Crafting a strategy—the process of making coherent, hard-to-reverse choices under uncertainty with the aim of building long-term value—has always been demanding. In 2010, only 35 percent of more than 2,000 surveyed executives reported that their strategies passed four or more of McKinsey’s Ten Tests of Strategy1 (see sidebar “The Ten Tests of Strategy: Assess your strategy’s quality”).
The increasing uncertainty and complexity of the business environment have made that task even harder. The World Uncertainty Index shows baseline uncertainty more than doubling since 1990, high-uncertainty events occurring more often, and each major spike being more severe than its predecessor (Exhibit 1).2 The challenge of navigating uncertainty is compounded by growing complexity—from the rapid advance of AI to geopolitical tensions to the emergence of new business and operating models—that multiplies the variables that strategists must consider.
These two challenges have taken a toll on the quality of corporate strategies. In a 2024–2025 survey, only 21 percent of executives reported that their strategies passed four or more of the Ten Tests of Strategy—a 40 percent drop from a decade and a half earlier.3 Not surprisingly, strategists are feeling the pressure. In 2022, 42 percent of survey respondents said they were struggling to achieve the level of impact they desired.4
Yet the rewards for delivering breakthrough strategies have never been greater—and neither have the penalties for getting strategy wrong. Plotting the economic profit of thousands of the world’s largest companies yields a power curve, in which the top quintile captures nearly 90 percent of all economic surplus, the bottom quintile digs a similarly large hole of value destruction, and the companies in the middle generate modest, if any, economic value5 (see sidebar “The Economic Profit Power Curve: Beat the market”). Successful strategy moves a company up this power curve, but the curve is growing steeper. The gap between the average gains of top-quintile outperformers and the average losses of bottom-quintile stragglers has doubled over the past two decades (Exhibit 2).6 In essence, the returns on great strategies and the costs of bad (or nonexistent) strategies are rising.
The Economic Profit Power Curve: Beat the market
Economic profit measures the surplus that a company captures after accounting for its cost of capital. It’s calculated by multiplying invested capital by the spread between ROIC and the weighted average cost of capital. Positive economic profit indicates that a company is successfully defying the competitive forces trying to erode its advantages. Negative economic profit signals that a company is destroying value.
Plotting the economic profit of thousands of corporations with revenues over $1 billion in order from lowest to highest produces a power curve. Regardless of the time period, this curve has a steep cliff at one end and a similarly steep incline at the other, separated by a long plateau (exhibit).1
Dividing the curve into five quintiles reveals three distinct patterns:
- Top quintile. The big winners capture nearly 90 percent of the economic profit generated by all the companies included in the analysis.
- Middle three quintiles. The middle companies earn modest, if any, economic profit. They either barely cover their cost of capital or have only managed to invest small amounts of capital.
- Bottom quintile. The stragglers destroy substantial value.
A successful strategy moves a company up the Power Curve by improving the strategy’s starting point (such as financing strength, R&D investment, and revenues), positioning the organization to capitalize on geographic or industry trends, and making bold strategic moves. McKinsey research, outlined in the book Strategy Beyond the Hockey Stick: People, Probabilities, and Big Moves to Beat the Odds (John Wiley & Sons, 2018), found that five big moves materially shift your odds of moving up the Power Curve if you pursue them with enough ambition and scale:
- Programmatic M&A. Use a consistent, strategic approach to acquisitions and divestitures to meaningfully reshape the company over a decade.
- Dynamic resource reallocation. Actively shift significant capital (at least 60 percent of capital expenditures across businesses in a decade) away from underperforming areas toward segments with high growth and returns.
- Strong capital expenditure. Invest in capital projects, typically at a ratio of 1.7 times the industry’s median capital spending for sales.
- Productivity improvement. Achieve operational efficiency and cost improvements that put your company in the top 30 percent of your industry.
- Differentiation improvement. Gain superior pricing-power or business model advantages that lead to top-tier gross margins within your industry.
Pursuing several of these moves simultaneously offers the best chance of substantially changing your company’s performance trajectory.
