A competitor who did not make the same bet is outperforming you. And somewhere in the back of your mind, a question is forming that you do not want to ask out loud:

Am I early, or am I wrong?

This is the hardest question in strategy. And most leadership teams answer it badly, in one of two ways.

1. They abandon too early, pivoting to whatever looks like it is working right now.

2. Or they hold too long, doubling down on conviction when the evidence is telling them they are wrong.

Both are expensive. Both are avoidable. Let me show you how to tell the difference.

The discipline the superfirms had

The firms in my research across 8,430 companies that captured dominant profit share maintained their strategic commitment across 20 years. That included the dotcom crash. The 2008 financial crisis. Multiple leadership transitions. Periods of intense competitive pressure where abandoning the bet would have been the comfortable choice.

Genuine Parts maintained its commitment to technology-driven distribution, globalisation, and consolidation that enabled it to raise its dividend for 68 consecutive years regardless of economic conditions. Apple maintained its commitment to mobile computing through quarters where analysts questioned whether the iPhone could sustain its margins. Unilever’s Paul Polman abolished quarterly guidance entirely because he believed the quarterly cycle created pressure to abandon long-term positioning for short-term results.

This is important: these firms were not being stubborn. They were being disciplined. The difference between stubbornness and discipline is evidence. Stubborn leaders ignore disconfirming information. Disciplined leaders actively seek it and use it to test whether the underlying shift is still structural.

The question is how to do that in practice.

Two types of slowdowns

Not all slowdowns mean the same thing. You need to distinguish between two fundamentally different situations, because the correct response to each is the opposite of the other.

A temporary slowdown is when the underlying shift is still structural but the pace has slowed or the market has hit a headwind. Renewable energy experienced this repeatedly: policy changes, subsidy withdrawals, and technology cost plateaus all created periods where growth decelerated. Each time, the structural drivers (climate change, declining technology costs, regulatory trajectory) remained intact. The firms that held course through those stalls emerged stronger because their competitors had retreated.

A structural reversal is when the underlying shift itself has changed direction. 3D printing for consumers is the clearest example. Extraordinary hype around 2013, venture capital flooding in, predictions of a manufacturing revolution in every home. By 2017, consumer adoption had flatlined and the technology had retreated to industrial applications where it had always been more viable. The shift was real but it was narrower than the hype suggested, and the firms that had built consumer-facing strategies around it needed to redirect.

The metaverse, as conceived in 2021, followed a similar pattern. Two years of intense corporate investment, then a failure to achieve mass adoption. The underlying technologies (VR, spatial computing) may still matter. But the specific shift that firms were building around, a virtual world replacing significant portions of physical interaction, did not materialise at the pace the investment assumed.

Remember: the question is never “is this change real?” Both 3D printing and the metaverse involved real technologies. The question is “is this change structural enough to build a strategy around for a decade?” The three tests exist precisely for this purpose.

Five signals that tell you which type you are facing

You cannot know with certainty whether a slowdown is temporary or structural. But you can assess the probability. Here are five signals to monitor.

Signal 1: Is the underlying driver still growing in academic and industry research?

This is the most reliable leading indicator I have found. Academic publication volume on a topic is a proxy for structural importance. If research output on your driver is still growing, the structural foundations are intact even if market adoption has slowed. If research output has plateaued or declined, the academic community, which has no commercial incentive to inflate the topic, is telling you something.

AI research continued to grow exponentially throughout periods when commercial AI applications disappointed. That growth predicted the breakout that followed. Metaverse research peaked in 2023 and declined, which predicted the corporate retreat that followed.

Signal 2: Are the firms closest to the shift still investing?

Ignore what commentators are saying. Watch what the firms with the deepest domain expertise are doing. If the leaders are maintaining or increasing their investment, the structural case is intact. If they are reducing exposure, pay attention.

When major insurers withdrew from the California homeowners’ market, they were signalling that climate-related risk had crossed a threshold. That was a signal of structural acceleration, not a slowdown. When Meta reduced its metaverse workforce, that was a signal of structural doubt from the firm most committed to it.

Signal 3: Is the regulatory trajectory still moving in the same direction?

Regulation is a slow but powerful confirmation signal. If governments are still building regulatory frameworks around a shift (carbon pricing, EV mandates, AI governance), it is structurally embedded regardless of market pace. Regulatory frameworks take years to build and are rarely reversed entirely. They represent institutional commitment that outlasts market cycles.

Signal 4: Are the cost curves still declining?

For technology-driven shifts, cost trajectory is the most concrete signal. Solar energy costs fell 89% between 2010 and 2020. Battery costs fell 97% over three decades. These are irreversible cost curves. When a technology’s cost is declining on a consistent trajectory, temporary market slowdowns are just that: temporary. When cost reduction slows, the structural economics may have changed.

Signal 5: Has anything changed in the structural drivers you identified when you made the commitment?

Go back to the original analysis. When you committed to this shift, you identified specific structural drivers: demographic trends, technological trajectories, regulatory direction, cultural shifts. Have any of those drivers reversed? If the drivers are intact, the slowdown is likely temporary. If one or more drivers have genuinely reversed, you may be facing a structural change in the shift itself.

When to hold

If three or more of the five signals confirm that the structural foundations are intact, hold course. The slowdown is likely temporary, and your competitors’ retreat is creating an opportunity.

This is important: holding means maintaining your strategic commitment whilst adjusting the pace and scale of your investment to reflect current conditions. You may slow the rate of spending. You may defer a specific programme. But you do not change the direction, and you do not pretend the slowdown is not happening.

The firms in my research that held through temporary slowdowns, Apple through smartphone margin compression, Genuine Parts through recessions, Unilever through periods when sustainability was unfashionable, emerged with stronger positions because their capabilities had continued compounding whilst their competitors’ had not.

When to redirect

If three or more of the five signals indicate that the structural foundations have weakened, you are likely facing a reversal. The correct response is to redirect, not abandon.

Redirection means shifting your strategic commitment to a different structural shift, not retreating to internally focused management. The research finding was not that commitment to any specific shift produces dominance. The finding was that the orientation, building around external structural changes rather than managing internal operations, is what separates the firms that dominate from the firms that do not. If one shift stalls, you find another. You do not go back to cost-cutting and quarterly earnings management.

You might be thinking, “Easier said than done. I can’t just swap one structural commitment for another.” You are right. It is genuinely difficult. Redirecting a strategic commitment means writing down investments, retraining teams, and telling stakeholders that your assessment has changed. It requires the kind of intellectual honesty that most corporate cultures punish.

But the alternative is worse. Holding a commitment to a shift that has structurally reversed is how good firms destroy value. The discipline is in knowing the difference, and having the five signals gives you a framework for making that judgment with evidence rather than instinct.

What next?

If you are facing this decision right now, run the five signals this week. Go through each one honestly. Write down what you find.

If the signals say hold, hold with confidence. Tell your board why. Show them the evidence. The superfirms held through far worse than whatever you are facing, and the discipline to hold is what produced their dominance.

If the signals say redirect, redirect with speed. Do not wait for the next planning cycle. Do not commission a study. The cost of being late is substantially higher than the cost of being early, and every quarter you spend holding a reversed commitment is a quarter your competitors are using to build around whatever comes next.

The hardest part is asking the question honestly. You now have a framework for answering it.

Use it.

Each one takes less than 15 minutes. Each one uses a single question. And the answers will tell you more about the real state of your strategy than any business review, any engagement survey, or any consultant’s diagnostic ever has.

Here is what makes these conversations different from the ones you are already having: they are not about performance. They are about orientation. They test whether the people executing your strategy understand what it is, where it is going, and why their work matters to it.

This is important: if your team cannot answer these questions clearly, your strategy exists only in leadership’s minds, nowhere else. And these five conversations will show you exactly where the gap is.

Let’s go through them.

Conversation 1: “What is changing in the world that will affect our customers in five years?”

This is the most revealing question you can ask.

Listen carefully to the answer.

If your employee describes a specific structural change, such as the shift to electric vehicles, the ageing of the population, or the automation of supply chains, and can connect it to your customers, your strategy has landed. That person understands why the firm is moving in the direction it is moving.

If they say something vague (”everything is changing,” “AI is going to be huge,” “the market is uncertain”), your strategy has not given them a framework for understanding the external world. They know things are changing. They do not know which changes matter to your firm or why.

If they describe internal priorities (”we’re focused on growing revenue in EMEA” or “we need to improve our NPS scores”), your strategy is organised around operational targets, and your team has absorbed that orientation. They are looking inward because the strategy is looking inward.

Remember: my research across 8,430 companies found that the firms which captured dominant profit share were the ones whose leadership teams paid disproportionate attention to external changes. The firms that lost market share paid disproportionate attention to internal operations. This question tests which orientation your team has absorbed.

Conversation 2: “Which of our current investments would you not make if you were starting today?”

This one is uncomfortable.

Every firm carries legacy investments: products, projects, partnerships, and processes that made sense when they were started but no longer serve where the firm is heading. Your team knows which ones these are. They work on them every day. The question is whether they feel safe enough to say it.

