According to McKinsey & Company, only 1 in 5 companies believe they have a high-quality strategy. More strikingly, the performance gap between those with and without one has more than doubled over the past 20 years.

If you’re among the 80% who feel your strategy could be stronger, you’re not alone, but you’re also leaving serious money on the table.

There’s a steep curve between the highest performers and the rest. The top 20% of companies now account for nearly 90% of economic surplus, the value created beyond cost of capital.

Put simply: the returns on great strategy are rising exponentially, and so are the costs of poor or absent strategy.

Why the Top 20% Capture 90% of Economic Value

In every industry, a small group of companies consistently outperforms—not by luck, but by design. These top performers grow faster, earn more, and sustain profitability through one critical advantage: great strategy backed by financial discipline.

Research shows these companies achieve up to 13 times higher returns on invested capital than their peers. That’s not a marginal difference—that’s the compounding effect of strategic clarity combined with excellent execution.

What Is a Great Strategy? (And What It’s Not)

Great strategy isn’t just a vision statement or a list of aspirational goals. In today’s fast-paced business environment, it’s a system of mutually reinforcing decisions about where to focus, invest, and win.

It sets an ambitious direction, aligns resources and capabilities, addresses gaps honestly, and builds culture intentionally. Most importantly, it’s executable and financially grounded—rooted in today’s reality while building toward future success.

Here’s what many strategy consultants won’t tell you: you can’t strategy your way out of poor financial fundamentals.

Before investing heavily in strategic planning, you need:

• Clear visibility into your current financial position
• Understanding of your actual margins and profitability by product/service
• Cash flow capacity to fund strategic initiatives
• Financial systems that can track strategic KPIs
• Realistic resource allocation models

Strategy without financial foundation is just expensive daydreaming.

Strategy Meets Finance: Where Real Value Is Created

The gap between strategic ambition and business reality is where most strategies fail. This is precisely where strategic financial leadership makes the difference.

Great strategy needs great execution—and execution requires answering critical financial questions:

Capital Allocation Decisions Which strategic initiatives get funded? In what order? With what expected returns? You can’t pursue every opportunity—financial discipline means making hard choices about where to invest limited resources for maximum impact.

Resource Planning Reality Can you actually afford the team, technology, and infrastructure your strategy requires? I’ve seen brilliant strategies collapse because the financial planning didn’t match the operational requirements.

Financial Modeling and Scenarios What returns can you realistically expect? Under different market conditions? Top performers don’t just plan for the best case—they model multiple scenarios and understand their financial resilience under each.

Performance Tracking That Matters How will you know if your strategy is working? This requires linking strategic objectives to financial KPIs and tracking them rigorously. Many businesses measure activity rather than outcomes—a costly mistake.

Risk Management and Contingency What if your assumptions change? What if key customers leave? What if costs rise faster than expected? Strategic financial planning means understanding your vulnerabilities and having contingency plans with financial backing.

This bridge between strategy and financial execution is where sustainable competitive advantage lives.

What the Best Performers Actually Do

When you study top-performing companies, clear patterns emerge:

They Make Bold, Financially Informed Choices

Not just bold for the sake of it—bold because they’ve modeled the scenarios and understand the risk-reward profile.

For example, one client decided to exit their lowest-margin product line—which represented 25% of revenue. Bold? Absolutely. Risky? On the surface. But we modeled it thoroughly, understood the cash flow implications, and identified how to redeploy those resources into their highest-growth segment. Result? 40% profit increase within 18 months and significantly stronger strategic position.

They Build Resilient Operating Models

They don’t just optimize for today’s conditions—they build financial resilience that allows them to adapt when conditions change. This means:

• Maintaining financial flexibility (not over-leveraging in good times)
• Building diverse revenue streams (not over-relying on single customers or markets)
• Creating scalable cost structures (understanding fixed vs. variable economics)

They Invest in Strategic Clarity and Monitor Progress Religiously

Top performers treat strategy as a living system, not a document created once and filed away. They:

• Review strategic KPIs at least quarterly
• Adjust resource allocation based on performance data
• Make fast decisions when strategic assumptions prove wrong
• Maintain clear line of sight from strategy to execution to financial results

The result? They exhibit:

• Fast decision cycles—they seize initiative while competitors deliberate
• Low cross-functional friction—finance, operations, and strategy work in concert
• High customer loyalty—often driven by innovation funded by strategic investment
• Financial outperformance—that 13x premium we mentioned earlier

How Does Your Strategy Compare?

