Michael Merlin Identifies ‘Infected Investments’ That Undermine Business Strategy

In a recent LinkedIn post, Michael Merlin explores a nuanced view of bad investments, arguing that they are not always defined by monetary loss but by a misalignment with core strategy. Merlin, a proponent of strategic financial planning, shared his perspective on how seemingly positive decisions can quietly erode a company’s long-term direction.

Merlin introduces the concept of “infected investments” by highlighting common pitfalls that can distract businesses. He points out that chasing fleeting trends or succumbing to competitive pressures can lead to decisions that, while appearing smart or necessary at the moment, ultimately weaken the strategic foundation.

“Fast wins feel smart. External signals feel convincing. But misaligned bets quietly weaken strategy long before results show it.”

The Hallmarks of Misaligned Investments

Merlin outlines several indicators of these detrimental investments. He notes that a common symptom is the divergence between surging trends and a company’s strategy, where businesses prioritize “chasing what’s hot instead of what fits.” This is further exacerbated when market movements lead to a loss of conviction, causing companies to “[c]opying replaces clear thinking.” According to Merlin, the allure of quick returns can also be deceptive, as “[f]ast money often carries slow damage,” obscuring long-term costs.

Furthermore, Merlin identifies the trap of vanity metrics and the pressure of external noise. He argues that “[v]anity metrics disguise weak fundamentals” and that “[f]ear Of Missing Out (FOMO) pressures. Decisions rush,” leading external distractions to override internal clarity. Finally, he points to the dilution of momentum that occurs when “[m]any bets scatter. Nothing compounds,” indicating a lack of focus and synergy.

The Power of Aligned Investments

In contrast to these misaligned bets, Merlin emphasizes the characteristics of investments that are in sync with a company’s strategic direction. He suggests that truly effective strategies ensure that “[e]ach move reinforces the core strategy.” This directional clarity allows businesses to build “[l]ong-term advantages” that are more durable than temporary spikes.

Merlin also highlights the compounding effect of confident execution. When “[e]xecution repeats, confidence grows,” teams can build on their strengths, leading to scalable systems rather than isolated wins. He stresses the importance of understanding and acknowledging risk, stating that “[u]pside excites. Downside is understood.” Ultimately, Merlin advocates for depth over breadth, advising that “[f]ewer bets clarify” compared to being overwhelmed by too many options.

Internal Alignment as the Antidote

Merlin concludes by reiterating that the core issue with bad investments is not necessarily financial loss, but a lack of strategic alignment. He posits that while external signals can influence decisions, “[i]nternal alignment cures them.” Strong companies, in his view, move beyond simply asking if an initiative will drive growth. Instead, they pose a more fundamental question: “Does this belong?” This focus on strategic fit, according to Merlin, is key to building sustainable business success and financial longevity, a concept he further explores in his book.