Today’s universities are under pressure from multiple directions. The massive growth in students and staff has led to, among others, a high competition between individual academics and universities for external funding. Studies highlight that the quest for external funding has led to a narrowing down of research topics in terms of breadth and scope, and some call for universities to more actively use their strategic capacity and leadership to create environments that also provide scholars with incentives for scholarly renewal, innovation, and research beyond what is in high demand from external funders. However, the definition of strategic capacity, challenges related to it, and how universities and their leadership may use it are not always clearly defined. This chapter addresses these issues.