The Economic Profit Power Curve provides a benchmark for what your strategy should seek to achieve. It helps you cut through the social side of strategy, grounding debates in the realities of competition and odds of success. It also allows you to calibrate whether your strategy is bold enough to move the needle on outcomes, thus helping your team find the strategic courage to potentially raise its ambition.
For more, see “The strategic yardstick you can’t afford to ignore” and Strategy Beyond the Hockey Stick.
Only one in ten companies manages to climb from the middle to the top of the Power Curve over a decade.7 In this article, we share what these Strategy Champions do differently: how they design bold moves, mobilize their organizations, and sustain focused execution, even in turbulent times.
Understanding the Strategy Champions
We started with two simple questions: What do the companies that rise to the top of the Economic Profit Power Curve do differently? And how do they approach the design and delivery of their strategies? To find the answers, we studied the strategy practices and capabilities of more than 400 companies. First, we defined two groups based on their movement along the curve over five years: Strategy Champions, which moved up to or maintained top-quintile economic profit performance, and stragglers, which fell to the bottom quintile, reflecting significant strategic setbacks (Exhibit 3).
Next, we compared how the champions and the stragglers approached strategy and how strong they were at strategy-related activities. Key to this was our evolved Strategy Method, which lays out 12 fundamental building blocks of strategy in three phases: design, mobilization, and execution (see sidebar “The Strategy Method: Bridge your aspiration to action”).8 These building blocks represent a common language for strategy activities that enabled us to systematically compare companies. We then assessed each company based on a set of capabilities that underpin the building blocks..
The Strategy Method: Bridge aspiration to action
The late strategy theorist Colin S. Gray described the function of strategy as a bridge from purpose to action. Effective strategies do more than just chart a course; they ensure that a company reaches its destination by aligning on the most important goals. Our Strategy Method outlines 12 building blocks that are fundamental to strategy design, mobilization, and execution (exhibit). These building blocks—which we consistently find in successful strategy efforts, from transformations to new-business launches—represent not a linear path but rather a language that helps business leaders ensure that their strategies don’t end up as superficial exercises.
Design phase
The design phase is about committing to a coherent set of bold, value-creating moves in the face of an uncertain future:
- Aligning on the strategic challenge. Define the core challenges, aspirations, and critical trends.
- Assessing the business through five lenses. Understand the organization and its environment from the perspective of financial-performance drivers, capabilities, competitive advantages, market dynamics, and beyond-market forces.
- Exploring value-creating big moves. Systematically consider strategic options to shape the portfolio and its performance.
- Committing to a bold strategy. Secure leadership agreement on a clear path ahead, backed by a compelling value-creation narrative.
Mobilization phase
The mobilization phase translates strategic choices into organizational readiness, with an operating model and approach tailored to the strategy:
- Empowering, engaging, and governing. Assign ownership of strategic choices to key leaders and ensure fit-for-purpose governance.
- Translating strategy into granular initiatives. Break down the strategic plan into concrete initiatives.
- Reallocating resources to the strategy. Shift funding, talent, and attention to strategy-aligned initiatives, and stop work on nonstrategic projects.
- Embedding strategy into plans and budget. Ensure that organizational structures, processes, and financial plans support the strategy.
Execution phase
The execution phase puts the plan into action, helping the company reach and sustain higher levels of performance and competitiveness:
- Forcing execution momentum. Catalyze early progress on priority initiatives to build traction.
- Driving and supporting performance. Actively manage performance, remove barriers, and enable delivery.
- Testing assumptions and adapting. Continually monitor the environment and strategic assumptions, and adapt as needed.
- Launching the next S-curve. Identify and pursue new opportunities to fuel the next wave of growth.
The Strategy Method is particularly useful in three respects. First, it enables you to understand where and why your strategy is succeeding or failing, which helps you prioritize investments to improve the strategy’s design and delivery. Second, by mapping your activities to the building blocks, you can ensure that you’re focusing on the most meaningful parts of strategy work. Finally, by making mobilization central to the strategy’s success, the Strategy Method helps you connect ambitious intentions to tangible results, ensuring that your strategy not only survives contact with reality but actually shapes it.
