Monday, June 12, 2017

Coherence and Capability in Strategy

One of the main takeaways for me during this reading was the Coherence Premium and the concept of focusing on organizational capabilities, where strategy is driven by those capabilities. What I find particularly striking about this approach is the relative simplicity associated with it. The idea is not that complicated: know what you are good at and then have the organization engage in a strategy to deepen or expand those activities.  As my organization is poised to begin the implementation of our 2017-2021 Strategic Plan, I think of ways we not only accidentally engaged in capabilities-focused planning, but also have some additional work to do on this front.

We based on our strategic plan on this idea of “championing homeownership” being the primary goal for the organization. This idea is part of our founding history and has primarily been the focus of our work for the last five decades. However, in the last few years or so we lost our focus, engaging in programs and services that did not truly fit those core capabilities. We were like the ConAgra example. We realized this (though not formally calling it a coherence problem); thus, we have already completed the first part of the coherence test by recognizing how incoherent we are.

So now it is time for us to fully identify what our capabilities are and how they interlock. Some of these capabilities will need more development and effort to fully achieve the success we want to see in this area of “championing homeownership.” For example, in order for us to fully implement our efforts to deliver quality services, we need to significantly improve our technological capacity. We also need to improve our marketing strategies to increase the number of program participants, which in turn increases revenue. However, if we need to improve multiple capacity areas, are we truly engaging in this coherence premium? My initial thought is that the organization has the opportunity to create capabilities and coherences where they  previously did not exist. By identifying one key area around which to create coherence, the organization will be on the right track to engage in this type of strategy.

The first step for us to achieve this is to create the necessary internal infrastructure to support success. We have realigned staff and staffing priorities to specifically focus on those areas where we are weakest, technology and marketing, so that we can increase our capacity in implementing our strategic goals. 

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