If they can name specific investments and explain why those investments no longer fit the strategic direction, two things are true. They understand the direction, and the culture allows them to challenge it constructively. Both are good signs.

If they say “everything we’re doing is important,” they either do not understand the direction well enough to evaluate against it, or they do not feel safe naming the misalignment. Either way, you have a problem. Strategy requires exclusion. If your team cannot identify what should be excluded, the strategy is not constraining decisions, which means it is not organising them.

You might be thinking, “I can’t ask people to criticise existing investments. It will create anxiety.” The opposite is true. People who can see misalignment but are not allowed to name it are already anxious. Giving them a structured way to raise it reduces anxiety. Silence is what creates the fear culture that destroyed Nokia.

Conversation 3: “If we could only build around three external changes for the next decade, what would they be?”

This forces a different type of thinking. Not “what should we do?” but “what is happening in the world that is important enough to organise around for ten years?”

Most people have never been asked this question. That is the point. The quality of their answers tells you whether your strategy has taught them to think about long-term structural change, or whether their mental model of strategy is limited to annual plans and competitive responses.

Let’s be very clear: you are not looking for the right answer. You are looking for the quality of the thinking. Can they distinguish between a structural shift and a passing trend? Do they think in terms of years rather than quarters? Can they articulate why one change matters more than another?

If your team can do this, your strategy has done something most strategies fail to do. It has changed how people think, not just what they do. That is the difference between a strategy that survives your leadership and one that disappears when you leave.

Conversation 4: “How does your work connect to the direction we are heading?”

This is the retention question. The one your best people are asking themselves even if they never ask you.

If an employee can draw a clear line from their daily work to the firm’s strategic direction, they have something that compensation cannot provide: a sense of trajectory. They are building skills that will be more valuable as the world changes. They are contributing to something larger than this quarter’s target. That is what keeps talented people.

If they cannot draw that line, their work feels disconnected from anything larger. It does not feel like it is going anywhere. And people who feel that way leave.

The answer also tells you something about your communication. A strategy that is clear at the top but invisible at the middle is a strategy that has not been translated into a narrative that reaches every audience. If the connection is missing, the story is missing.

Conversation 5: “What would you do differently if you had the authority?”

This one requires trust. But the answers are extraordinarily valuable.

Your team sees things you do not. They are closer to the customers, closer to the operations, closer to the failures. When you ask what they would change, you are testing two things at once: whether they understand the strategic direction well enough to propose improvements to it, and whether the ownership architecture gives them enough authority to act on what they see.

If they have specific, strategically aligned suggestions, promote them. Seriously. These are the people who understand the direction and can see how to accelerate it. They are exactly the talent you cannot afford to lose.

If they have suggestions that are disconnected from the strategic direction, the direction has not landed clearly enough for them to contribute to it. That is a communication problem, and it is fixable.

If they say “nothing, everything is fine,” the culture is not safe enough for honest answers, and you have a bigger problem than strategy.

How to run them

Do not do all five in one sitting. Spread them across two weeks. Pick different people at different levels and in different functions. Do not announce it as a diagnostic or a programme. Just have the conversations. Listen more than you talk. Take notes afterwards, not during.

Remember: you are not looking for consensus. You are looking for patterns. If three people in different parts of the firm give you the same answer to Conversation 1, that answer is your strategy’s real orientation, whether or not it matches what the leadership team intended.

And here is the hard part: if the patterns reveal a gap between what you think the strategy is and what your team has absorbed, the problem sits with the strategy or how it has been communicated. Not with your team.

What next?

You now have five conversations you can use.

Run them. Write down what you hear. Compare it to what you intended.

The gap between those two things is the most important strategic information you will collect. And unlike most strategic information, collecting it costs you nothing but the willingness to listen to the answers.

Start tomorrow.

But here is the question almost nobody is asking: what happens to your strategy when a government changes, a trade relationship breaks, or a regulator rewrites the rules you built your business around?

Power is the “P” in the SPINE framework, the taxonomy of transformative forces I developed from a review of 292 drivers of change across 88 academic articles. It covers the structural shifts in how the world is governed, from national politics to global order. And it is the force that most firms treat as someone else’s problem until it becomes theirs.

Let me break it down for you.

Two driver families, one force

Power operates through two driver families: World Order and Political Systems. Think of them as two levels of the same force. World Order covers how nations relate to each other: alliances, rivalries, trade blocs, and the rules governing international commerce. Political Systems covers how individual nations are governed: elections, regulation, policy direction, and institutional stability.

Both generate strategic opportunities and threats. Both are structural, playing out over decades. And yet both are woefully underused in strategic planning.

Let me walk you through each one.

World Order: The ground is shifting beneath your international strategy

If your firm operates across borders, the operating environment has changed more in the past 15 years than in the previous 50. The shift from a unipolar world dominated by the United States to a multipolar world shaped by the US, China, India, and the European Union has rewritten the rules for any firm with international reach.

This driver family contains several clusters that matter enormously to your strategy. Here are the ones you need to understand.

Geopolitics and great power competition

The US-China technology competition is the defining geopolitical shift of our era. It affects every firm that manufactures, sources, or sells across both blocs. Nvidia must simultaneously serve the Chinese market whilst complying with US export controls that restrict which chips can be sold there. Apple maintains manufacturing in China whilst navigating US regulatory requirements that tighten with each administration. Tesla operates Gigafactory Shanghai whilst managing political risk from both Washington and Beijing.

This is important: these firms are not caught in a temporary trade dispute. This is a structural realignment. It has been building for over a decade, it crosses every industry, and it will accelerate. If your supply chain touches China, if your revenue depends on access to either market, or if your technology could be classified as strategically sensitive, this driver is already reshaping your competitive position. The question is whether you are building around it or waiting for it to arrive.

Trade architecture and economic blocs

The globalising economy that many firms built their strategies around is fragmenting. Data localisation requirements mean that a firm operating in the EU, China, India, and the US may need four separate data infrastructures. Technology transfer conditions in some countries require sharing intellectual property that would be protected elsewhere. And sanctions regimes can make a supplier relationship that was legal last year prohibited this year.

The individual drivers within this cluster include trade agreements, tariffs, sanctions, export controls, and cross-border investment rules. Each one, taken individually, looks like a compliance issue. Taken together, they represent a structural shift in how the global economy is organised. A firm that built its strategy around continued trade liberalisation is operating on a premise that has been weakening for over a decade.

Defence and security reshaping commercial markets

Defence spending is rising across NATO, driven by the war in Ukraine and broader security concerns. This is not a temporary budget cycle. European governments have committed to sustained increases in military expenditure, and the commercial implications extend well beyond defence contractors. Cybersecurity, satellite communications, supply chain resilience, critical minerals, and advanced manufacturing all sit at the intersection of defence priorities and commercial markets. If your firm operates in any of these spaces, defence-driven demand is a structural tailwind that will compound for years.

Political Systems: The volatility closer to home

The second driver family covers how individual nations are governed. For most firms, this feels like background noise. Governments change. Regulations shift. You adjust and move on.

But the pace of that change has accelerated, and the scale of the shifts has grown.

Regulatory nationalism

Governments are increasingly using regulation as a competitive tool. The EU’s digital regulations (GDPR, the Digital Markets Act, the AI Act) set rules that firms worldwide must comply with if they want access to the European market. China’s data sovereignty laws restrict how information can flow across its borders. India’s production-linked incentive schemes redirect manufacturing investment toward domestic production.

For a firm with global operations, each of these creates a compliance obligation. Together, they create a strategic environment in which regulatory divergence across blocs is the norm, not the exception. Let’s be very clear: this is not going to reverse. The direction of travel is toward more regulation, more divergence, and more complexity. You can either build your operations to handle that structurally, or you can spend the next decade firefighting each new requirement as it arrives.

Governance volatility and political polarisation

The growing polarisation of politics in many democracies compounds the challenge. The emergence of Reform in the UK, the shifting coalitions in France, the remaking of American politics around issues that cut across traditional party lines: all of these create an operating environment that is less predictable than it was 30 years ago.

A pharmaceutical company that built its pricing strategy around one regulatory regime may face entirely different rules after an election. A technology firm that invested in a country’s data infrastructure may find its investment stranded by a change in data sovereignty law. A firm with significant exposure to a single country’s industrial policy faces concentration risk that has nothing to do with its competitive position and everything to do with the volatility of governance.

For most firms, political change is something to be weathered. A new government arrives, the firm adjusts, business continues. But for a firm that treats governance volatility as a structural change to build around, the response is different. You build flexibility into your operations so that a change of government does not require a strategic overhaul. You invest in government relations as a sensing mechanism, not a lobbying function. You diversify your geographic exposure so that dependence on a single regulatory regime is reduced.

Why most firms get Power wrong

Here is where the research gets interesting.

My content analysis of 120 annual reports showed that the firms which emphasised Power-related drivers of change, specifically policy and regulation and governing institutions, tended to fall behind their direct competitors. Nokia emphasised policy and regulation significantly more than Cisco. Amgen emphasised it significantly more than Gilead. HP emphasised governing institutions significantly more than Apple.

So does that mean Power does not matter?

