Strategy, boils down to one essential truth: making choices about where to play and where not to play. Simple, right? Yet “simple is tough to execute! For example, it might seem easier to take a “please everyone” approach to strategy, yet rarely does this translate into success. In reality, pleasing everyone muddles the enterprise’s focus as resources are thinly spread forcing everyone to compromise on reaching their strategic imperatives. Soon, the foundation of the entire enterprise weakens because without clear, actionable, strategic priorities, tactics take precedence over vision and cost-cutting and efficiency programs substitute for genuine strategy.
Some projects and business units consistently deliver outsized, long-term returns. These are the initiatives that should receive the lion’s share of resources. Other investments deliver lower, or even negative, returns and should be minimized—or perhaps halted altogether. Yet even when the data is clear and seasoned leaders know what needs to happen, companies still struggle to follow through and do what needs to be done.
Bombardier’s Hard-Learned Lesson in Strategic Focus
Take Bombardier, for example. This Quebec-based enterprise once saw itself as Canada’s answer to General Electric, back when GE was a global powerhouse. Originally known for its snowmobiles (Skidoos), then watercraft (Sea-Doos), Bombardier grew rapidly into a supplier of trains, planes and subway cars. But this aggressive expansion came at a high cost.
Bombardier’s journey is a saga of soaring ambition mixed with equally monumental challenges. From the 1970s to 2020, the company’s fate fluctuated between that of a Quebec success story and a financial train wreck (or is that plane wreck?) Thanks to its political clout and cozy relationship with the taxpayer-funded Caisse de Dépôt investment bank, Bombardier secured financing for its big ventures and when needed, tapped goverments and their agencies to keep the company afloat.
However, the wheels and wings began to fall off in the mid 2010s. Rail car delays led to penalties that wiped out profits, while the commercial jet division was burning through cash like jet fuel. Despite building a stellar aircraft and impressive trains, Bombardier didn’t have the needed resources to support the global infrastructure for both. Exhausted investors, wary politicians, and fed-up taxpayers demanded change. In 2020 Bombardier’s new CEO finally had a mandate to make the “rational” strategic decisions the company had long avoided.
The Big Shift: Shedding Excess and Embracing Focus
Bombardier had already spun off its recreational vehicle business, and later its commercial jet division was sold to Airbus (now the A220), and, in 2021, they finally divested their troubled train division to Alstom.
Today, Bombardier is highly focused and thriving in a singular market—private jets—where they’re the undisputed leader. A lean, profitable Bombardier was able to commit the resources to build out the needed infrastructure to service these jets world wide. Today they dominate the private jet industry, even turning away new customers to fulfill their order backlog. The company saw its stock price rise over 250% in 2021, and though challenges such as the environmental impact of air travel remain, this newly focused Bombardier is in a much stronger position to take them on. What can Bombardier teach us about strategic choices and resource allocation:
- What sounds so easy often isn’t. Making resource allocation decisions is tough and the decisions are often unpopular. Leaders need to prioritize even when it’s uncomfortable.
- Pleasing Everyone Serves No One. Trying to balance too many ventures hurts both successful divisions and underperformers. An effective strategy prioitizes projects that will create lasting value.
- Act Before Bankruptcy forces your hand. By waiting to act Bombardier was thrust into a financial crisis which they thankfully survived. Not all are so lucky! Start making the hard calls now to set your organization on a sustainable path.
By allocating resources where they have an outsized impact, leaders can position their organizations for sustainable growth and build resilience. Bombardier’s transformation shows that difficult decisions can yield exceptional results. So, what’s holding you back from making those strategic choices? The right focus today might just make the difference between stagnation or growth tomorrow.
