Blog#2: Week 4: Internal Organizational Analysis/ Developing Strategic Options:

Blog#2: Week 4: Internal Organizational Analysis/ Developing Strategic Options: 

Author: Tejas Kashyap | tkashyap@andrew.cmu.edu

The process of developing and evaluating ‘strategy’ for an organization should give as much if not more importance to internal capabilities than to external conditions. Paul Leinwand and Cesare Menardi, in their writing for HBR, describe this as the ‘Coherence Premium’. It is asserted that through perfect alignment of what a company’s core capabilities are to what opportunities exist in the market, a successful path forward can be charted. 

They exemplify this through discussions about Wrigley, Pfizer, and ConAgra, pointing out how this principle is supported in their success or failure. In recent times, we can see Tesla building out an ecosystem that promotes eco-friendliness on a broader scale. Most of its activities or those of associated companies are aligned to provide support to others in the ecosystem. As an example, Tesla’s need for more power stations for its vehicles is being sustained by its sister company Solar City, which ensures cheap and clean energy is effectively produced and delivered. Through the synergy of these companies, they are perfecting the supply-demand curve, wherein, the Tesla cars drive the demand for energy up, leading to enhanced top-line for Solar City, whereas Solar City is striving to ensure that power is available to Telsa cars, wherever needed. Telsa’s advances in Li-ion battery systems and material sciences have also benefited and pushed forward Musk’s other business Space X. This is what I believe ‘Coherence’ should look like in the present times, wherein in companies in seemingly different spaces work together to complement each other, effectively shortening the time to achieve the particular industry’s imagined future state. 

In another presentation by Paul Carroll and Chunka Mui for HBR, where they review strategies that lead to disaster, the essence remains that paying too much heed to external factors, borrowing strategies that worked for other companies, being too optimistic and betting on the wrong future is not a good strategy move to say the least. Understanding the unique place the company in question is currently in, evaluating current and evolving skills, culture and organization dynamics and measuring those with not only the external market conditions, but also those of competitors, or companies that are to be acquired or merged with is crucial. At the end of the day, there are tons of variables that cannot be predicted or shifts that probably cannot be planned for, but if there is effective due-diligence, a conscious understanding of the companies core competencies and differentiating factors, an effective strategy can be charted. Also, an effective strategy is a constantly evolving piece of art, the ideals and guiding factors of the company help it remain on course, but the way to overcome the next challenge, being agile and consciously maneuvering the course is essential.