An Executive Action Plan

You’ve seen the numbers: Strategic Debt costs 50% of your potential growth, wastes 60% of your misallocated resources, and erodes the trust that drives organisational velocity. It is not an abstract concept; it is a quantifiable financial liability that is compounding every quarter.

The good news is that unlike Technical Debt, which often requires years of rework, Strategic Debt can be reversed rapidly through decisive shifts in governance and leadership behavior.

Here is a three-step action plan your executive team can implement in the next 90 days to close the gap between your brilliant strategy and your sluggish execution.

1. Establish Your Strategic Debt Baseline (Measure the Malignancy)

Stop discussing strategy solely in terms of market potential and start discussing it in terms of financial risk. If you can’t measure the cost of misalignment, you can’t manage it.

Action Plan:

• Identify Loss Given Drift (LGD): Calculate the cumulative capital (opex and capex) spent on major initiatives over the last 18 months that either failed or delivered below-threshold returns, specifically because they were not aligned with the current core strategy. This number is your starting LGD.
• Audit the Bottom 10%: Mandate an immediate audit of your 10% lowest-performing or lowest-alignment projects. These projects represent resources trapped in inertia. The metric to watch: How quickly can the executive team agree to kill, pause, or dramatically reduce funding for these projects?

2. Implement the Strategic Capital Review (SCR) Rhythm

The rigid annual budget cycle is the single greatest enabler of Strategic Debt. It locks in misaligned spending for 12 months and incentivizes activity over impact. Your budget review must become a continuous, agile governance process.

Action Plan:

• Replace the Annual Review: Commit to holding formal Quarterly Strategic Capital Reviews (SCRs). The purpose of these meetings is not to review departmental spend but to act as a Strategic Investment Committee.
• Adopt the 70/20/10 Rule: Structure your SCR discussions around dynamic allocation:70% for Core/Optimization (Horizon 1)20% for Adjacent Growth (Horizon 2)10% for Exploration/Innovation (Horizon 3)
• Make Reallocation Decisive: In the SCR, for every dollar of new investment approved, demand an equal amount of resource freedom be identified by killing or pausing low-performing legacy projects. No net increase in low-priority spending.

3. Rewire Executive Incentives (Align Leadership Behavior)

If your executive team is incentivized purely on managing their department's budget or hitting short-term operational goals, they are inherently incentivized toward inertia. To eliminate Strategic Debt, you must tie compensation directly to strategic agility and enterprise performance.

Action Plan:

• Tie Bonus to H2 Performance: Shift a significant portion (e.g., 25–30%) of the executive bonus pool from simple P&L metrics to shared success metrics tied to Horizon 2 (Adjacent Growth) projects. This immediately forces cross-functional collaboration and resource sharing.
• Incentivize Portfolio Rationalization: Reward leaders for successfully killing or pausing their own legacy projects that no longer serve the strategy, instead of penalizing them. This shifts the culture from "budget hoarding" to "capital recycling."
• Lead with Transparency: Publicly communicate the total LGD metric and the progress of the SCRs every quarter. This builds organizational muscle and reinforces that alignment is a continuous, top-down priority, not a one-time initiative.

By taking these three steps—measuring the debt, installing dynamic governance, and aligning incentives—your executive team can transform misalignment into velocity and turn potential revenue into realized growth this quarter.