For more, see “How AI is transforming strategy development.”
The results highlight a reality often missing from strategy discussions. While the data support the common refrains that strategy is about making clear choices and about execution, the biggest gap between Strategy Champions and stragglers is actually in mobilization—the crucial phase of translating strategic choices into organizational readiness (Exhibit 4).
Where Strategy Champions build their advantage
As we dug deeper, we found that Strategy Champions are, on average, stronger than stragglers at every one of the 12 building blocks (Exhibit 5). However, their strengths are particularly distinctive in several areas critical to strategy success.
Strategy design: Setting the foundation
Two building blocks in which Strategy Champions particularly outperform stragglers are in the design phase. First, they excel at aligning leadership teams on strategic imperatives by building a shared understanding of the core challenges that the company needs to address. When business leaders enter the strategy room, too often their goal is to get approval for their plans rather than to find the objectively best strategic course for the enterprise as a whole. This social side of strategy is why building a factual foundation is so critical: It ensures that everyone understands the core challenges and can debate how to best act on them.
Part of establishing that foundation is identifying the trends with the biggest impact on the business—the strength that we found most differentiates Strategy Champions from stragglers. In Jeff Bezos’s 2016 letter to shareholders, the Amazon founder called “the eager adoption of external trends” one of four essential ways to avoid disruption or complacency.9 He went on to explain, “If you fight [trends], you’re probably fighting the future. Embrace them and you have a tailwind.”
Another building block of design at which Strategy Champions are particularly effective is committing to a bold strategy: making coherent choices about clear strategic moves in the face of an unpredictable future. This demands strategic courage on the part of the CEO, the management team, and the board. For example, Aliko Dangote, CEO and president of Dangote Industries, West Africa’s largest company, built his success on the view that leaders need “to be the boldest people around.”10 His personal philosophy is “think big, dream big, and do big things.”
A high-quality strategy ultimately represents a value creation agenda that guides the allocation of resources. Unsurprisingly, Strategy Champions tend to excel at crafting compelling strategic narratives that capture their agendas (in part through their equity stories). This lays a foundation for mobilization.
Strategy mobilization: Building the bridge
Mobilization, the critical connection between design and execution, is where Strategy Champions build their most noteworthy advantage. Getting mobilization right starts with that phase’s first building block: ensuring that the right talent is fully empowered and engaged on each strategic decision. Strategy Champions are considerably better than others at making individual leaders accountable through clear targets and incentives, for ensuring that each strategic choice is mobilized and executed. Nvidia, for example, assigns a “pilot in command” to major projects and strategic decisions—the very best leader for that effort, regardless of role or seniority.
Effective mobilization further benefits from ensuring that top talent holds the roles that deliver the most strategic value, wherever these roles are in the organization, and empowering those leaders to own and drive strategy. Indeed, a study of more than 1,600 senior managers by Siemens and the University of Göttingen found that business units whose leaders felt highly empowered to implement their strategies outperformed those that didn’t.11
Strategy Champions particularly stand out in the second building block of the mobilization phase: translating strategy into granular initiatives. They also excel at reallocating resources to the strategy and ensuring that the strategy is embedded into plans and budgets. In doing so, they bridge what Stanford University business professor Jeffrey Pfeffer calls “the knowing–doing gap”12—systematically ensuring that short-term decisions match long-term strategy rather than letting managers revert over time to established patterns. Ultimately, Strategy Champions’ ability to effectively orchestrate the building blocks of mobilization hinges on having a fit-for-purpose operating model, which is why it’s essential to factor in future mobilization when designing strategy.
