Reinforcing strategy: Internal Organizational Analysis

Developing a corporate strategy requires a wholistic view of an organization’s competitive ecosystem. This means companies not only need to examine the external factors, but also internal organizational competencies and capabilities and the ability to adequately support the execution of the strategy. In fact, a companies strengths should serve as the guide for developing their strategies. Strong organizational awareness, what I think of as an understanding of internal strengths and capabilities and weaknesses, is required at every level of an organization to empower employees in their day-to-day jobs. When opportunities to serve customers, for investments, acquisitions, expansions come, the employees can quickly make good trade-offs and better decisions to support the business’s growth.

During my career, I worked for a brief period for a start-up company from day 0. As a new company in a very competitive and fragment industry with external trends pointing to increased mobile use, the unique value proposition was offering users simple and intuitive mobile user interface, where our competitors relied on strong retail presence. Not much went into developing the structures to support and reinforce this strategy. This was a classic example of what Leinwand and Mainardi meant when companies “pay too much attention to their external positioning and not enough to internal capabilities”. A coherent strategy may have included efficient and automated internal processes required to support and build strength with online delivery. With management’s imperative and pressure to reduce time-to-market to acquire as many customers as quickly as possible, operations suffered. We had to make trade-offs with meeting deadlines, using incredibly manual processes to support onboarding, customer support and reconciliation, thereby introducing lots of errors and inefficiencies. If this direction is not quickly reassessed, the strategy to focus solely on the online space in the current industry climate may be the company’s undoing after all.

In the article, The Seven Big Ways to Fail, the authors highlight cases where a company’s strategy failed due to management’s misjudgment of entering adjacent markets, doubling down on current strategies, and so on. Hindsight is 20/20; it is easy to proscribe after the fact. this study done by Carroll and Mui reminds me that strategy is an art. Some of these strategies, especially market adjacency moves and finding synergies in mergers, probably seemed like brilliant moves at the start. To avoid disaster, the authors recommend adding a step to the strategy development process, by having an independent body thoroughly review strategic plans and ask difficult questions to improve the strategy or send strategies back to the drawing board.

Sources:

Leinwand, P. & Mainardi C. The Coherence Premium: Harvard Business Review, June 2010

Carroll, P. & Mui C. Seven Ways to Fail Big: Harvard Business Review, September 2008