Strategy in an age of permission

Executive summary

Most strategy debates are framed as if the world is stable: cost of capital is meaningful, markets discipline excess, and value creation is a matter of choosing the right trade-offs.

In reality, modern markets oscillate between two very different states: permissioned and non-permissioned regimes. Strategy only makes sense when conditioned on which state you are in.

Permission is not declared by firms.

It is granted and withdrawn by capital markets.

When permission exists, many traditional disciplines cease to bind. When it is withdrawn, they all bind at once. Most strategic failure comes not from poor analysis, but from being regime-wrong.

Permission as the hidden variable

In permissioned regimes, capital is abundant, refinancing is easy, and risk premia are suppressed. This does not mean risk disappears. It means enforcement is temporarily suspended.

The usual disciplining mechanisms:

• valuation,

• return thresholds,

• balance-sheet conservatism,

lose authority.

The strategic question stops being:

“Is this the optimal use of capital?”

and becomes:

“Are we allowed to do this, and can we remain allowed while doing it?”

Permission is maintained externally, through:

• hitting reported numbers,

• preserving narrative credibility,

• avoiding visible funding stress.

So long as these conditions hold, markets tolerate and often reward aggressive behaviour.

What strategy looks like in permissioned regimes

When permission exists, the dominant strategic error is under-investment.

Narrative becomes a strategic asset

If the firm has any growth exposure, it must be foregrounded. Optionality is valued more than efficiency. Coherence and momentum matter more than precision.

Strategy decks in this regime are not optimisation exercises.

They are permission-renewal documents.

Capital deployment beats capital return

Buybacks and dividends are not wrong, but they are second-order. The strategic priority is to put capital to work:

• expand capacity,

• pursue M&A,

• fund adjacencies,

• build platforms.

IRR discipline softens. Scale, positioning, and option creation dominate. The penalty for mediocre projects is low. The penalty for missing the growth moment is high.

Execution risk exceeds efficiency risk

It is better to act imperfectly than to wait. Markets forgive waste. They do not forgive irrelevance.

In short:

Sell the story, hit the numbers, and invest aggressively.

The illusion of cost of capital

In permissioned regimes, WACC still exists on spreadsheets, but not in practice.

The binding hurdle rate is not economic.

It is behavioural:

• can you refinance,

• can you raise capital,

• can you maintain belief.

This is why firms appear to “forget” discipline in good times. They haven’t forgotten. Discipline is simply not binding.

When permission is withdrawn

Permissioned regimes do not unwind gently. They end when funding tightens, refinancing risk appears, or credibility cracks.

At that point, gravity returns abruptly.

The same actions that were rewarded months earlier become liabilities.

The dominant strategic error flips from under-investment to over-extension.

Returns regain primacy

Shareholder distributions, deleveraging, and balance-sheet repair move to the centre. Buybacks that looked timid suddenly look prescient.

Cost becomes strategy

Cost transformation is no longer cosmetic. It is the fastest way to restore credibility, cash flow, and optionality. Complexity is punished. Focus is rewarded.

Narrative shifts

Growth stories are discounted. Language moves to resilience, discipline, core, and cash generation.

This is not hypocrisy.

It is regime adaptation.

In short:

Drive returns, cut costs, and defend the bottom line.

Why regime shifts are misread

Permission is withdrawn externally, but firms experience it internally with a lag.

By the time internal KPIs, budgets, or scorecards force a response, permission has usually already been revoked by capital markets.

This is why:

• organisations over-invest into turns,

• cost programmes arrive late and feel brutal,

• and leadership teams believe markets have become “irrational”.

They haven’t.

The enforcement mechanism has changed.

What this means for strategists

Most boards and management teams frame these tensions as moral or philosophical debates:

• growth vs discipline,

• investment vs returns,

• vision vs realism.

This framing is wrong.

Both approaches are correct, but only in the right regime.

The strategist’s job is not to argue for one philosophy, but to:

• diagnose the regime,

• align capital allocation with permission,

• and avoid fighting the enforcement mechanism of the moment.

Strategy is not just competition and choice.

It is a conversation with capital markets.

Markets decide when ideas are allowed to matter.

Firms that mistake temporary permission for permanent truth overreach.

Firms that cling to discipline while permission exists miss the moment.

Bottom line

• In permissioned regimes:

  Narrate, deploy, expand.

• Outside permission:

  Return, retrench, simplify.

Seen this way, strategy is less about brilliance and more about not being regime-wrong.

And over long horizons, for investors, corporates, and careers alike, that turns out to be almost everything.