Strategy models help Boeing

I see strong 2nd quarter profits at Boeing,  just after hearing their strategy VP explain their heavy use of strategy models. Their industry model led them not to cut production after a 2009 collapse in orders, in spite of screams from analysts that they should do so to cut costs. Reminds me Airbus used a similar model way back in 96 (also in link above) to spot that a massive jump in orders was fluff, and to be cautious about adding capacity. (Back then, Airbus could only supply part of the market, so they couldn””””t have captured Boeing””””s 98-9 peak deliveries).

Message here – you can””””t do strategy with 2×2 boxes, Vision statements and spreadsheets – you need rigorous and powerful models of your business and its environment. And this is not just for big boys and girls – my friend Warren Farr who runs RSC, a regional distributor of heating, ventilation and air-con equipment, built a strategy model of his market. This told him a market slow-down was not a normal cycle but a fundamental shift to an era of lower demand. Competitors kept expanding, believing growth would return – Warren held back and banked the cash. When competitors failed, he bought up cheap capacity and failed businesses, putting RSC into a strong position – much to the delight of employees who would otherwise have lost their jobs.

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