No. It means most firms relate to Power defensively. They monitor regulation. They manage compliance. They treat political change as a risk to be mitigated. The language in their strategies reflects this orientation: shares, debt, regulations, law. Constraint and defence.

The opportunity is to flip that orientation. A firm that treats “the shift toward regulatory nationalism” as a structural change to build around, rather than a compliance burden to manage, can invest in operational flexibility, geographic diversification, and regulatory intelligence as strategic capabilities. The same change that creates cost and complexity for a defensive firm creates competitive advantage for an aligned one.

Nvidia is doing exactly this. Its entire product strategy now accounts for the geopolitical bifurcation of the semiconductor market, designing different chip variants for different regulatory environments. That is not compliance. That is building around Power.

What to do this week

Review your strategy and ask three questions:

First: does it name specific Power-related changes? Not “the geopolitical environment is uncertain,” but specific shifts: the US-China technology competition, the rise of regulatory nationalism, the fragmentation of trade architecture. If it does not, you are treating Power as background noise.

Second: can you trace any of those changes to a capital allocation decision? A geographic diversification investment, a regulatory capability build, a supply chain restructuring? If you cannot, the changes are noted but not acted on.

Third: are you relating to Power defensively (managing risk, ensuring compliance) or as an opportunity (building capabilities that become more valuable as the shift accelerates)? The firms that dominated their industries oriented toward opportunity. Their competitors oriented toward defence. The language in their annual reports told you which was which, years before the financial performance did.

What next?

Power is the transformative force that arrives without warning. A technology shift gives you a decade of signals. A demographic trend gives you a generation. A regulatory change can land in a single legislative session and strand investments overnight.

That is precisely why it deserves a place alongside Society, Innovation, Nature, and Economy in your strategic scanning. The firms that build around Power will not be caught adjusting when the next trade restriction, regulatory shift, or political realignment arrives. They will have built the flexibility and the capabilities to move with it.

The question is whether your strategy treats Power as someone else’s problem. Because right now, for most firms, it does.

And here’s the uncomfortable part: the exit interviews are not telling you why.

They say “better opportunity.” They say “career progression.” They say “work-life balance.” These are real, and they are also incomplete. Underneath every one of those explanations sits a question that most departing employees are too polite to say:

What exactly am I building here, and why should I believe it will matter in five years?

If your strategy cannot answer that question in plain language, your retention problem is a strategy problem. Full stop. No amount of compensation adjustment, engagement surveys, or employer brand campaigns will fix it.

Let me show you why, and more importantly, what to do about it.

What your best people actually need from you

The research on employee motivation has been converging on the same answer for decades. Daniel Pink synthesised it in Drive. Deci and Ryan built the empirical foundation in self-determination theory. Beyond a threshold of fair compensation, three things drive engagement: purpose, autonomy, and mastery. The work matters. I have agency over how I do it. I am getting better at something valuable.

This is important: your strategy determines whether your firm can deliver on any of these.

Think about what happens when your strategy is organised around three or four long-term structural changes happening outside your firm. Say you are building around the shift to automated distribution, the growth of emerging markets, and the transition to sustainable supply chains. Purpose becomes obvious: we are positioning this firm for the next decade of change, and your work is part of that. Autonomy becomes possible: if you understand what we are building around, you can evaluate decisions yourself without escalating every choice to your manager. And mastery becomes directional: the skills you are developing are aligned to where the world is heading, which means they appreciate over time.

Now think about what happens when your strategy is organised around cost reduction, operational efficiency, and quarterly earnings targets. Purpose becomes “hit the number.” Autonomy disappears because there is no strategic logic to guide decisions, so everything gets escalated. And the skills you are developing serve the current operation, which may not be the one that matters in five years.

Which firm would you stay at?

The Nokia warning

When INSEAD researchers Quy Huy and Timo Vuori studied Nokia’s decline, they found something the market narrative had missed entirely. The conventional story was that Nokia failed because Apple’s technology was better. Huy and Vuori interviewed 76 Nokia managers and engineers. What they found was a culture of fear.

Middle managers were afraid to deliver bad news because senior leaders had a reputation for impatience with anyone not delivering results. Senior leaders were afraid of external competition and of missing quarterly targets. Fear flowed in both directions, and information stopped moving upward. Strategic problems were hidden rather than solved.

Here is what that meant for talent. Nokia’s best engineers knew that the Symbian operating system was inferior to what Apple was building. They could see the shift happening. But the internal culture gave them no way to act on what they saw. No framework connecting their expertise to a strategic response. No confidence that raising the alarm would produce anything other than punishment.

The people closest to the problem had the clearest view of the solution. The organisation ensured that view never reached the people who could act on it.

Let’s be very clear: this is what happens when strategy is organised around internal metrics rather than external changes. The direction of your leadership team’s attention shapes your culture. And your culture determines whether talented people stay, speak up, and contribute their best thinking, or leave, stay silent, and protect themselves.

Nokia’s annual reports across 20 years confirmed the pattern. More strategic language devoted to financial management and workforce administration than to any growth-oriented external change. The institutional voice mirrored the fear culture that Huy and Vuori documented. Nokia went from 56% of its industry’s profits to 7%. Not because it lacked talented people. Because its strategy and culture made those people unable to do what they were capable of.

You might be thinking, “That’s an extreme case. We don’t have a fear culture.” Maybe not. But ask yourself this: when was the last time a mid-level manager in your firm told the leadership team something they didn’t want to hear about the strategy? If you cannot remember, the culture may be quieter than Nokia’s but the effect is the same. Your people are not contributing what they know. Some of them are leaving instead.

What the opposite looks like

When Paul Polman arrived at Unilever in 2009, one of his first acts was to abolish quarterly earnings guidance. The signal to investors was clear: short-term targets encourage bad decisions. But the signal to Unilever’s 128,000 employees was equally important: this firm is playing a longer game, and your work is part of something that compounds over years, not something that resets every 90 days.

He then launched the Sustainable Living Plan, making sustainability the organising logic of the entire company. A brand manager in Jakarta developing a new product could connect her work to a direction that was structural, visible, and growing. A supply chain manager in São Paulo evaluating suppliers could apply a clear criterion without escalating the decision.

The strategy created both the purpose and the autonomy that drive retention. Over Polman’s ten-year tenure, Unilever delivered 290% shareholder return whilst consistently ranking among the most attractive employers in its sector.

Genuine Parts, the auto parts distributor that captured 48% of its industry’s profits, is a less glamorous but equally powerful example. Its investment in warehouse automation, digital ordering, and global expansion gave 60,000 employees a trajectory they could see and contribute to. A warehouse technician learning to operate robotic picking systems was developing skills that would be more valuable each year as automated distribution accelerated. The strategy made the work feel directional rather than repetitive.

So what do you do about it?

Three things. And you can start all of them this week.

First, test your strategy for clarity. Find ten employees at random, across different levels and functions, and ask them to describe what the firm is building around and why it matters. No corporate jargon allowed. If they can do it, your strategic narrative is working. If they cannot, you have found the root of your retention problem.

Second, build the employee story. Your strategy needs a version that answers three questions for every employee: what is changing in our industry and why does it matter? How is this firm positioning itself around those changes? And what does that mean for my role, my skills, and my career over the next three to five years? I wrote about the five-stories framework in an earlier piece. The employee story is the version most firms never write. Write it.

Third, make the connection between individual work and strategic direction visible. Not once a year at a town hall. Constantly. When you explain a restructuring, connect it to the external changes you are building around. When you announce a hire, explain how it strengthens your positioning. When you review performance, ask whether the work served the direction. The firms in my research that maintained their strategic commitment over decades did not just have better strategies. They were places where the work had a visible trajectory, where individual decisions connected to a larger logic, and where the skills being developed pointed toward a future that was growing rather than shrinking.

What next?

Your best people are not looking for a better package. They are looking for a better answer to one question: what am I building here, and why should I believe it will matter?

If your strategy can answer that in plain language, you have a retention advantage that no competitor can buy. If it cannot, the exits will continue, and the exit interviews will keep telling you everything except the truth.

You know what to do. Start this week.

Read it as if you had never seen it before. Read it as an investor deciding whether to hold, or as a new employee trying to understand what the firm is building and why. Then ask these ten questions.

Each one is drawn from my research across 8,430 companies that identified what separated the firms that captured dominant profit share from the well-managed competitors that did not. The questions are ordered from the most basic (does the strategy look outward?) to the most demanding (would it survive a crisis?). Score your strategy honestly. A strategy that addresses all ten is rare. A strategy that answers fewer than four has a structural problem that no amount of good execution can fix.

1. Does your strategy name specific changes happening outside your firm?

“The world is becoming more uncertain,,” or “Our industry is evolving” doesn’t cut it. We are looking for specific, named changes: the shift to electrification of vehicles, the ageing of the developed world’s population, the rise of AI-enabled automation in manufacturing. Changes that are observable, measurable, and independent of whether your firm participates in them.

Most strategies describe what the firm will do. The firms that dominated their industries described what was changing in the world and then explained how the firm was positioning itself in response. If your strategy reads like a plan for self-improvement (grow revenue, reduce costs, improve efficiency), it is answering the wrong question.

