Every organization is a conglomeration of departments, working together in synergy to achieve a common goal. Well, that’s what we would imagine an ideal organization to be modeled like. Unfortunately, this is far from the truth.
Now imagine adding another company into this mix. One with different cultural values, a different vision and different infrastructure. Well, seems like the recipe for disaster!
To test this and gauge the estimated coherence of the newly formed company, organizations must first conduct the coherence test. This provides leaders with an immediate sense of how effective their processes are. It helps spark ideas for cost cutting, improving process workflow and growth strategies. It also helps provide a metric for rivalry within the industry. 
Microsoft purchased Nokia to provide them with a competitive advantage against Google and Apple, by leveraging Nokia’s mobile hardware component. They had a clear goal – to increase their customer share in the smartphone market by providing low cost phones. Unfortunately they did not keep their competition in mind. Instead they should have adopted the strategy of understanding their opponents and keeping track of each other’s advancements and accordingly taking decisions looking at their strategic position. For instance, looking at the UX experience provided by Apple and Android, Nokia should have hired more UX designers to improve their interface.
Another factor that describes coherence is the capability of the system. Microsoft aimed to achieve success by integrating Nokia to achieve new product development through disruptive technologies at low cost, improved R&D facility and the best culture for employees to work at. On speaking to a friend who worked at Microsoft as a Technical Project Manager for 4 years, I realized how the employees from Nokia were treated as outcasts when they joined Microsoft. Employees blamed that on the striking cultural differences between the two companies. Microsoft had confident and outgoing employees, while Nokia housed introverts and reserved individuals.
Next, the company needs to assess product fit. This looks at the diversification of the company and what its portfolio looks like to the market. Nokia had a wide gamut of gadgets under its belt – with smartwatches and varied prices of smartphones. Microsoft noticed that the smartwatches were not targeting enough customers and that the cost of production was higher than the revenues earned. Furthermore, the other big players in the market had already captured the mainstream customers, making it difficult for the Nokia smartwatches to gain loyalty. Microsoft made the right decision to cut its losses and focus on improving just the phone range.
Clearly, the Microsoft-Nokia acquisition could have employed different strategies and done better at the coherence test. Microsoft made a loss of 12 cents on every mobile telephone the company sold before factoring in marketing, research and development, and other expenses after acquiring Nokia.