Sunday, June 5, 2016

Coherence vs. Clatter - Applications in the Field

Of the papers that we read this week, by far the Coherence Premium resonated best with me.  The publication is anchored to a “companies should focus on what they do best in a coherent fashion” methodology.  On the surface, the paper sounds like a rehash of “Core Competency 101;” however, the publication goes into the economic value of determining an arena in which to “play,” identifying capabilities that support the targeted area, and then aligning the capabilities accordingly.  I fully appreciated the quantitative analysis in the EBIT vs. Coherence Score graph.  The quantitative side of me does wonder if there are other considerations that could have led to the proposed positive correlation (i.e., failing to account for the post hoc ergo propter hoc fallacy or confounders/externalities).

The reason that this article jibed with me is because I am currently on a related strategic engagement.  Just last week, I presented a three year capability roadmap that had the instantiation of each capability in a serial sequence (i.e., not a single capability development segment overlapped in terms of time).  A stakeholder proposed the idea of instantiating multiple capabilities simultaneously and iterating in a seemingly round-robin fashion.  At face-value, the proposed idea sounded superb: it was agile, nimble, and appeared to add (some) value on all fronts.  I maintain that the suggestion would not yield the desired result.  Firstly, the proposition violated one of my core tenets, which is to “focus on a few differentiating things and do them well,” which somewhat foots to the Coherence Premium publication.  Secondly, the switching costs (e.g., human hours) associated with having a few resources execute against multiple instantiation work streams in parallel may be overwhelming.  Thirdly, if budgets evaporate, which does happen on occasion, what is developed will be a handful of half-baked capabilities.  Lastly, the cost associated with coordination between multiple work streams may end up neutralizing any expected speed to market or agility.  In the lack of a counter argument, it is difficult for me to lean any way other than to refute the suggestion. 

This upcoming week, we are going to revisit the topic.  I may just forward the publication to a few of the stakeholders for grins.  J

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