---
id: "framework-capital-allocation-constrained-world"
type: "framework"
source_timestamps: ["\\\"§ So Long", "Cheap Capital\\\""]
tags: ["corporate-finance", "strategy"]
related: ["concept-value-based-management", "claim-growth-over-returns-fails", "concept-end-of-cheap-capital", "action-rigorous-capital-allocation"]
steps: ["Go back to basics regarding business economics and accept that difficult tradeoffs are mandatory.", "Allocate capital rigorously rather than abundantly.", "\\\"Invest selectively", "prioritizing the quality of returns over top-line growth.\\\"", "\\\"Maintain a clear", "unbroken linkage between corporate strategy and underlying economics.\\\""]
speakers: ["Michael Mankins", "Matthew Crupi"]
sources: ["reskilling"]
sourceVaultSlug: "hbr-seg-reskilling"
originDay: 10
articleStem: "hbr-sig-49-ai-squeezing-middle-managers"
sourceUrl: "https://hbr.org/2026/06/ai-is-squeezing-middle-managers"
sourceTitle: "AI Is Squeezing Middle Managers"
---
# Capital Allocation for a Constrained World

A strategic approach proposed by [[entity-bain-and-company|Bain & Company]]'s [[entity-michael-mankins|Mankins]] and [[entity-matthew-crupi|Crupi]] for operating in an environment where the [[prereq-wacc|WACC]] has returned to high single digits (see [[concept-end-of-cheap-capital]]). It requires abandoning growth-at-all-costs models in favor of strict economic discipline — the operational expression of [[concept-value-based-management]].

**Steps:**
1. **Go back to basics** regarding business economics and accept that difficult tradeoffs are mandatory.
2. **Allocate capital rigorously** rather than abundantly.
3. **Invest selectively**, prioritizing the quality of returns over top-line growth.
4. **Maintain a clear, unbroken linkage** between corporate strategy and underlying economics.

This is the discipline behind [[claim-growth-over-returns-fails]] and is enacted via [[action-rigorous-capital-allocation]].

Related: [[concept-value-based-management]] · [[claim-growth-over-returns-fails]] · [[concept-end-of-cheap-capital]] · [[action-rigorous-capital-allocation]]