We’ve all been there. You’ve delivered, the numbers back it up, and yet one question quietly follows you out of the room: what’s going to stop performance from drifting?

It’s not pessimism. It’s a pattern. The same forces that drive markets toward equilibrium operate inside organisations — quietly, structurally, and often invisibly until it’s too late to course correct.

Like financial markets, complex biases create periods of overconfidence followed by correction. Organisations are no different.

No matter how confident leaders are about their own and their team’s ability to deliver transformative change, there are hidden forces at work. Forces that quietly pull what could be stellar performance back toward the mean.

There will be peaks and troughs. But in most cases, most of the time, firms revert to average performance over the long run.

That can sound melodramatic. Yet there is a real tension between what firms promise to boards, to investors, to themselves, and what transformation initiatives actually sustain.

Why performance erodes

Most of the complexity sits in structural forces — not in whether the change programme had a good launch deck, or a well-run steering group, although that all helps in the short term. It goes deeper.

As superior performance is sustained, high margins attract competition, eventually compressing profits. Companies that meet aspirational targets are more likely to loosen them and accept reduced performance. This is not through complacency or laziness, but a response to success and perceived risk. The urgency to seek and solve problems or find competitive advantage also lowers, leading to erosion in the long term.

Common failure modes include:

  • Monitoring weakens after early success
  • Targets soften; variance becomes accepted
  • Incentives loosen their connection to results
  • Competitors imitate what worked
  • Costs creep back as complexity increases

What Intel did differently

Andy Grove recognised this dynamic at Intel. He didn’t treat strategy as pure intent — he operationalised it:

  • Aligned incentives around the future of the business, not its past
  • Abandoned profitable products that no longer fit the vision
  • Created urgency around competitive inflection points
  • Reinforced fast feedback loops
  • Institutionalised measurable progress

This was the operationalisation of Moore’s Law — not as a slogan, but as a measurable discipline. Performance wasn’t left to drift. It was structurally reinforced.

The research is clear

Research across 732 firms shows the same pattern (Bloom & Van Reenen, 2007): companies that institutionalise measurement, target discipline, and incentive alignment outperform. Over 18 years of longitudinal studies from The World Management Survey supports these findings. There is no mystery. The difference is structural.

Performance frontiers

Grove used doubling transistor density and reducing the cost per unit to sustain performance and competitive advantage. This enabled Intel to continually reset the targets of computational power, even after success was achieved.

Each industry will have their own mechanical measures, each signalling how firms perform across a variety of competitive dimensions. A mechanical measure links user value to economic input — the tension between two metrics. It improves predictability, resists gaming, and supports alignment between targets and operations.

A few examples:

  • Retail — inventory turnover × margin stability: users experience fresh stock while inventory remains profitable and disciplined
  • Education — cost per completed learner × progression integrity: costs remain controlled relative to successful student outcomes
  • SaaS — time-to-value × cost per active user: fast onboarding drives activation while cost per active user remains efficient
  • Healthcare — referral-to-treatment time × cost per risk-adjusted outcome: patients are seen quickly while cost per accurate outcome remains managed

The leaders who sustain it

There are other factors that resist regression — chiefly, how effectively leaders manage and develop their people. Even with that covered, without relentless focus and structural congruence, the pull of gravity is difficult to resist.

The leaders I’ve seen sustain performance are the ones who treated structure as seriously as strategy — who asked uncomfortable questions even after success, and built the mechanisms to keep asking them. That discipline is rarer than it should be. But it is learnable.

Consider this in your own context:

  • What metric defines your performance frontier?
  • Has that frontier moved in the last 12 months?
  • Did success raise or lower ambition?
  • Would compensation change if that metric failed to improve?
  • How quickly would we detect drift?

Further reading: Bloom & Van Reenen — Measuring and Explaining Management Practices Across Firms and Countries; Greve — Performance, Aspirations, and Risky Organisational Change; Grove — Only the Paranoid Survive.