Over the past two decades, European organizations have become remarkably good at developing strategies. The toolkits are sophisticated, the offsite formats are polished, the slide decks are impressive. And yet, something has shifted. Not in the methods, but in the ground beneath them.
Germany's economy contracted in both 2023 and 2024 — the first back-to-back decline since the early 2000s — and even a modest return to near-zero growth in 2025 has done little to alter the sense that Europe's largest economy is stuck in a structural malaise unseen in the post-war era. Volkswagen, long a symbol of European industrial confidence, just this week reported that its operating profit was halved in 2025 and announced it would cut 50,000 jobs across the group in Germany by 2030—up from the 35,000 agreed barely a year earlier. Its CEO declared openly that the business model that sustained the company for decades is no longer tenable. Its software division CARIAD, conceived as the answer to Silicon Valley, consumed €12 billion and delivered little that customers could feel. At the same time, BYD, a company most European executives had barely heard of a few years ago, now develops a new car model in roughly twenty months, about half the time its European competitors require. By late 2025, it was outselling Audi on the continent.
What makes these developments interesting for the topic of strategy is not that they are dramatic (for dramatic things happen all the time). But that they were, in a sense, legible. The signals were there. The question is why so many well-crafted strategic plans failed to read them. And that question, I believe, points to something deeper than any single industry or company. It points to the way we develop strategy itself.
Mintzberg reminded us nearly four decades ago, in his influential paper "The Strategy Concept I: Five Ps for Strategy" (1987), that strategy is never just one thing. There is the plan: the intellectual definition of a course of action. And there is the behavior: what the organization actually did, looking back. In stable times, the gap between the two is manageable. In our current environment, that gap has become a chasm.
Consider the difference between strategy as a position and strategy as a perspective. Positioning locates products or services in particular markets. Perspective is an organization's fundamental way of doing things. Put simply: position answers the question "Where do we play?", while perspective answers the question "Who are we when we play?". The Austrian Ebner Group illustrates the distinction beautifully. Founded in 1948, Ebner spent over seven decades mastering one thing: what happens inside industrial furnaces: thermal fields, atmosphere control, precision engineering at extreme temperatures. That is its perspective, its organizational DNA. When, around 2018, a dedicated team within the company began researching silicon carbide crystal growth, they were not abandoning that essence. They were carrying it into an entirely new domain. SiC single crystals, a critical material for power electronics in electric vehicles and renewable energy, are grown inside specialized furnaces at very high temperatures—a process that demands exactly the kind of thermal mastery Ebner had built over decades. In 2020, the company founded EEMCO as an independent business unit, and today it is positioning itself as Europe's first independent producer of these strategic semiconductor materials, with plans for zero-emission volume production in Norway. The perspective remained intact. They still do what they have always done: engineer what happens inside furnaces. But the position shifted radically, from the metals industry into the heart of Europe's semiconductor supply chain. Rheinmetall's dramatic repositioning from mid-sized defense supplier to Europe's defense champion tells a similar story at larger scale: the organizational perspective (advanced precision-engineered systems) stayed constant while the position moved into a booming market created by geopolitical upheaval. In both cases, strategy worked with an organization's essence, not against it.
Now contrast this with Volkswagen's CARIAD venture. Here, the company attempted to change its very perspective — to become, in effect, a software company. It built a Silicon Valley-style unit detached from VW's actual strengths in manufacturing, supply chains, and process engineering. The result was billions spent, timelines missed, and a strategic distraction that contributed to the worst financial performance in a decade. Position and perspective are not interchangeable. Confusing them is costly.
Given such examples, one might ask whether strategy does more harm than good. The question is not as provocative as it sounds. Volkswagen's cascading five-year plans, optimized for a combustion-engine world, did not merely fail to anticipate disruption — they actively prevented adaptation. Northvolt, Europe's flagship battery maker, attracted over $15 billion in investment and was valued at $12 billion, yet collapsed into bankruptcy when its factory delivered barely a fraction of planned output. Grand ambition without operational testing against reality is not strategy; it is fiction.
And yet, the opposite (meaning, no strategy at all) is equally dangerous. Especially now, when US tariffs can raise import costs from 2.5% to over 25% overnight, when Chinese EV brands capture 12% of Europe's electric vehicle market in a single year, and when AI is rewriting competitive landscapes faster than most boards can convene. Orientation is precisely what we need most, both as individuals and organizations. The answer is not to abandon strategy but to change how we create it: not as a rigid blueprint, but as a living process that can breathe with the world it operates in.
At theLivingCore, our understanding of strategy draws on the biological perspective of "niches" and "niche creation". Stuart Kauffman, in A World beyond Physics, describes this beautifully:
"Each species affords one or more adjacent possible new niches for yet new species, which so expands what now becomes possible… […] new niches expand faster than the species that create them."
In organizational terms, this means that companies do not merely carve out positions for themselves in competition with others. They create niches — through products, services, business models — which in turn enable other ecosystem players to emerge. This is a radically cooperative view: organizations enable emerging ecosystems rather than simply fighting over existing ones.
Europe's defense buildup offers a striking illustration. The ReArm Europe initiative, unlocking up to €800 billion in defense spending through 2030, does not merely benefit Rheinmetall or KNDS. It creates adjacent niches that enable entirely new species to flourish: Helsing, the Munich-based AI defense startup, reaches a €12 billion valuation; autonomous drone manufacturers proliferate across the Baltics and Scandinavia; cybersecurity firms scale; semiconductor demand surges for military-grade chips. Each new participant enables further adjacent possibilities — with niches expanding faster than the organizations that create them. This is Kauffman's biology playing out in industrial policy, in real time.
If cascading strategy processes built for stable times no longer work — and the evidence from Europe's current landscape is overwhelming — then how should strategies be developed? Our answer at theLivingCore is to treat strategy formation as a genuine innovation process, using the leap methodology we have developed and refined over fifteen years. This is not a creative sprint or a Design Thinking exercise. It is a process rooted in profoundly understanding an organization's core and its potentials by thinking and learning from the future as it emerges. Five dimensions set it apart:
The Draghi Report made it explicit: Europe's GDP gap with the United States has widened from 17% to 30% in two decades, and not a single EU company worth over €100 billion has been built from scratch in fifty years. The old ways of developing strategy contributed to this gap. They were built for a world of predictable trade, stable energy, and incremental competition. That world is gone.
What we need now are strategies born from future potentials, rooted in organizational essence, forged through honest dialogue, and tested before they are proclaimed. In other words: strategy developed as a genuine innovation process, capable of answering the three questions that remain as relevant as ever:
Where are we now?
Where do we want to go?
How will we get there?
If this resonates, we would be glad to explore these questions together with you.
Photos by Francois Genon and Maarten van den Heuvel @ Unsplash
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