The Vision to Value Series
Paper 1 - What We Thought We Bought
Why well-intentioned strategic choices often fail to deliver the value leaders expect.
Read the full article here.
Mining companies have become better at making strategic choices. Capital discipline has improved, trade-offs are more explicit, and boards spend more time testing the quality of their decisions. Yet the value that companies expect when they commit to strategic decisions often goes unrealised. Industry data confirms the scale: McKinsey (2024) estimates that 83% of major mining and metals projects overrun on cost by more than 40%, with schedules delayed by 20 to 30%. For megaprojects above $1 billion, overruns average 79% and delays 52%.
Every major decision involves two sets of assumptions. The first, about markets, returns, costs, and geology, is stress-tested exhaustively. The second, that the organisation can deliver at the pace and effectiveness the decision now demands, is rarely examined. This paper calls that untested assumption the capacity bet.
This gap in value opens up after leaders have made strategic choices, not when they are formulating strategy. Once leaders have committed to a course of action, the realisation of value depends on how quickly the organisation responds to emerging signals. What happens in practice is different: priorities multiply, oversight increases, and decisions take longer. Issues that could be resolved locally are routed upward for senior approval, away from the people who understand the problem. By the time under-delivery shows up in lagging indicators, it is too late to reverse the losses easily.
These losses are widely dismissed as an inevitable cost of putting strategic decisions into practice. That assumption is wrong. The erosion of value doesn’t happen randomly, and isn’t primarily about effort, competence, or commitment. It follows a few predictable patterns, which recur when organisational systems haven’t been redesigned for the consequences they now carry.
In capital-intensive industries where assets are long-lived and geology is uncertain, these effects are amplified. Mining is the acute case. What mining companies ultimately deliver comes down to two closely linked outcomes: near-term cash flow and a sustained mineral reserve base. Early performance may look acceptable, but future value is quietly consumed as the organisation defers sustaining work, discipline weakens, and external operating constraints tighten.
The external conditions the business depends on — permits, community trust, water supply — can give way faster than the organisation can respond. The erosion of value in operating assets and capital projects follows a small number of predictable patterns. This paper names six. They persist because organisations keep operating the same way after making commitments — to the board, to the market — that demand a different pace of response.
A delayed project doesn’t deliver the same returns six months late — it delivers worse ones.
When the organisation is slow to act, the external conditions the asset depends on give way. Permits stall, community trust erodes, access agreements come under pressure — and each takes longer to rebuild than it took to lose.
Once leaders have committed to a course of action, the realisation of value depends on whether the organisation can manage its own performance well enough to deliver what it has promised. If it can’t, delays become harder to reverse, and value is quietly lost long before anyone notices.