The prominence of mobilization in our research reinforces a crucial reality: Before a strategy can shape the competitive landscape, it must successfully embed itself into the DNA of the organization. As the late military and foreign policy strategist Andrew Marshall noted, “before any strategy can influence a competitor, it first has to survive your system.”13
Strategy execution: Sustaining progress
Well-designed and mobilized strategies create potential; execution captures it. Within this phase, Strategy Champions particularly distinguish themselves in their ability to drive and support performance. Rather than passively tracking progress, they actively manage performance to identify and break down barriers holding back delivery and continually support the teams responsible for execution. Singapore’s DBS Bank, for example, redefined its performance management approach to enable its ambitious digital transformation strategy by tightly aligning its balanced scorecard with the strategy and defining a new digital-value-capture metric.14
During execution, Strategy Champions are also stronger than other companies at testing, learning, and adapting their strategy as needed, such as by increasing the resources allocated to a strategic move or launching a new strategy design effort in pursuit of the next S-curve. These activities require having clearly documented strategic assumptions and rationales for each choice made during strategy design. One CEO instilled the practice of the leadership team articulating to the board the assumptions underlying their strategic commitments. This forced business leaders to acknowledge and reconcile different beliefs, laying the foundation for efficient testing and learning every six months during execution.
While Strategy Champions are, on average, stronger than peers across all the building blocks and the underlying capabilities in the Strategy Method, their deepest strengths vary in important ways based on the context they face. This is a significant advantage in today’s extremely uncertain environment.
Different contexts call for different strengths
Aside from analyzing 400 companies’ strategy capabilities, we assessed how they factored in a powerful external element: the level of uncertainty (see sidebar “Strategy under uncertainty: Understand the future”). The results demonstrate that strategy capabilities work together as a system: Strategy Champions aren’t just stronger than others at strategy overall; they have the right strengths for the level of uncertainty that they face (Exhibit 6).
When uncertainty is low, Strategy Champions prioritize exploring value-creating bold moves, seeking or forging discontinuities that can present opportunities with an exceptional ability to find the right level of boldness. They often rely on their scale, scope, or innovation capabilities to change competitive dynamics. To move up the Economic Profit Power Curve in highly stable environments, these moves need to be forceful enough to dislodge leading incumbents.
The combination of finding or creating discontinuity and capitalizing on it with bold action can give companies a lasting advantage. Walmart’s massive investment in supply chain automation to generate a cost advantage and Disney’s systematic acquisition of content franchises to become a leading player in family entertainment were strategies aimed at building an edge over competitors during stable times.
Changing the status quo during stable times requires steely conviction, however. Companies that fail to honestly assess their competitive advantages can find themselves doubly disadvantaged: They may lack both the solid foundations to make bold moves and the leadership resolve to push through when things go wrong.
In times of change or volatility, opportunities and risks abound. In such periods, Strategy Champions’ most distinctive capabilities shift from exploring bold moves to aligning on the strategic challenges. Boldness still prevails, but when multiple futures seem plausible, Strategy Champions focus less on finding or creating opportunities than on aligning with conviction on selected opportunities and the approaches to managing attendant risks—and doing so more quickly and capably than competitors do. Microsoft CEO Satya Nadella has repeatedly exemplified this mindset, as when he unified the board and the organization around the goal of becoming a cloud-first company rather than protecting Windows revenues.
To navigate high uncertainty, leaders often have to adapt the strategy, which in turn benefits from disciplined documentation of the assumptions that underpinned the original strategic decisions. Best Buy’s turnaround under CEO Hubert Joly embodied this adaptive approach in what he calls the “bicycle theory”: “If you have tried to direct a bicycle from a standstill, it’s very hard; you fall. If the bicycle is moving, it may not be moving in the right direction, but it doesn't matter; you can course correct.”1 Companies that fail to document their assumptions and continually test their hypotheses end up being unable to distinguish between execution problems and strategic-hypothesis failures, leading to continued investment in flawed approaches rather than intelligent adaptation.
Strategy under uncertainty: Understand the future
Effectively navigating business strategy requires a clear understanding of uncertainty, as prediction-focused methods can be perilous when the future is truly ambiguous. Establishing a common language for categorizing uncertainty, as in these four levels of residual uncertainty (what remains after thorough analysis), enables teams to systematically assess the type of uncertainty that they face, fostering more productive strategy discussions (exhibit).
