The Temporal Mismatch

Economic activity operates across three temporal scales that are fundamentally mismatched. At the transaction level, prices clear in milliseconds to seconds—an instantaneous snapshot claiming to represent value. At the strategic level, commitments and capabilities unfold over years to decades, assessed only in retrospect. At the evaluative level, the question of what counts as good at all evolves over decades to centuries, through cultural and institutional change that no one fully controls.

The mismatch is not incidental. It is constitutive of why strategic choice exists.

What Prices Cannot Do

Hayek demonstrated something profound about market coordination. Prices enable coordinated action without shared understanding. The shipper need not know why tin prices rose—only that they did and what that implies for action. "The most significant fact about this system," Hayek wrote, "is the economy of knowledge with which it operates, or how little the individual participants need to know in order to be able to take the right action."

But "the right action" presupposes an evaluative framework that price signals cannot generate. At the transaction level, markets coordinate brilliantly. At the institutional level, markets presuppose settlements about property rights, contract enforcement, and what can even be commodified. At the constitutional level, markets require prior determination of who counts as an actor, what can be exchanged, and which claims are legitimate.

Hayek showed how to coordinate given objectives. He did not—and could not—show how objectives are determined. That is a different kind of question entirely.

The Compression Problem

Prices compress time as well as information. A price is an instantaneous snapshot that claims to represent value, but value unfolds over extended horizons. As prices update faster relative to fundamentals, the proportion of price information derived from underlying reality approaches zero. The proportion derived from prices-about-prices approaches one.

This is Keynes's beauty contest at infinite speed: judges evaluating not beauty but expectations about other judges' expectations about expectations. When the coordination mechanism outruns the temporal substrate it claims to represent, it becomes constitutive rather than representative. It does not aggregate pre-existing value; it creates the value it appears to measure.

This is not a market failure in the usual sense. It is what happens when coordination mechanisms are asked to do something they cannot do: validate objectives that require time to validate, using signals that update faster than validation can occur.

Three Clocks, No Synchronization

Consider a concrete example. A company decides to invest in a new manufacturing process. The decision involves three temporal scales simultaneously.

The transaction level: What do current prices say about input costs, demand, competitor behavior? These signals update continuously, and are available to everyone with access to the same market data.

The strategic level: Will this process yield competitive advantage over a fifteen-year capital cycle? This question cannot be answered through transaction-level data because the answer depends on competitor innovations, demand shifts, and technological developments that do not yet exist.

The evaluative level: Should we be in this business at all? What counts as success—shareholder returns, employment creation, technological leadership, environmental impact? These questions have no answer waiting to be discovered; they require judgment that transcends any particular set of price signals.

The three clocks do not synchronize. They cannot synchronize. And this is precisely why strategic choice exists.

The Space Where Strategy Operates

If all questions could be resolved at transaction speed, there would be no strategy—only execution of what prices dictate. If no questions could ever be resolved, there would be no strategy either—only drift without learning. Strategy operates in the gap between these extremes: questions that are too slow to be answered by market signals but tractable enough that evidence eventually accumulates.

This gap is not a bug. It is where the interesting questions live. Which commitments should we lock in, knowing we cannot validate them quickly? Which should we leave open to revision as evidence emerges? How do we protect slow-validating commitments from fast-cycle pressure to abandon them before they have time to prove themselves?

Better measurement does not close this gap. It relocates the boundary. Questions that once seemed strategic become operational as measurement improves. But this does not eliminate strategic questions—it exposes new ones. As our ability to track execution improves, the question "are we doing things right?" becomes answerable. The question "are we doing the right things?" remains stubbornly evaluative, contested, and slow.

The Design Problem

This points toward a design question that most organizations answer implicitly rather than explicitly. Different objectives have different temporal properties—different validation horizons, appropriate feedback mechanisms, and governance requirements. Ends-oriented objectives (what to achieve) have long validation horizons and cannot be assessed through short-cycle metrics. Means-oriented objectives (how to achieve) have shorter horizons and can be adapted through performance feedback.

The ends/means distinction maps onto temporal structure. Ends require slow governance because they validate slowly. Means can tolerate fast governance because they validate quickly. An organization that treats both the same way—either revising its purposes at operational speed, or refusing to update its methods despite evidence—will fail in predictable ways.

The strategic question is not simply "what should we pursue?" It is "what commitment structure should we create?"—which objectives operate at which clock speeds, what triggers revision at each level, and how do we maintain the capacity to revise when circumstances demand?

Markets coordinate at speeds that exceed the validation of what they coordinate toward. This mismatch creates the space where strategic choice operates. The space cannot be eliminated by better data or faster processing. It can only be navigated—by making commitments whose validation horizon exceeds the attention span of markets, and by building the governance architecture that allows those commitments to mature on their natural timescale.