This week's topic was on internally analyzing organizations and understanding their capabilities/strengths to better guide company decisions. I found The Coherence Premium article particularly interesting because its insight on coherence provided a valuable prism to filter out bad business ideas. The words "growth" and "innovation" are often misinterpreted as a new product/service or entry into a new market. This idea is what my team and I have been trying to understand this semester in our client project for Management Consulting. We were caught up in analyzing a new market space (i.e., tele-pharmacy) and seeing how we could best match up the client company in this space. After reading about the coherence test, I realized that I was looking at the project from a wrong perspective. After understanding a new market, I should evaluate the client company on its core competencies and capabilities rather than trying to fit a square object in a circular hole. We need to understand how the company chooses to create market value, its 3 - 6 distinct and competitive capabilities, and how to hone in the product/service "sweet spot" if one exists in the telepharmacy arena.
One company that exemplifies successful coherence is Lockheed Martin, a key player in cybersecurity and IT. The strategic growth of this company matches with its capabilities: all of its IT development is organic. This Forbes article highlighted distinct qualities that put Lockheed Martin ahead of its competitors.
Lockheed Martin is NSA's 6th largest contractor. Its expertise in cybersecurity and IT is an internal capability that has been cultivated since the inception of the company. With the recent media spotlight on many IT areas -- security (attacks from Chinese hackers, greater oversight on national surveillance, Snowden leak), healthcare (safe health data sharing), business analytics (making sense of Big Data) -- the market demand for IT solutions across all industries will increase further. Lockheed's correct external positioning and correct internal investment will allow it to reap more returns.
Understanding what you are good at and using limited resources to make yourself the best in strength areas rather than mindlessly diffusing efforts across multiple incompatible strategies seem pretty straightforward. However, the authors point out that many companies still make wrong, incoherent decisions. If you were in a leadership position in a company that took up an incoherent business venture, how would you halt this effort?