Blog #2 Internal Organizational Analysis and Developing Strategic Options (Part I)

Internal Organizational Analysis and Developing Strategic Options (Part I)

Know what you are best at and then do the deed to interlock that unique set of strategy! That’s exactly what Paul and Cesare tells us in the article “The Coherence Premium”[1]

Most of the companies miss on this aspect as they are busy concentrating on the market strategies. Paul and Cesare suggest that companies should start from the opposite direction, figuring out what they’re good at and then developing those capabilities (three to six at most) until they’re best-in-class and interlocking. 

According to Paul and Cesare a company becomes coherent only when its capabilities system is consciously chosen and implemented to support a focused strategic purpose and is aligned with the right product and service portfolio. 

Walmart, the giant discount retailer achieves maximum efficiency by integrating four capabilities: aggressive vendor management, expert point-of-sale data analytics, superior logistics, and rigorous working capital management.

To elaborate more on this aspect, we can look at expertise of Airbnb. As mentioned in Link, Airbnb goes an extra mile to localize the services it offers to reflect the needs of specific cohorts across the globe, especially through its range of services dubbed host and experiences. In fact, the relationships it has established with all its hosts across the globe shows just how critical excellence is for Airbnb. The management of the company prides in leaving the customers longing for more every time. Airbnb strives to ensure that its efforts and services and linkages it provides to its customers create one impact – a sense of belonging. It is something the company has proven beyond doubt that it can achieve through its dependable and safe approach called responsible hosting across the globe.

As defined by Paul and Cesare – The Power of Coherence is in the capability that customers value and competitors can’t beat. It’s more than an activity or a function: It’s the interconnection of people, knowledge, IT, tools, and processes that enable a company to out-execute rivals on some important measure. As shown via the Case Study: When Expansion Is the Enemy of Coherence[1], the companies struggle in the territory where they don’t have the capabilities to win.

Now, business fails for several reasons, Carroll and Mui discusses[2] the seven risky strategies and offer advises on how to resist their charms. Their research is based on most significant business failures among U.S. public companies from 1981 through 2005. The article dwells down on intrigue questions such as “Is this a realistic strategic for long term success?”, “What can we learn from history?”, “ Do vital information and dissenting views about strategies reach decision makers?” , “ Have we assessed the true advantages and liabilities  that come with scale?”, etc. This article is unique in the sense that most of the data in general focuses on successful companies in an effort to generalize from their traits, tactics, or strategies but Carroll and Mui brings out the companies that tried to do the same thing as the winners and failed.

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[1] (Leinwand & Mainardi)

[2] (Carroll & Mui)