The Most Expensive Mistake in Strategy Is the Wrong Analogy
Most strategic failures do not come from bad execution.
They come from good execution of the wrong idea.
This is uncomfortable for experienced leaders because it suggests that discipline, intelligence, and effort are not sufficient. Entire organisations can move with precision, speed, and commitment, and still walk confidently in the wrong direction.
The underlying reason is rarely a lack of historical expertise and data. It is almost always a framing error.
More specifically: bad analogy.
When you move outside your known business, ctrl C/V thinking becomes fear-driven.
It borrows certainty from the past instead of building insight from the new terrain.
Strategy Is Always Built on Analogy (Whether You Admit It or Not)
Strategy never starts from a blank sheet.
Every strategic discussion implicitly answers a quiet question first:
“What kind of thing is this?”
A market, a product, a technology, a competitor, a threat, a future.
Before numbers appear, before roadmaps are drawn, before investments are approved, leadership teams decide—often unconsciously—what this situation is similar to.
That similarity becomes the reference frame.
Is this a better version of something we already know?
Is this a cost play?
Is this a channel shift?
Is this just automation?
Is this another IT project?
Is this a niche that will mature later?
Once the analogy is chosen, most decisions become almost automatic.
What to optimize.
What to protect.
What to postpone.
What to ignore.
And that is where things quietly go wrong.
Why Bad Analogies Are So Dangerous
Bad analogies are dangerous for three reasons:
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They feel rational
They build on experience, pattern recognition, and past success.They protect existing competence
They justify why current assets, power structures, and incentives remain valid.They make wrong choices look disciplined
You can defend them with logic, benchmarks, and PowerPoint.
This is why organizations do not notice the error early.
The analogy does not collapse immediately. It degrades relevance gradually.
Case 1: Smartphones Were Not “Better Phones”
When smartphones emerged, the dominant analogy inside incumbents was obvious:
A smartphone is a more advanced mobile phone.
That analogy shaped almost every early decision.
Nokia
Optimized for hardware excellence, battery life, signal quality, physical robustness.
Software was treated as a feature layer.
Ericsson
Looked at smartphones through network compatibility, standards, and carrier alignment.
The buyer was implicitly the operator.
Microsoft
Framed smartphones as small PCs.
Menus, file systems, stylus interaction, enterprise metaphors.
All three were serious, well-run organizations.
All three invested heavily.
All three were wrong.
The winning analogy was not phone.
It was a new personal computing platform.
Once you see that, everything changes:
Software becomes the product
Developers become a strategic asset
Distribution shifts to ecosystems
User experience becomes emotional, not functional
The incumbents did not lack data.
They lacked permission to abandon the analogy that made them successful.
The Pattern Repeats (Across Industries)
This is not a smartphone story.
It is a structural pattern.
Let’s look at the most common bad analogy traps that still shape strategy today.
1. “This Is a Better Version of the Old Thing”
Analogy: incremental improvement
Reality: category shift
Kodak
Optimized for film quality, chemical processes, printing economics.
Digital photography
Optimized for immediacy, storage, sharing, zero marginal cost.
The analogy difference decided the outcome.
Film advantages depended on scarcity.
Digital advantages eliminated it.
2. “This Is Just Cheaper”
Analogy: price competition
Reality: system redesign
Legacy airlines
Optimized for service bundles, hub economics, fare complexity.
Ryanair
Optimized for passenger self-service, early commitment, radical unbundling.
The analogy difference decided the outcome.
Price advantages can be matched.
System advantages compound.
3. “This Is a Tool for Professionals”
Analogy: expert system
Reality: behavior shift
Microsoft (Windows Mobile)
Optimized for menus, file systems, training, enterprise metaphors.
Apple (iPhone)
Optimized for touch, immediacy, intuition, zero learning cost.
The analogy difference decided the outcome.
Expert tools assume adaptation.
Mass adoption removes the need for it.
4. “Distribution Is the Advantage”
Analogy: channel control
Reality: behavioral lock-in
Early internet portals believed traffic was the moat.
But traffic is rented.
Behavior is owned.
Yahoo
Optimized for page views, homepage placement, content aggregation.
Facebook
Optimized for identity, social graph, feedback loops.
The analogy difference decided the outcome.
Distribution advantages decay.
Behavioral advantages compound.
5. “This Is Just Automation”
Analogy: efficiency tool
Reality: decision reallocation
Enterprise AI adoption
Optimized for productivity gains, faster execution, lower labour cost.
OpenAI–style AI usage
Optimized for decision leverage, judgment support, role redefinition.
The analogy difference decided the outcome.
Efficiency improves output.
Decision shifts redistribute power.
6. “Customers Want What They Say They Want”
Analogy: expressed needs = demand
Reality: progress under constraints
Traditional market research
Optimized for surveys, stated preferences, feature requests.
Netflix
Optimized for observed behavior, context, completion, substitution.
The analogy difference decided the outcome.
What customers say explains intent.
What they do reveals causality.
7. “We Can Add This Without Giving Anything Up”
Analogy: optional extension
Reality: forced trade-off
Conglomerate-style strategy
Optimized for option preservation, portfolio breadth, internal harmony.
Amazon
Optimized for explicit trade-offs, single metrics, ruthless prioritisation.
The analogy difference decided the outcome.
Flexibility without loss creates drift.
Commitment requires exclusion.
Why Bad Analogies Persist Inside Organizations
If these mistakes are so common, why are they not corrected earlier?
Because bad analogies:
protect existing power
delay uncomfortable trade-offs
allow consensus without commitment
make strategy reversible
They allow leaders to say:
“Let’s explore”
“Let’s keep options open”
“It’s too early to decide”
That feels prudent.
It is often avoidance.
Analogy Choice Is a Capital Allocation Decision
This is the part that rarely gets stated clearly.
Choosing an analogy is not a communication exercise.
It is a capital allocation decision.
Once the analogy is set:
investments follow
talent is hired
incentives are aligned
roadmaps solidify
political coalitions form
Changing the analogy later becomes expensive, slow, and personal.
This is why early framing matters more than late optimisation.
A Diagnostic Question That Actually Works
Most strategy tools ask:
Where do we compete?
How do we win?
What are our capabilities?
Those questions come too late.
A more useful question at the start is this:
If our core analogy is wrong, what must we stop doing first?
Not what we must add.
Not what we must optimise.
What must we abandon.
If the answer threatens:
a powerful unit
a historic strength
a legacy metric
an identity narrative
Pay attention.
That is usually where the future diverges from the past.
Strategy Is Not About Seeing More. It Is About Seeing Differently
Most failed strategies were built by smart people with good intentions.
They did not ignore reality.
They interpreted it through a frame that once worked.
The hardest strategic move is not execution.
It is letting go of the analogy that made you successful.
Because once the analogy changes,
everything else follows—whether you are ready or not.
The organisations that survive are not the ones with better forecasts.
They are the ones willing to ask:
“What if this is not the thing we think it is?”
That question costs political capital.
Not asking it costs relevance.