Level one: A clear-enough future
In level one, residual uncertainty is negligible, and you can use a single, fairly precise forecast as a reliable basis for developing a strategy. Standard tools, such as market research, competitor analysis, and discounted cash flow models, are effective for decision-making.
Level two: Alternative futures
In level two, a few distinct scenarios can cover the likely future outcomes, even though the specific outcome is unpredictable. Strategy often changes as a given scenario becomes reality. This level of uncertainty is common during potential regulatory changes or shifts in competitor capacity, and it requires developing a small number of scenarios, possibly with different valuation models.
Level three: A range of futures
In level three, you can define a range of potential futures by a set of key variables, such as market penetration rates and technology cost levels. Level-three uncertainty is often present in emerging industries and new markets (in the extent of demand for an innovative new product, for example) and often requires strategists to develop a few plausible scenarios (typically four or five) that encompass the probable range of outcomes.
Level four: True ambiguity
In level four, multiple interacting uncertainties make predicting possible outcomes and developing scenarios nearly impossible. Rare and transitional, this level of uncertainty can follow major shocks (for example, the COVID-19 pandemic and the September 11 attacks). Analysis is often qualitative: cataloging known factors, identifying variables or indicators to track, and studying analogous situations.
By identifying a specific level of uncertainty, you can choose the appropriate analytical tools; develop the relevant scenarios, if needed; and select the strategic postures and actions best suited to the environment you face.
For more, see “Strategy under uncertainty.”
These findings reinforce the fact that different contexts require different playbooks. Yet in our experience, few companies consciously make such adaptations. Many continue with their established approaches rather than identifying strategy capabilities to strengthen or build. Organizations accustomed to stable markets that suddenly face disruption often need to develop new strategy muscles.
Mastering the craft of strategy
How can an organization that aspires to become a strategy champion improve its strategy capabilities? It should start with setting clear, shared standards for strategy. Our survey shows that stragglers are nearly twice as likely as Strategy Champions to have little or no agreement about what constitutes high-quality strategy. This matches our experience: Strategy is an often-misunderstood concept, and the lack of understanding results in unproductive debates and flawed decision-making.
Some leading companies have established bespoke approaches to promoting the strategic thinking that they seek. Amazon, for example, distinguishes between “Type 1” decisions (those that are irreversible or nearly so) and “Type 2” decisions (those with relatively short-term consequences) when allocating management attention,15 and its practice of the six-page memo stresses clear thinking.16 Mercado Libre, meanwhile, uses a 90–10 system that fully empowers leaders to make most decisions, with the expectation that the 10 percent of decisions that involve high stakes and are irreversible are managed collaboratively.17 Such shared understanding fosters speed: Strategy Champions are 1.7 times more likely than stragglers to consistently make strategic decisions at the right speed.
Commitment to strategy excellence also has a financial dimension. Strategy Champions are twice as likely as stragglers to have budgets that are dedicated to improving their strategy capabilities and one-third more likely to have full executive-team support for investing in those capabilities. The growing frequency of external shocks and the increasing importance of AI in strategy development make such capabilities critical.
As an organization’s chief strategist, the CEO is essential to focusing attention on strategy. The experience of Rolls-Royce under CEO Tufan Erginbilgiç illustrates the cultural reset that this may require. Facing significant performance challenges, Erginbilgiç launched a strategic review framed around making clear choices. He involved around 500 leaders in what he described as a necessarily “chaotic” process. “Because you’re making choices in the room, by the time you’re done with strategy, the whole organization is aligned,” he told us.18 The process didn’t just change Rolls-Royce’s strategic direction but aligned minds on what high-quality strategy means and requires.
The aim of strategy has always been to make hard choices under uncertainty to unlock exceptional results. But our research and experience have revealed something that many companies miss: Strategy Champions have both brilliant visions and the right set of strengths to bring them to life. They embrace all 12 building blocks of the Strategy Method, from design to mobilization to execution. In today’s tough game with high stakes, mastering the craft of strategy is the bridge to becoming a Strategy Champion.
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