You may be performing well—but could you perform better? Could you secure long-term prosperity rather than just short-term success?

Strategic Clarity Assessment:

Ask yourself these critical questions:

Setting the Agenda:

• Are you shaping your market or reacting to conditions?
• Are your strategic choices bold enough to create differentiation?
• Do you have a clear point of view about where your industry is heading?

Matching Ambition to Capability:

• Are your strategic ambitions matched by operational capabilities?
• Have you identified the capability gaps between current state and future vision?
• Do you have a realistic plan to close those gaps?

Building Resilience:

• Do you model multiple scenarios to test your strategic resilience?
• Are you vigilant across all functions (finance, operations, sales, etc.)?
• Does your culture embrace change and adaptation?

Financial Readiness Assessment:

Now add these equally critical financial questions:

Resource Alignment:

• Can you clearly explain how your budget supports your strategy?
• Do you know the expected ROI for each strategic initiative?
• Have you identified the financial resources required for full strategy execution?

Cash Flow Reality:

• Do you have sufficient cash flow to fund strategic investments?
• Have you modeled the cash flow impact of your growth plans?
• Do you understand your working capital requirements as you scale?

Performance Visibility:

• Can you track financial performance by strategic initiative?
• Do you have leading indicators (not just lagging) for strategic success?
• Can you quickly identify which parts of your strategy are creating value?

Risk Awareness:

• Have you stress-tested your strategy against downside scenarios?
• Do you know your financial breaking points?
• Have you identified early warning indicators for strategic risks?

If you’re uncertain about any of these answers, that’s your signal. Strategy without financial grounding remains theoretical. Ambition without resource planning remains mere aspiration.

From Strategy to Execution: Bridging the Gap

Here’s the uncomfortable truth: most strategies fail not because they’re bad strategies, but because of poor execution—and poor execution usually traces back to inadequate financial planning and resource allocation.

The common failure patterns I see:

Underestimating Resource Requirements The strategy looks brilliant on paper, but when you cost it properly, you realize you can’t afford to execute it fully. Rather than revising the strategy, companies try to execute it on a shoestring—guaranteeing mediocre results.

Overestimating Speed to Results Revenue projections show that dramatic “hockey stick” growth starting in month six. But there’s no credible explanation for why or how it will happen. When it doesn’t materialize, the entire strategy loses credibility.

Ignoring Opportunity Costs Every strategic choice means saying no to alternatives. But without rigorous financial analysis, companies don’t properly evaluate what they’re giving up. Sometimes the road not taken would have created more value.

Lack of Financial Discipline During Execution The strategy is approved, then execution becomes chaotic. Budget overruns go unaddressed. Initiatives continue long after they’ve proven unsuccessful. There’s no financial accountability tied to strategic outcomes.

This is where fractional CFO support transforms outcomes.

A fractional CFO helps you:

• Translate strategic vision into financially realistic plans
• Model scenarios and stress-test assumptions before committing resources
• Build financial tracking systems that connect strategy to results
• Make informed decisions about resource allocation as conditions change
• Maintain financial discipline while preserving strategic flexibility
• Communicate strategy and performance clearly to boards and investors

It’s the bridge between boardroom ambition and profitable execution.

Strategy: The Most Undervalued and Most Misunderstood Asset

As the research clearly shows, great strategy doesn’t just guide—it compounds performance over time.

But only when it’s:

• Clear – Everyone understands where you’re going and why
• Bold – Differentiated enough to create competitive advantage
• Coherent – All elements reinforce rather than contradict each other
• Financially grounded – Resourced realistically and tracked rigorously

The performance gap between strategic winners and everyone else continues to widen. The question is: which side of that gap will your business be on?

Are you Ready to Strengthen Your Strategic and Financial Alignment?

If this newsletter has highlighted gaps between your strategic ambitions and your financial reality, you’re not alone. Most growing businesses reach a point where they need more sophisticated financial planning to support their strategic objectives.

Whether you’re:

• Preparing for significant growth or investment
• Navigating a strategic pivot or market entry
• Building a more resilient business model
• Wanting to move from good performance to exceptional results

Strategic financial leadership can make the difference between strategies that sound good and strategies that deliver measurable value.

Let’s talk about bridging that gap.

I offer a complimentary 30-minute Strategy & Finance Discussion where we’ll explore:

• Your current strategic priorities and challenges
• The financial realities that will enable or constrain execution
• How fractional CFO support could strengthen your strategic outcomes

Because the best strategies aren’t just bold—they’re financially sound, executable, and designed to compound value over time.

Get in touch to book your call.