Wednesday, November 18, 2015

Coherence, Failure, and a Small Scale Perspective

Company coherence, or intense focus on core competencies, is a strategy that applies to relatively large companies, especially those competing to be the best in their field. In the articles this week, one focuses on Coherence (“The Coherence Premium”) and the other describes ways of failing (“Seven Ways to Fail Big”). Of those seven ways, 4 can be viewed as situations without coherence. Roll-up, or combining huge numbers of companies, is almost the opposite of a coherence strategy. Failures from a consolidation rush, pseudo adjacency, and the synergy mirage can occur because the new acquisitions may have attributes outside of the acquirer’s core competencies.

These strategy perspectives are from the point of view of established and large companies, and there is not a clear parallel with startup companies that are building new technology. Really, you can’t fail big until you are big, and you are minuscule until you get to market.

Startups notoriously have more work than they have hands, and this can lead to a situation in which employees and founders are working outside of their own individual core competencies. An example may be a tech-savvy person needing to create a marketing strategy. We have learned that whenever possible, rely on experts. A logical extension of this concept is that the further a task is away from your competencies, the more important it is to bring in an expert. Though a startup is not a simple microcosm of giant corporations, and though it is much more likely to fizzle out than fail big, coherence as a principle is still important to its success.

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