2. Are those external changes structural?

A structural change has been growing for a decade or more, across economic cycles. Cloud computing qualifies. The metaverse, as conceived in 2021, does not. The three tests that separate a structural shift from a passing trend are: has it been growing for ten years, does it affect multiple industries, and can your firm allocate capital and talent against it? If an external change your strategy leverages fails any of these, it may be real but it is not something to build around.

3. Can you count the number of changes your strategy is built around on one hand?

The firms that dominated their industries organised around three or four external changes. One or two is too vulnerable if it gets disrupted, and ten is indistinguishable from having no priorities at all. If your strategy leverages five or more five external changes, it has not made the hard choices about which ones to commit to. If it leverages none, it is organised around internal priorities, which is a different problem entirely.

4. Can you draw a straight line from each external change to a specific capital allocation decision?

This is where most strategies fail. The external changes are named, sometimes even described well, but they sit on a superficial level and never connect to spending. Somewhere between the environmental scan and the budget, internal priorities take over. Revenue targets, cost programmes, and competitive responses absorb the capital, and the external changes become context that was noted but never acted on.

Test it concretely. Pick one of the external changes your strategy leverages. Can you point to a budget line, an acquisition, a hiring decision, or an investment programme that exists because of that change? If you can, the change is shaping decisions. If you cannot, you may have a problem with alignment.

5. Does your strategy describe what is changing in the world, or what the firm will do to itself?

Read the language carefully. “We will invest in digital transformation” describes the firm. “Consumer ordering behaviour is shifting permanently to digital platforms, and our distribution infrastructure must be rebuilt around that shift” describes the world and then explains the firm’s response.

The content analysis of 120 annual reports showed this distinction with unusual clarity. The firms that captured dominant profit share used language oriented toward external changes: computational technologies, consumer culture, globalisation. Their competitors used language oriented toward internal operations: cost structures, workforce management, financial engineering. Both were describing their businesses. Only one orientation predicted who would win.

6. Could a new employee read your strategy and make a decision based on it by the end of the week?

This is a communication test, but it is also a precision test. A strategy that says “we are committed to innovation and customer excellence” gives nobody a decision criterion. A strategy that says “we are organised around the shift from combustion to electric powertrains, and every product decision should be evaluated against whether it strengthens our position on that shift” tells a product manager exactly what to prioritise.

My CEO storytelling research note explored this in depth. Steve Jobs’s “PCs are going to be like trucks” gave every engineer at Apple a filter for evaluating proposals. If a project served the post-PC world, pursue it. If it served the old one, deprioritise it. Your strategy should function the same way.

7. Does the same strategic logic appear in what you tell employees, investors, and customers, or do you tell each audience a different story?

Different audiences need different versions of the same story, but the underlying logic should be consistent. Employees hear about how the external change shapes their roles and opportunities. For investors, the story connects those same changes to long-term returns. Customers need to see why the positioning makes the firm a better partner as the market evolves. If the employee story promises job security whilst the investor story promises headcount reduction, the strategy will lose credibility the moment the two audiences compare notes.

8. Can you name who is accountable for each strategic objective?

This has to be a named individual with the authority to allocate resources and the responsibility to report progress. My research showed that the firms which sustained their strategic commitment over decades did so because accountability sat with senior leaders who owned the strategic response personally, not with support functions that managed programmes on behalf of the leadership team.

If you cannot name the person accountable for each objective, the ownership architecture is either missing or invisible, and either one produces the same result: nobody feels responsible, and the strategy fails.

9. When did your strategy last cause you to stop doing something?

A strategy that only adds priorities is a wish list, not a strategy. The discipline of committing to three or four external changes means actively excluding the rest: killing projects that do not serve the direction, declining acquisitions that do not strengthen the positioning, reallocating resources away from activities that are good ideas but misaligned.

If your strategy has not caused your firm to stop doing something in the past twelve months, it is probably not constraining decisions, which means it is not organising them either.

10. Would your strategy survive a bad year without being abandoned?

This is the hardest test. When results disappoint, when a competitor makes a move, when the board asks difficult questions, does the leadership team return to the external changes and reaffirm the direction? Or does it pivot to cost-cutting and operational language, abandoning the strategic logic at the first sign of pressure?

The superfirms in the research maintained their strategic emphasis across 20 years of disruptions, recessions, and competitive crises. That discipline is itself a signal: it tells the organisation that the direction is real. A strategy that changes every time the financial results disappoint is a reaction, not a strategy.

How to score it

Count the number of questions your strategy can answer with a clear, specific yes. Eight to ten: your strategy is doing what a strategy should do. Five to seven: the analytical foundations are present but the connection to decisions, communication, or accountability needs work. Below five: your strategy is likely organised around internal priorities rather than external changes, which means it shares the orientation of the firms in the research that executed well but lost.

The questions are simple. The honest answers rarely are.

Six months later, a product manager in Singapore is deciding between two feature priorities. A regional sales director in Munich is evaluating whether to pursue a new customer segment. A procurement lead in Cincinnati is choosing between two suppliers. None of them connects their decision to the strategic direction announced at the town hall. They are making choices based on quarterly targets, functional KPIs, and the priorities their direct manager communicated in last week’s team meeting.

This is where most thematic strategies die. They are conceived at the top, communicated once or twice, and then dissolved by the operational reality of a large organisation where thousands of people make decisions every day without reference to the strategic direction. The strategy exists in the executive suite. It does not exist on the factory floor, in the regional office, or in the procurement system.

My research across 8,430 companies found that the firms which dominated their industries maintained their thematic emphasis across 20 years. That kind of consistency does not happen through CEO communication alone, however clear the narrative. It requires an ownership architecture that cascades accountability from the boardroom to every person who touches strategic execution.

Executive ownership is not enough

The instinct in most organisations is to assign each strategic objective to an executive sponsor. This is correct as far as it goes. Unilever’s Sustainable Living Plan worked in part because Paul Polman owned the firm’s response to sustainability as a driver personally, as CEO, rather than delegating it to a CSR department. The distinction between a strategic response owned at the top and a programme managed by a support function is the difference between success and failure.

But Unilever has approximately 128,000 employees. Polman’s personal accountability for the sustainability positioning meant that every major capital allocation decision was tested against it, every acquisition was evaluated through it, and every investor presentation was framed around it. That is executive ownership working well. What it cannot do on its own is ensure that a brand manager in Jakarta makes a packaging decision that serves the firm’s positioning, or that a supply chain manager in São Paulo selects a supplier whose practices align with it. Those decisions happen too far from the executive suite, too frequently, and in too much operational detail for any CEO to influence directly.

The gap between executive ownership and operational execution is where the ownership architecture matters. The question is how to build a system that makes the strategic direction present in decisions the CEO will never see.

The cascade

Ownership cascades through four levels, and each level requires a different type of accountability.

At the executive level, leaders are accountable for the strategic objectives and competitive positioning that flow from the selected drivers. They define what the firm will build in response to each force, control the resources needed to deliver it, and report progress to the board. If the positioning fails to produce results, they own the failure. This is the level where Polman operated when he made sustainability the organising logic of Unilever’s entire portfolio, and where Cisco’s John Chambers operated when he organised the company’s acquisition strategy around market transitions in networking technology.

Senior management takes ownership of the key results that sit beneath each strategic objective. If the objective is “establish market leadership in automated solutions,” the VP of Sales might own the market share target, the VP of Product might own the revenue mix shift, and the VP of Customer Success might own reference customer acquisition. These owners live in the operational detail whilst maintaining line of sight to the strategic objective above them. They monitor KPIs weekly, run programmes, coordinate across functions, and course-correct before problems reach the executive level.

Middle management is where ownership is most frequently lost. The executive level is visible and the frontline is accountable for specific deliverables, but the layer between them is often vague. Programme managers at this level own the delivery of specific initiatives: building a new capability, launching a product, restructuring a process. They convert strategic intent into milestones, manage resources within allocated budgets, and escalate blockers they cannot resolve. When middle management ownership is informal or assumed rather than explicit, programmes drift without anyone feeling empowered to kill them or redirect them. This is what I call the orphaned middle, and it is where most execution failures originate.

At the team level, individual KPI owners monitor the metrics that signal whether the strategy is working. A conversion rate, a defect rate, a customer satisfaction score. These owners are closest to operational reality and provide the early warning signals that the levels above them depend on. If a leading indicator moves in the wrong direction, the KPI owner investigates, recommends action, and escalates if needed.

One accountable, many responsible

The single most common ownership failure in large organisations is shared accountability. When two or three executives jointly own a strategic objective, each assumes the others are handling it. Problems fall between the cracks. Decisions are delayed because nobody feels authorised to make them alone. By the time the shared owners convene to discuss the issue, the window for action has often closed.

The fix is radical clarity. One person is accountable for each objective, each key result, each programme, and each KPI. Others contribute, provide input, or need to be informed, but only one person owns the outcome. This sounds obvious. In practice, it requires leadership teams to make uncomfortable choices about who carries the weight, and it requires the person who does not get the ownership to accept that their role is contribution, not control.

