Ten Questions Your Strategy Should Answer (And Probably Doesn’t)
A diagnostic you can run this week. Most strategies describe what the firm will do to itself. The ones that win describe what is changing in the world.
Pull up your strategy (or the strategy of your employer). By that, I mean the actual strategy: the thing that is supposed to organise how your firm allocates capital, talent, and attention over the coming years.
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 isindistinguishable 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.