The Vision To Value Series
Paper 2 - The Capacity Bet
Why organisational readiness is the most consequential and least examined variable in any major decision.
Read the full article here.
Every time a board approves a major capital commitment — a new development, a major expansion, an acquisition — two bets are placed. The first is economic: that the prices, costs, and returns in the investment case will hold. Boards test this bet exhaustively — sensitivity tables, Monte Carlo simulations, peer reviews, independent technical assessments. The second bet is that the organisation can deliver what the board has approved — mobilise on schedule, make decisions fast enough to protect the value at stake, and manage the permits, community relationships, and infrastructure the commitment depends on. That second bet is rarely tested. This paper calls it the ‘capacity bet’.
The same bet is present in existing assets being operated through volatile markets. There is no single investment decision to stress-test — but the assumption is identical: that the organisation can make the right decisions fast enough to protect the value at stake. It almost never gets examined.
Paper 1 in this series — ‘Vision to Value in Mining: What We Thought We Bought’ — described the persistent gap between the value organisations expect to create and the value they actually deliver. It showed that the strategy is rarely the problem. The economics are usually sound. The value is lost afterwards — in the months and years when the organisation has to deliver what it committed to. The losses aren’t random. They fall into a small number of repeating patterns. This paper explains why. The root cause isn’t flawed strategy, a lack of effort, or poor execution in any conventional sense. It’s simpler and more structural: the organisation examines the economics, but not its ability to deliver what those economics assume.
The capacity bet isn't about headcount, skills, or commitment. It's about how the organisation is designed to operate — where decisions get made, what gets escalated, how fast it can respond when conditions change, and whether the external constraints the commitment depends on are actively managed or left until they become urgent. Speed and architecture matter — but only if the people making decisions can see the value consequences of what they're deciding. A decision made at the right level and the right pace, but against the wrong measures, still destroys value. Papers 4 and 5 in this series develop what that looks like in practice.
When the capacity bet pays off, problems are caught early and fixed while they’re still small and of limited consequence — what this paper calls the ‘correction zone’. When the capacity bet is lost, performance deteriorates in a pattern that’s recognisable but rarely recognised in time. Leadership adds priorities without removing existing ones, and the organisation is expected to deliver more with the same capacity. Decisions get pushed upwards as leaders feel the need to intervene, and the pace of response slows. Permits stall, community relationships fray, infrastructure agreements come under pressure — while leadership is absorbed in operational detail it shouldn’t need to be managing. By the time the damage shows in the financial results, significant value has already been lost and is difficult to recover. This paper calls that the ‘explanation zone’ — where the organisation has stopped fixing problems and started explaining them away.
The capacity bet is present in every high-consequence commitment — capital projects, operating assets through economic cycles, acquisitions, strategic pivots, and transition programmes. The economics are tested. The organisation is not.
