Strategy in the Age of Arenas
Since 2005 roughly 85% of global profit growth has come from a small set of fast-growing 'arenas' (cloud, AI, EVs, etc.), and companies need one of four distinct strategic postures toward them based on their distance from the arena and capabilities to win, with capital concentrated early rather than a static plan.
Summary
Montard, Delteil and Russell argue that arenas, fast-growing industries that drove about 85% of global profit growth since 2005, make industry-anchored strategy obsolete. Companies map their distance from an arena and their capabilities to win, yielding four responses: reinvent the core (Adobe; 50-70% of strategic investment), refocus (Texas Instruments; 60-80%), build the next advantage (a media company's direct-to-consumer channels; 60-70%) and explore the fringe (China's EV industry; 5-10% with trigger points). Strategy hinges on resource allocation, and waiting for clarity is the highest-risk move.
Editor's opinion
This is a genuine addition, translating the strategic implications of McKinsey's earlier arenas-of-competition research into concrete guidance for companies. Each of the four postures comes with an actual capital-allocation range -- 50-70% for reinvent, 60-80% for refocus, 60-70% for adjacent, 5-10% for fringe -- turning "reallocate capital with urgency" into something a CFO can actually act on rather than a slogan.
Key concepts
Arenas · Distance from the arena · Capabilities to win · Reinvent the core · Refocus to win · Build the next advantage · Explore at the fringe