The discipline extends beyond structural assignment. When ownership is clear, the next question is whether the owner has the authority to match their accountability. A senior manager who owns a key result but lacks budget authority, hiring rights, or decision-making power over the resources needed to achieve it is not really an owner. They are a scapegoat. Accountability without authority produces frustration, disengagement, and the defensive culture that kills strategic execution: people spending their energy documenting why failures were not their fault rather than solving the problems that caused them.

The cultural layer

Structure and authority are necessary but they are not the whole system. Ownership at scale requires a culture that makes four things possible.

Transparency comes first. Performance against the strategic objectives must be visible across the organisation, not locked in executive dashboards that the people doing the work never see. When a KPI moves, the people closest to it should know before the people furthest from it. If problems are only visible at the quarterly review, they are visible too late.

Productive challenge follows. A culture where raising concerns about strategic progress is treated as disloyalty will produce silence, and silence produces surprises. The firms in my research that maintained their thematic commitment across 20 years did not do so by suppressing internal debate. They did so by channelling it: challenge the execution, challenge the pace, challenge the resource allocation, but do so in service of the chosen direction rather than as an argument for abandoning it.

Learning orientation means separating intelligent failure from preventable failure. A programme owner who takes a calculated risk on a new capability, fails, and surfaces the lessons quickly is doing exactly what the organisation needs. A programme owner who fails because they ignored warning signals and hid the problem is doing something different. The response to each must be visibly different, or the organisation will learn that all failure is punished and will stop taking the risks that strategic execution requires.

Fast escalation is the fourth element. When an owner encounters a blocker they cannot resolve, the speed at which it reaches someone who can resolve it determines whether the issue costs the organisation a week or a quarter. Healthy escalation culture treats raising problems as responsible ownership. Where that culture is absent, people learn that surfacing issues gets them blamed for the issues themselves, and they stop doing it. The difference between the two is entirely a function of how leadership responds when problems are surfaced.

How to know whether it is working

The simplest test is the same one I described in the CEO storytelling piece: ask ten employees at random to describe the firm’s strategy. But ownership requires a second, harder test. Ask those same employees who owns the strategic objective that their work contributes to. If they can name the person, the cascade is working. If they cannot, ownership exists on paper but not in the organisation.

A more operational test is speed. When a KPI signals trouble, how long does it take for the information to reach someone with the authority to act on it? In a well-functioning ownership system, the answer is hours or days. In a poorly functioning one, the answer is weeks or quarters, by which point correction is expensive and the window for prevention has closed.

The ultimate test is whether the ownership system survives a leadership transition. When an objective owner leaves, is there a named successor who can take over without losing momentum? Or does the strategic direction drift whilst the organisation figures out who is responsible? The superfirms in my data maintained their thematic emphasis across CEO transitions, recessions, and competitive crises. That durability was the product of an ownership architecture that made the firm’s positioning institutional rather than personal.

Thematic Strategy fails most often not because the wrong drivers were selected, and not because the CEO cannot communicate them clearly. It fails because the distance between the boardroom and the factory floor is filled with thousands of daily decisions that nobody has connected to the strategic direction. Closing that gap is what ownership at scale is designed to do.

This is the most common failure in strategic management, and it is almost always a communication failure. If the CEO cannot translate the strategy into a narrative that makes employees want to come to work, gives investors a reason to back you, and grows customers, the strategy remains trapped in PowerPoint and the organisation reverts to whatever it was doing before.

My research across 8,430 companies suggests this is more than an execution problem. It may be a leading indicator of competitive outcomes.

Language matters a lot

My content analysis of 120 annual reports across 20 years showed a consistent pattern: the language that CEOs used to describe their firms’ strategies predicted which firms would dominate their industries and which would not, years before the financial performance did.

In 2010, Steve Jobs told an audience at the D8 conference that “PCs are going to be like trucks. They’re still going to be around, they’re still going to have a lot of value, but they’re going to be used by one out of X people.” That metaphor did strategic work that no slide deck could match. In a single image, it identified the external force Apple was organised around (the shift from desktop computing to mobile personal devices), told every engineer and designer what to build towards, and told them what to deprioritise, in language vivid enough to survive translation through every layer of the organisation. A product manager at Apple hearing that sentence could evaluate any proposal by asking whether it served the post-PC world or the old one. Three years earlier, when he introduced the iPhone at Macworld in 2007, Jobs had framed the product in the same outward-facing terms: “Every once in a while, a revolutionary product comes along that changes everything.” The sentence described a structural shift, not a phone, and it announced that Apple would build around it.

Gilead’s John Martin communicated with similar clarity but in entirely different language, which is what you would expect from a biotech CEO whose forces were different from those reshaping consumer technology. Asked what drove his strategy, Martin began with the world’s needs: “When you look for unmet medical needs to go after next, what’s at the top of the list? Hepatitis C virus infection.” He then spent $11 billion acquiring Pharmasset, a company with an unapproved hepatitis C treatment, telling investors the deal represented the chance to address 180 million patients worldwide. The market was sceptical and Gilead’s stock fell by roughly 10% on the announcement. The bet generated $58.5 billion in revenue over five years.

Jobs and Martin led firms in different industries with different forces, but their communication shared an orientation. They began with the external world and worked inward. They described forces in language specific enough that a listener could convert the statement into a decision.

What the opposite sounds like

Their competitors’ CEOs described different priorities. Amgen’s Kevin Sharer presented six strategic objectives to investors in 2011: manufacturing quality and lowest cost, cost structure management, capital allocation, balance sheet strength, shareholder returns, and bringing medicines to market. Five of the six concerned internal operations. The language was competent, professionally delivered, and gave investors no framework for understanding which external forces Amgen was building around or why.

HP’s successive CEOs, across 15 years, told variations of the same inward-facing story. Carly Fiorina framed the Compaq merger around cost synergies and competitive scale. Mark Hurd told analysts his focus was driving operational efficiency and cut 14,500 jobs in his first year. Meg Whitman announced a further restructuring that would eliminate 55,000 positions, describing her priority as restoring a balance of growth and efficiency. Across three CEO transitions and a decade and a half, none identified an external force that HP would organise around. Each described what the firm would do to itself, without addressing what was changing in the world that would determine whether any of it mattered.

Nokia’s Stephen Elop produced the most instructive failure of strategic communication in recent corporate history. His 2010 “burning platform” memo diagnosed the crisis in terms that pointed entirely inward: accountability failures, leadership gaps, poor collaboration. Every sentence described what Nokia was doing wrong internally. The memo was addressed to employees, but it gave them no framework for understanding the forces that were actually destroying Nokia’s position. It told them the building was on fire but not where the fire came from or where to run. The direction of attention in that memo, inward at failures rather than outward at forces, mirrored what the content analysis found across 20 years of Nokia’s annual reports. The language was the symptom; the orientation was what produced it.

Why narrative is a strategic function

The distinction between these CEOs had nothing to do with presentation skill. Jobs was magnetic and Sharer was polished, but the gap between them was functional: Jobs and Martin were using communication as a strategic instrument. Sharer and Elop were not.

When a CEO describes the firm’s strategy in terms of external forces, three things happen in the organisation. Employees gain a decision filter. If a product manager knows the firm is organised around the convergence of computing and consumer culture, she can evaluate a proposed feature by asking whether it serves that convergence. If it does, pursue it. If it does not, deprioritise it. She does not need to escalate the decision because the narrative has given her the criteria. I wrote about this concept in more detail in One Strategy, Five Stories: the same strategic logic needs different narrative frames for different audiences, but the underlying logic must be clear enough that people across the organisation can apply it independently.

The second effect is patience from investors. A CEO who can explain the logic connecting today’s investments to structural forces that will compound over a decade gives investors a framework for holding through quarters where the returns have not yet materialised. When Paul Polman arrived as Unilever’s CEO in 2009, one of his first acts was to abolish quarterly earnings guidance, telling investors that short-term targets encouraged decisions that harmed long-term performance. Unilever’s shares fell 8% on the announcement. He then launched the Sustainable Living Plan, making sustainability the organising logic of the entire company, and told Fortune magazine: “This is not a charity we’re talking about here, you know. We are running a business.” Polman’s story connected an external force (consumer and regulatory demand for sustainable products) to a business strategy, in language that forced investors to decide whether they believed the force was structural. Many did. Over Polman’s ten-year tenure, Unilever delivered nearly 300% shareholder return, outperforming its peers and the broader market.

For customers, the effect is confidence in the partnership. A firm whose CEO can articulate the structural forces the company is building around gives customers a reason to believe the partnership will be valuable as the market evolves. The customer is buying a position, not a product, and the CEO’s communication is what makes that position visible.

Each of these effects is operational. They change decisions, capital flows, and commercial relationships. This is why strategic communication has become a core leadership competency rather than a complementary skill. A CEO who can identify the right themes but cannot communicate them is doing half the job, and as my research shows, it is the half that matters less. A strategy that the leadership team understands but the organisation cannot act on produces precisely the outcome the content analysis documented at HP and Nokia: good execution of an increasingly irrelevant direction.

