Why organizations default toward the wrong diagnosis

Dr. David Etienne, DBA, CPA, CA

August 28, 2026

A company’s growth stalls. Leadership responds the way leadership almost always responds: sharpen the competitive positioning, push harder on pricing, retrain the sales team, launch a new marketing push. Eighteen months later, none of it worked, because the actual problem was never about how well the company was competing. It was about the underlying machine generating revenue in the first place — and no amount of strategic tuning fixes a machine that’s fundamentally built wrong for the market it’s now operating in.

This mix-up — treating a business model problem as if it were a strategy problem — happens constantly, and it turns out there’s a real, defensible reason it’s so easy to make.

There’s a genuinely useful way to tell them apart

A widely cited framework offers the clearest distinction available: think of strategy as the process of designing and building a car, the business model as the car itself, and tactics as how you actually drive it. Strategy is the set of committed choices about how you’re going to compete. The business model is the resulting logic — how the company actually creates value, delivers it, and gets paid for it. Tactics are the fine-tuning you do inside that structure without changing the structure itself.

Under this framing, a tactics problem means you’re driving the car badly — weak execution of pricing, sales, or marketing choices that a sound business model would otherwise support. A business model problem means the car itself can’t do what the road now requires, no matter how well you drive it. A strategy problem sits further upstream still: it’s a defect in the committed choices that produced the car in the first place — which is exactly why a broken business model can’t be fixed by better driving. It needs someone to revisit the choices that built the car, not just retune how it’s being driven.

Here’s the uncomfortable part: even the researchers don’t fully agree

A major review of the academic business model literature found something that should give any executive pause before confidently diagnosing which kind of problem they have: scholars don’t actually agree on what a business model is. The research has developed largely in separate silos, with different fields defining the construct differently, and a follow-up review years later found the ambiguity hadn’t been meaningfully resolved. There’s even a genuine, serious academic argument that a business model isn’t a fully separate thing from strategy at all — that it’s better understood as strategy expressed at a more concrete, operational level of abstraction.

If the people who study this full-time can’t cleanly agree where strategy ends and business model begins, it’s not surprising that executives under real deadline pressure constantly default to the wrong diagnosis.

Why organizations default toward the wrong diagnosis specifically

There’s also a structural reason why the mistake tends to run in one particular direction. Research on business model innovation has identified a consistent pattern: when companies hit a genuine business-model-level problem, they tend to respond by using the tools and logic of their existing model, because that’s the toolkit everyone already knows how to use. Sharpening strategy and tactics inside a familiar business model feels like doing something. Actually, questioning whether the underlying model still fits the market feels like admitting the foundation is wrong — a much harder conversation to have, and a much harder one to act on.

What evidence-based diagnosis actually looks like here

Before reaching for another strategic or tactical fix, it’s worth asking a more basic question: has the way we create, deliver, or capture value actually stopped working — or are we just competing poorly within a still-valid model? Those are different diagnoses requiring completely different responses, and the evidence to tell them apart is usually available if anyone actually looks: has customer willingness to pay for the current value proposition genuinely declined, independent of how well it’s being sold? Are competitors succeeding with a structurally different model, not just a better-executed version of yours? If the answer points at the model itself, no amount of strategic sharpening inside that model will fix it.

The next time your organization launches a strategic initiative to fix a stubborn problem, has anyone actually tested whether the problem lives in how you’re competing, or in the underlying model you’re competing with?