When to Abandon Your Strategy (And When to Double Down)

Here is how to tell whether you are early or wrong.

Before we get to today’s research note, check out The Hallett Review. This is my son’s new platform for a new generation of writers.

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Now let’s get to today’s research note:

You made a strategic commitment. You identified an external change you believed was structural. You allocated capital to it. You told your board, your investors, and your employees that this was the direction.

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.