The discipline of repetition

Telling the story once is not telling it. A CEO who presents the strategy at an annual town hall and considers the communication job done will find that three months later the organisation has forgotten the specifics and reverted to operational defaults. Strategic narrative requires constant repetition, and the repetition needs to be connected to decisions rather than delivered as a standalone message.

When a firm makes an acquisition, the CEO should explain how it connects to the themes. When a business unit is restructured, the connection should be explicit. When quarterly results are reported, the narrative should frame them against the forces the firm is organised around, not just against last year’s numbers. Bob Iger did this at Disney across 15 years. Pixar, Marvel, Lucasfilm, and Fox each looked like a standalone deal when announced. But Iger connected each one to the same story about digital distribution and the globalisation of consumer culture, giving employees a reason to believe the acquisitions were part of something larger. Investors gained a logic for supporting the capital commitment. Customers could see why the Disney brand was worth engaging with across platforms. Without that connecting story, each acquisition would have appeared disconnected and the internal resistance to each deal would have been greater.

The CEO who communicates well does not add communication to their leadership responsibilities. They integrate it into every interaction they already have: board meetings, investor calls, town halls, one-to-ones with direct reports, and the informal conversations that shape culture. The strategy should be audible in all of them, adapted to the audience but anchored to the same forces.

How to know whether it is working

Comprehension is the first test. Ask employees to describe the strategy. If they can, the narrative has landed. If they cannot, it has not, regardless of how many times it has been presented.

A harder test is whether stakeholder behaviour reflects the story. Are employees making decisions that serve the themes without being told to? Are investors holding through short-term underperformance because they understand the long-term logic? Are customers choosing the firm because of its positioning around forces that are reshaping their own markets?

The most demanding test is whether the narrative survives a crisis. When results disappoint, when a competitor makes a move, when the board asks difficult questions, does the CEO return to the forces and reaffirm the direction, or does the CEO pivot to operational language and abandon the thematic frame? The superfirms in my research maintained their thematic emphasis across 20 years that included the dot-com crash, the 2008 financial crisis, and periods of intense competitive pressure. The discipline of maintaining commitment through adversity is itself a form of communication: it tells the organisation that the themes are real, not decorative.

The question every CEO should ask is whether they could describe their firm’s strategy to a new employee in three minutes, in language specific enough that the employee could make a decision based on it by the end of the week. Jobs could, and so could Martin and Polman. The evidence suggests that this capability, far from being a soft skill, is one of the strongest predictors of whether a firm’s strategy will produce the outcomes it was designed for.

Each of them assumes something about the world that was more true in 1980 than it is now: that the competitive terrain is relatively stable, and that strategy is the art of positioning well within it.

I believe this view is outdated and strategically dangerous.

What Porter gets right

Porter’s central contribution was clarity about the nature of competition. An industry’s profitability is shaped by five structural forces: the bargaining power of buyers, the bargaining power of suppliers, the threat of new entrants, the threat of substitutes, and the intensity of rivalry among existing competitors. Understand these forces and you understand why some industries are more profitable than others, and where within an industry a firm can position itself to capture disproportionate value.

This remains useful. A leadership team that has not conducted a rigorous analysis of its competitive structure is operating without a map. Porter’s framework provides one, and the map is accurate as far as it goes.

Where it stops is at the boundary of the industry itself. Porter’s Five Forces describes the terrain as it currently exists. It tells you about the bargaining power your suppliers hold today, the substitution threats you face today, the competitive intensity you experience today. What it does not describe is the set of long-term forces that are reshaping the terrain from outside, operating above the level of any single industry and indifferent to the competitive dynamics within it.

The layer above industry structure

Nokia understood its competitive terrain in 2005. It knew its competitors, its suppliers, its distribution channels. A Porter analysis conducted that year would have told Nokia’s leadership that its competitive position was strong: over 40% global handset market share, diversified supplier relationships, formidable distribution, and limited threat from substitutes in the traditional mobile phone category. By every measure that the Five Forces framework captures, Nokia was well positioned.

What the framework could not capture was the convergence of computing and communications, a structural force that sat above the mobile phone industry and was about to reshape it from outside. The threat arrived through none of Porter’s five channels: not from a more powerful supplier, a new entrant in handsets, or a substitute within the existing product category, but from a force operating at a higher level, the long-term shift in how humans interact with computing. Apple’s iPhone was the product of a different force entirely, one that a competitive analysis of the mobile phone industry in 2005 would not have surfaced.

Nokia’s former chairman Jorma Ollila later acknowledged this directly, noting that Apple had created an entirely new platform of services and applications that Nokia had been unable to match. When INSEAD researchers studied the collapse, they found an organisation that had turned inward: middle managers afraid to deliver bad news, senior leaders focused on quarterly targets, a culture in which internal fear had replaced external curiosity. Nokia’s failure was directional before it was operational. The company was looking at its competitive position whilst the ground beneath that position was shifting.

SWOT captures some of this through its “threats” and “opportunities” quadrants, but only as a snapshot. It does not distinguish between a threat that will persist for two quarters and a force that will reshape the industry for two decades. Both receive the same treatment: a bullet point on a matrix. The Balanced Scorecard, for its part, tracks performance against strategic objectives but does not address where those objectives should come from. It is an execution framework, and a good one, but it assumes the strategic direction has already been set correctly. If the direction is wrong because the firm has organised around internal priorities while the external terrain shifts beneath it, disciplined execution against a Balanced Scorecard will produce efficient delivery of an increasingly irrelevant strategy.

What all three frameworks share is an assumption that the competitive environment is the primary unit of analysis. Porter analyses the industry. SWOT maps the firm against its environment at a point in time. The Balanced Scorecard tracks progress against objectives derived from competitive positioning. Each is valuable within its scope. But none asks the prior question: what long-term forces are reshaping the environment in which this competition is taking place, and is the firm organised around them?

What the evidence shows

My research across 8,430 companies tested whether this gap between industry analysis and force analysis had measurable consequences. I searched the entire US stock market for firms that had captured a dominant share of their industry’s profits over five consecutive years. Eleven firms met the threshold, just 0.13% of the sample (I called them superfirms). I then designed a content analysis of 120 annual reports across 20 years, comparing three of these superfirms with the competitors that had held the profit lead at the start of the period: Apple versus HP, Cisco versus Nokia, Gilead versus Amgen.

The finding was consistent across all three pairs. The superfirms devoted disproportionate attention to growth-oriented, outward-facing forces: computational technologies, consumer culture, globalisation, business model innovation. Their competitors devoted disproportionate attention to defensive, inward-facing concerns: financial structures, workforce management, regulatory compliance. Both groups discussed external forces. The difference was whether those forces organised the firm’s decisions or sat in a section of the strategy document labelled “external environment” and stayed there.

The CEO statements reinforced the data. Cisco’s John Chambers stated his strategic philosophy explicitly: “I always compete against market transitions, business model changes and technology, never against competitors.” Gilead’s John Martin, asked what drove his strategy, began with the world’s needs and spent $11 billion acquiring a company with an unapproved hepatitis C treatment because he saw an external force worth organising around. Their competitors’ CEOs described internal priorities. Amgen’s Kevin Sharer outlined six strategic objectives to investors in 2011: five of the six concerned manufacturing costs, capital allocation, and balance sheet management. HP’s successive CEOs, across 15 years, described cost reduction, workforce restructuring, and operational efficiency. Both firms were executing competently against frameworks that described their current competitive position. Neither was organising around the forces that would determine their future one.

The distinction maps precisely onto what separates Porter’s framework from what I believe is needed. Porter tells you how to position within an industry. The evidence from the my research suggests that the more consequential question is which forces are reshaping the industry from above, and whether the firm has organised around them. HP conducted rigorous competitive analysis throughout the 2000s. It knew its buyers, its suppliers, its rivals. What it did not do was identify the convergence of computing and consumer culture as a force to build around. Apple did, and the result was a shift from 1% of industry profits to 78% in 15 years. A well-executed Porter analysis could not have produced that outcome, because the force that produced it operated outside Porter’s frame.

From context to foundation

The approach I call Thematic Strategy extends Porter’s framework by adding this missing layer. It accepts Porter’s insight that strategy requires clear choices. It accepts that competitive positioning matters. What it adds is a prior question: which long-term external forces should those choices be anchored to?

A theme, in this framework, is a long-term structural force, external to the firm, that the firm has chosen to organise its strategy around. Themes must pass three tests: has the force been growing structurally for a decade (structural shift), does it affect multiple industries (cross-industry relevance), and can the firm allocate capital and talent against it (actionability). These tests filter the hundreds of forces in a firm’s external environment down to the three or four worth organising around.

The difference between conventional strategy and thematic strategy is the difference between treating forces as context and treating them as foundation. An adaptive firm conducts an annual strategic review, notes the forces reshaping its industry, adjusts its plans, and then returns to executing against internal priorities. The forces inform the plan. An aligned firm selects three or four forces and makes them the centre of every major decision: capital allocation, acquisitions, product development, geographic expansion. The forces are the plan.

