The Concentration Imperative: Why Mediocrity Is the Price of Fairness

Prime Minister Mark Carney announced the Canada Strong Fund on April 27, 2026 — a $25 billion vehicle structured to invest in nation-building projects alongside private capital, with a retail component that would allow individual Canadians to invest directly. Within days of the announcement, the critical commentary was already visible — not primarily about regional distribution, but about something more fundamental: whether a fund capitalized by sovereign borrowing against a federal deficit could generate the commercial returns its mandate required without adverse selection, gravitating toward projects too risky for private capital alone.

Economists noted the structural tension between the fund's national-building purpose and its promise of retail financial returns. A fund that concentrates on genuine competitive advantage may disappoint constituencies that expected equitable distribution. A fund that accommodates those constituencies may disappoint investors who expected commercial returns. The governance cannot satisfy both unless the strategic logic is established first and the political accommodation is managed within its boundaries.

The dynamic is not unique to sovereign wealth funds or to government. It replicates inside every organization that must make resource allocation decisions in the presence of multiple stakeholders with legitimate but competing claims on those resources. The pharmaceutical company whose strategic planning process includes representatives from every therapeutic area will produce a portfolio that reflects every therapeutic area's claim to continued investment.

The government department whose budget process requires sign-off from all regional directors will produce a spending plan that reflects all regions' priorities. The hospital system whose capital allocation process is governed by a board representing every clinical division will produce a capital plan in which every division receives something and no division receives enough. The outcome is distributed investment, and distributed investment produces distributed mediocrity.

What concentration actually requires

Roger Martin's analysis of what genuine strategy requires is worth restating precisely because it is so routinely acknowledged and so rarely implemented: a strategy is a set of choices that concentrates resources in the specific spaces where the organization can win, and those choices are inseparable from the decision not to concentrate resources in the spaces where it cannot.

The Canada Strong Fund that concentrates on two or three sectors where Canadian capability and global market position create a genuine compounding advantage — critical minerals and processing, artificial intelligence infrastructure, advanced manufacturing in specific subsectors — will generate returns that a distributed fund cannot. The returns compound because concentrated investment builds capability, which attracts talent and further investment, which builds more capability. Distributed investment generates none of this compounding because it never reaches the threshold of concentration that compounding requires.

Richard Rumelt's diagnosis of bad strategy — developed across a career of studying why organizations with intelligent leadership and adequate resources fail to generate strategic outcomes — converges on the same point from a different direction. Bad strategy, in Rumelt's analysis, is not the absence of strategic thinking. It is the product of governance processes that convert strategic thinking into lists of priorities that reflect every constituency's preferences.

The resulting document has strategic vocabulary — vision, mission, priorities, initiatives — but it does not make choices. And strategy that does not make choices does not produce advantage. It produces the organizational equivalent of spreading a finite budget across an unlimited number of priorities: activity everywhere, impact nowhere.

Separating the political problem from the strategic one

The most important governance design insight for organizations facing this dynamic is that the political problem and the strategic problem are distinct, and that conflating them — allowing the political pressure for equitable distribution to determine the answer to the strategic question of where to concentrate — guarantees a poor outcome on both dimensions.

The political problem — how to manage stakeholders whose priorities are not being funded, how to communicate the rationale for concentration, how to build the legitimacy of the allocation decision among constituencies that did not benefit from it — is real and requires genuine work. It does not require giving those constituencies a proportional share of the resource allocation.

The organizations that manage this distinction effectively do something specific in their strategy process: they separate the question of where to concentrate from the question of how to manage the stakeholders whose priorities are being deprioritized, and they address both questions with appropriate rigor rather than allowing the second to corrupt the answer to the first. In practice this means that the strategy session produces an explicit, evidence-based answer to the concentration question before it opens the question of stakeholder management.

The political work then operates within the boundaries established by the strategic answer — it does not revise those boundaries. This sequencing is uncomfortable. It requires leaders to deliver messages to constituencies that will receive them as losses. But the alternative — a fund, a portfolio, a budget that no one chose — produces no advantage for anyone, and no stakeholder is ultimately well-served by a strategy that has sacrificed its capacity to win in order to preserve the appearance of fairness.