Why Geoeconomic Strategy Keeps Failing
And why creating technologies does not mean you have an industrial strategy
Companies have never been better equipped to understand geopolitics. Today’s multinational corporation includes Chief Geopolitical Officers, political risk subscriptions, scenario planning workshops, blah blah. The corporate intelligence industry has exploded over the past decade.
I add to this that when I moved from MIT back to Harvard, the reason was to bring geopolitical expertise into the Institute for Strategy, because the demand for this new type of intel from CEOs and boards was overwhelming.
And yet… The strategies it informs keep failing. Friend-shoring stalled; the CHIPS Act fabs got announced but ecosystems may never materialize; European hydrogen strategies produce roadmaps but not markets (I mean, it is Europe…).
So the standard post-mortem blames bad forecasting or slow execution, usually in long-winded reports that never get read, by a team that has been fired. But, my research actually shows that this common diagnosis is wrong.
The problem isn’t misreading the political environment or moving too slowly, it’s trying to execute strategies that are actually really good into markets whose supporting architectures don’t yet exist! In other words, that technical readiness (the capability to actually produce the desired thing) has outrun both market readiness and institutional readiness. The gap between strategy and outcome is structural.
I’ve spent several years at Harvard working on exactly this problem: why breakthrough technologies fail to become industries, and what the missing piece usually is.
The short answer is that market formation requires the co-evolution of three distinct architectures:
Technical,
Market, and
Institutional
And importantly, when one races ahead of the others, you get what I call an architecture lag, wherein the technology works, but the surrounding economic system doesn’t yet exist to support that technology.
This piece applies that framework to industrial strategy; the geoeconomic strategies companies and governments are currently betting on (friend-shoring, the CHIPS Act, European hydrogen) and asks what governments, boards, and investors should actually do differently when the problem is architectural rather than informational.
This article applies the architecture-lag and coordination-architecture frameworks developed formally in two companion papers: “Institutions as Coordination Architectures” and “Market Formation as a Systems Engineering Problem.” Available on request: s@sinead.co
Read the full paper. Really sharp, Sinéad. The distinction between early-stage technology and architecture lag is the part that should travel further than it has.
What I was thinking through as I read: the three rational responses all treat architecture lag as a neutral structural problem. But it's also a competitive tool. Incumbents who can afford to wait, or subtly shape the standards bodies and regulatory frameworks during the lag period, end up owning the architecture when it matures. They get to build the missing infrastructure and set the terms of the market around it—a form of invisible power that never shows up in the geopolitical risk report.