Genuine Parts, a car parts distributor founded in 1928, built its strategy around technology-driven distribution, globalisation, and industry consolidation. Disney organised around digital distribution and the globalisation of consumer culture, acquiring Pixar, Marvel, Lucasfilm, and Fox because of those forces. Unilever made sustainability the operating logic of the entire company a decade before most competitors treated it as anything more than a communications exercise. Each of these firms captured dominant profit share in industries where dozens of well-resourced competitors shared what remained.

In 1993, Igor Ansoff and Patrick Sullivan published a study spanning nine decades of business performance. Their conclusion was that environment-driven firms, companies that continuously realigned their strategies with the external environment, outperformed others across every era studied. Thematic Strategy builds on Ansoff’s finding and makes it operational by identifying the specific mechanism: long-term drivers of transformation, selected deliberately, committed to over decades, and used as the organising principle for all major decisions.

What this means for how you build strategy

Porter’s Five Forces remains a useful tool for understanding industry structure, and SWOT still has value as a starting point for situational analysis. Neither needs to be abandoned. What needs to change is where the strategic conversation begins.

Most strategy processes start with the competitive environment: who are our rivals, what are our strengths, where can we win? Thematic Strategy begins one level higher: which structural forces are reshaping the terrain on which that competition takes place, and which of those forces are we building around? The competitive analysis then follows, but it follows from the force analysis, which means the firm is positioning within an industry it understands to be changing in specific, identifiable directions.

The difference is operational. Under Porter’s framework, capital flows to defend and extend the firm’s competitive position within the current industry structure. Under Thematic Strategy, capital flows to strengthen the firm’s position on three or four forces that are reshaping the industry structure itself. When those forces accelerate, the firm using Porter discovers its position has eroded. The firm organised around forces discovers the opposite: the capabilities it built are now more valuable, because the world has moved in the direction it was already facing.

The practical test is whether your current strategy could survive a change in the competitive landscape that none of your existing frameworks would have predicted. Nokia’s could not, and neither could HP’s. The firms that dominated their industries built strategies that strengthened as the forces accelerated, because the forces were the foundation. That is the shift from Porter to what comes next.

The strategy acknowledges the external forces, but the budget allocates against internal priorities. The gap between what the team knows is changing and what the team actually does about it grows wider each quarter.

By the end of this article, you should be able to answer three questions:

1. What are the three structural forces your strategy is organised around?

2. When did your leadership team last change a resource allocation decision because of a shift in one of those forces?

3. Who is responsible for monitoring those forces?

If those questions feel uncomfortable, the process described here is designed to close exactly that gap.

The gap is visible empirically. My research across 8,430 companies found it in the data. Every firm I analysed discussed external forces to some degree. HP mentioned technology, Nokia referenced consumer devices, and Amgen wrote about globalisation. But they did not shape those firms’ decisions. The superfirms paid disproportionate attention to growth-oriented, outward-facing forces. Their competitors treated the same forces as background noise. The difference lay in whether foresight had been connected to the decisions that allocate capital, talent, and organisational energy.

Closing that gap requires a process, and the annual offsite with a guest speaker on trends does not qualify. Neither does the consulting engagement that produces a 100-page report nobody reads. What works is something less glamorous: a process that runs continuously and feeds directly into the decisions that shape the firm’s direction.

Why the strategy offsite fails

The output of a strategy review is typically a set of slides: observations that are broadly accurate and almost entirely disconnected from the capital allocation decisions that will be made in the following months.

This fails for a specific reason. External forces do not change on an annual cycle. A force that was emerging in 2022 may be accelerating by 2026. Nokia’s leadership reviewed its competitive environment every year throughout the 2000s. The reviews noted the emergence of smartphone computing. But Nokia held over 40% of global handset market share in 2007, and that dominance made the annual cadence feel adequate. Then Apple had launched the iPhone and captured the position that Nokia would never recover. The annual cycle failed not because Nokia’s analysts were uninformed but because they did very little about it.

Cisco, by contrast, is one of the superfirms in my research, and its approach is completely different. John Chambers described his competitive logic in terms of “market transitions,” not competitors, and Cisco’s capital allocation reflected this: the company made over 200 acquisitions in two decades, each tested against whether it strengthened Cisco’s position on the forces reshaping networking and communications technology. Cisco did not know more about market forces than Nokia did. It acted on what it knew faster, feeding foresight directly into acquisition decisions on a continuous basis rather than reviewing it annually and filing it.

Who should be in the room

The composition of the foresight group matters more than most organisations recognise. The default is to assign foresight to the strategy team, which produces rigorous analysis that the operating executives have no ownership of and therefore ignore. The opposite failure is to make it a CEO-only exercise, which produces conviction at the top and bewilderment everywhere else.

In my experience, the groups that work best are small, senior, and cross-functional: six to eight people. The CEO or equivalent, the heads of the two or three largest business units, the CFO (because foresight without a connection to capital allocation is academic), and one or two people from outside the core leadership who bring a different perspective: a technology leader, a head of corporate development, or someone with deep customer contact. The cross-functional composition matters because forces look different from different positions in the organisation. A demographic shift that the head of product sees as a design challenge looks like a revenue risk from the CFO’s and an acquisition opportunity from the perspective of corporate development. Those three perspectives on the same force are what make the scanning exercise strategically useful rather than analytically interesting. Larger groups default to presentation mode. Smaller ones lack the diversity of perspective that makes the scanning productive.

One person who should not be in the room is an external consultant running the process. The foresight group needs to own its conclusions. When an outside firm presents the analysis and the leadership team reacts to it, something shifts: the discussion becomes an evaluation of the consultant’s work instead of a debate about the firm’s strategic direction. I have watched this happen repeatedly. The leadership team engages with the slides, not the forces. They offer polite feedback instead of genuine disagreement, and leave the room having discussed someone else’s view of their environment. External input is valuable for specific questions, but the scanning and prioritisation process must be owned internally or it will not survive the first quarter in which operational pressures compete for the leadership team’s time.

What the process produces

The output of a foresight process is a prioritised view of the external forces reshaping the firm’s competitive environment, updated regularly and connected to specific decisions.

I developed the Growth-Impact Matrix to help with this:

The horizontal axis plots impact: whether the force represents an opportunity or a threat to the firm, assessed through a combination of revenue exposure, competitive positioning, and capability alignment. The vertical axis plots momentum: how fast the force is growing, scored from baseline (growing at or below GDP rate) through accelerated and rapid to exponential (growing at 15% or more annually). The team arrives at a shared position for each force through structured discussion, typically with one member presenting a preliminary assessment and the group debating until consensus emerges. Voting can break deadlocks, but the conversation is where the value lies.

The resulting matrix produces four broad zones. Forces in the upper right (high momentum, positive impact) are the ones to commit to and build around. Forces in the upper left (high momentum, negative impact) demand defensive investment. Forces in the lower half deserve monitoring but not strategic commitment, and the discipline of leaving them there, rather than escalating every emerging trend into a strategic priority, is part of what makes the matrix useful.

How the matrix connects to theme selection

What makes this tool different from a standard risk matrix or PESTLE analysis is that it connects directly to the three tests that determine whether a force qualifies as a strategic theme:

1. Has it been growing structurally for a decade (structural shift)?

2. Does it affect multiple industries (cross-industry relevance)?

3. Can the firm allocate capital and talent against it (actionability)?

The momentum dimension captures structural shift directly. Cross-industry relevance shows up in how broadly a force’s impact reaches across the firm. And actionability is reflected in the specificity of the response the matrix demands: commit, invest, or defend are operational instructions, not vague prescriptions like “monitor” or “be aware.” The matrix is the mechanism through which theme selection happens.

The matrix serves as a living document. Forces change. A driver that sat in the monitoring zone two years ago may have accelerated into the commitment zone. The value of the matrix is that it makes these movements visible and forces the leadership team to respond to them, which prevents the common failure of pretending the strategic environment has not changed since the last review.

Building it for the first time

The initial exercise, building the matrix for the first time, takes genuine effort. The SPINE framework provides 292 individual drivers of transformation organised across five forces: Society, Power, Innovation, Nature, and Economy. A leadership team scanning this taxonomy for the first time should expect to identify 10 to 15 drivers with material relevance to their competitive context. Plotting those drivers on the Growth-Impact Matrix and arriving at a shared view of which forces demand strategic response will typically require two to three half-day sessions. After the initial build, the process shifts to maintenance and decision-making.

How often, and for how long

A quarterly review is the right cadence for most organisations. It aligns with the business planning cycle without creating the overhead of monthly meetings that compete with operational demands. Firms in fast-moving industries, those in the middle of a strategic crisis, or early-stage companies where the competitive landscape is still forming may need a higher frequency, but for established firms operating in industries that change over years rather than weeks, quarterly works well. Each session should be two to three hours, structured around three questions:

1. Which forces have moved on the matrix since the last review?

2. What new forces have appeared that were not previously on the radar

3. And most critically, which capital or talent decisions should change as a result?

Not every force needs rescoring each quarter; the focus should be on the three or four where momentum or impact may have shifted, with a full rescore of the entire matrix annually.

That last question is the one that separates a useful foresight process from a sophisticated monitoring exercise. If the quarterly review does not produce at least one specific recommendation about resource allocation, hiring, investment, or divestment, then the process is not connected to decisions and will eventually be abandoned. The firms that dominated their industries did not merely monitor forces. They organised around them, which means every foresight discussion ended with a decision or a reaffirmation of a previous one.

Between quarterly sessions, one member of the foresight group should own the monitoring function. This is a standing responsibility, not a full-time role: flag any significant movement in the forces on the matrix, any new force that has appeared, or any event that changes the momentum or impact assessment of an existing force. When something material changes, the group reconvenes. A well-functioning process would have triggered an interim review when the European energy crisis reshaped operating costs across the continent in 2022, and again when ChatGPT’s release in November of that year forced every firm with AI on its matrix to reassess how fast the force was moving. The cadence is quarterly by default, with ad hoc sessions when the environment moves faster than the cycle.

Where foresight processes break down

Three failures recur. Information overload is the most common. The goal of foresight is reduction, not accumulation: selecting three or four forces to build around from a landscape of hundreds. A matrix with 40 forces plotted on it serves research purposes, not strategic ones. The discipline of limiting the matrix to 10 to 15 forces, and the themes derived from them to three or four, is what gives the process strategic value.

Disconnection from capital kills the process more quietly. A foresight exercise that produces insight but never changes a budget line will be abandoned within a year. The CFO’s presence in the room exists to ensure that when the group concludes a force has accelerated, the conversation immediately turns to what that means for next quarter’s investment plan.

The deeper failure is treating foresight as a support function. If the process is owned by a strategy team that reports to the leadership rather than being run by the leadership itself, the output will be treated as advisory, not directive. My research showed this clearly: the direction of a leadership team’s attention predicted competitive outcomes years in advance. Attention that is delegated to a support function is, by definition, not the leadership team’s attention.

The test

The tests are simple.

1. What are the three structural forces your strategy is organised around?

2. When did the leadership team last change a resource allocation decision because of a shift in one of those forces?

3. Who in the organisation is responsible for monitoring those forces?

If the answers come easily, the process is connected to decisions. If they do not, the process is producing awareness without action, which is the gap that separates the firms that execute well but lose from the firms that dominate.

These priorities are not wrong. Many reflect genuine concerns. The problem is that they are interchangeable. Swap the priorities of any two firms in the same industry and you would struggle to tell the difference. When everything is a priority, nothing organises the firm’s decisions in a distinctive direction.

A theme is different from a priority. It is a long-term structural force, external to the firm, that the firm has chosen to organise its strategy around.

Themes exist whether the firm responds to them or not. E-commerce was rewriting the rules of distribution whether any individual retailer invested in it or not. The shift to renewable energy was reshaping power markets whether any individual utility adapted or not. The choice to organise around a theme is a strategic decision. The theme itself is external and indifferent to your participation.

My research across 8,430 companies found that the firms which dominated their industries selected three or four themes and committed to them over decades. The precision of that selection is what made the approach work. Too many themes leads to diffusion, the same problem conventional strategy produces when it tries to respond to everything. Too few creates vulnerability. The question is how to separate the small number of themes worth organising around from the hundreds of forces in any firm’s external environment.

I use three tests. A candidate force must pass all three to qualify.

Test 1: Structural shift

Has the force been growing for ten or more years, at a rate significantly greater than GDP growth, across economic cycles?

Cloud computing clears this bar easily. It has been growing consistently since the mid-2000s, through recessions and recoveries, and shows no signs of decelerating. The metaverse, as conceived in 2021, does not. It generated intense media attention for roughly two years, attracted large corporate investments, and then failed to achieve mass adoption. The distinction matters because organisations frequently confuse excitement with structure. A force that generates conference panels and consulting reports is not necessarily one that has been growing consistently for a decade. The test is deliberately backward-looking. It asks not “will this be important?” but “has this already been important, for a long time, across conditions that would have killed it if it were not structural?”

A sophisticated objection to the ten-year threshold is that it would exclude genuinely structural forces in their early stages. This is a fair concern, and the answer is that the test is a heuristic for structural durability, not a rigid threshold. A force that has been growing for seven years with accelerating momentum may qualify. One that has been growing for two years with intense media coverage but no evidence of persistence across an economic downturn probably does not.

AI is worth addressing directly because it illustrates this judgment in practice. Large language models appeared to arrive suddenly in late 2022. But the underlying compute infrastructure, the training data pipelines, and the venture investment in AI companies had been building for well over a decade. The structural force underneath was not sudden. The product that made it visible was. What looked like a disruption was actually the visible surface of a shift that had been compounding for years. AI qualifies under this test, but the full argument for why most firms’ AI strategies still fail as themes belongs to the third test below.

Test 2: Cross-industry relevance

Why does a theme need to affect more than one industry? Because a force that reshapes a single niche cannot anchor a firm’s strategy for a decade. The breadth of a force determines how many strategic options it creates and how many applications the firm can find across its portfolio, its geographies, and its growth trajectory. A narrow force produces a product opportunity. A broad force produces a strategic position.

Ageing populations are the clearest example of a force that meets this standard. The implications reach into healthcare through rising chronic disease treatment and growing eldercare demand, into financial services through longer retirements requiring different savings and pension products, and into housing through demand for smaller units, single-floor living, and proximity to medical services. Consumer goods firms face different nutritional needs and packaging requirements. Labour markets face shrinking working-age populations and rising dependency ratios. A firm that organises around ageing populations can find applications across its entire portfolio and across multiple geographies, since the demographic trajectory is seen in nearly all developed economies.

Contrast this with blockchain-based supply chain verification. It may be growing. It may solve a real problem in specific logistics and procurement contexts. But its applications are concentrated in a narrow band of use cases within a single domain. No CEO would stand in front of a board and say “Our strategy for the next decade is organised around blockchain-based supply chain verification.” The number of industries a force affects is a reasonable proxy for how much strategic surface area it creates. A force that touches six industries gives a firm six different ways to apply its theme and six different sources of compounding advantage as the force accelerates.

Precision fermentation is transforming parts of the food industry, but it has limited relevance to financial services, healthcare, or media. A firm operating solely within food production might reasonably organise around it. A diversified firm cannot.

Test 3: Actionability

This is where most candidate themes are eliminated. A firm must be able to explicitly allocate capital and talent to the theme. If it cannot point to specific investments, specific hires, and specific decisions that flow directly from the theme, the theme has not passed.

“The world is becoming more uncertain” is an observation that most leaders would agree with. But no firm can allocate a budget line to uncertainty. There is no R&D programme for “uncertainty.” There is no acquisition target called “uncertainty.” The observation is real but not actionable, which means it cannot be a theme. “The future of work is changing” is a similar case. It sounds strategic. It appears in annual reports across industries. But what capital decision does it produce? Which specific capabilities does the firm build? Unless the leadership team can answer those questions concretely, the phrase is occupying strategic space without doing strategic work.

This is where most firms’ AI strategies fail, and the failure is instructive because it shows what the actionability test is actually filtering for. AI satisfies the structural shift and cross-industry tests easily. The problem is how firms articulate it. “Artificial intelligence is transforming our industry” is a statement that could appear in any strategy in any sector and commit the firm to nothing. It is the strategic equivalent of “we believe in growth.” The actionability test requires specificity: which AI capabilities is the firm investing in? Can it hire the people it needs? Can it identify acquisition targets? Can it point to a budget line that says “AI-aligned investment” and explain what that investment will produce?

“Artificial intelligence” fails the actionability test. But “machine learning applied to drug discovery” clears it, because a firm can hire computational biologists, invest in training data infrastructure, and acquire companies with relevant datasets. “Computer vision for automated quality control in manufacturing” clears it too, for different reasons: the capital expenditure is identifiable, the talent requirements are specific, and the ROI is measurable against current defect rates. The test forces precision, and precision is where vague strategic language becomes operational commitment. A leadership team that cannot convert its AI priority from a sentence in a strategy document into a capital allocation plan has not yet identified a theme. It has identified a topic.

The filter in practice

When Cisco’s John Chambers said “I always compete against market transitions, not competitors,” he was describing what it looks like when themes, rather than internal priorities, organise the strategy. The three tests are the mechanism for arriving at that position.

The test you can run today is simple. Take the priorities listed in your current strategy document and run each one through the three filters. Has it been growing structurally for a decade? Does it affect multiple industries beyond your own? Can you point to specific capital and talent decisions that flow directly from it? The priorities that survive all three are your themes. The ones that fail are initiatives, observations, or buzzwords occupying strategic real estate they have not earned. A theme can be concrete (electric vehicles) or abstract (the sustainability movement that Unilever organised its entire strategy around), but it must survive all three filters regardless.

These judgments are not always clean. Reasonable people on the same leadership team will disagree about whether a force has been growing “significantly greater than GDP” or whether it has genuine cross-industry relevance. That disagreement is part of the value. The three tests are designed to force a debate that most strategy processes skip: not what should we do, but which external forces are structural enough to build around for a decade.

Most leadership teams that run this exercise discover that their strategy contains one or two genuine themes buried under a longer list of internal priorities that feel strategic but are not connected to any external force. The firms that dominated their industries did the opposite: they placed external forces at the centre and organised everything else around them.

The three tests are the mechanism for making that shift.