Blog 3: Internal Organizational Analysis and Developing Strategic Options (Part I)

For this week’s readings, “The Coherence Premium” (Leinwand and Mainardi, Harvard Business Review, June 2010) was the article with the most interesting key takeaways for me. The article starts off with the following quote: “Sustainable, superior returns accrue to companies that focus on what they do best.” I completely agree with Leinwand and Mainardi’s opinion, and have had a first-hand experience at this myself a couple of years ago. During my time working in management consulting, I had experience working with various companies. Some of these did a good job of aligning their self-identified capabilities to strategic opportunities, and others didn't.

The quote in the article is very relatable with the experience I had working with a small sports apparel manufacturer. During the project, I noticed that they did not do a very good job of aligning their self-identified capabilities to strategic opportunities. I believe that this is because they were family-owned for many years and therefore may not have had clear goals and strategies set by their leadership. Moreover, when the company was later acquired by a private equity firm, Kearney was brought in as a management consulting firm to understand their growth strategy. The company had been growing at a 20% CAGR Y-o-Y and then stagnated. This was indeed in part due to misalignment of their self-identified capabilities to strategic opportunities. Our client had expertise in manufacturing team uniforms and started expanding its offerings into more athleisure apparel, like polo shirts and other athletic comfortable clothing. This was neither their expertise nor their market segment, and they therefore failed in that space and stagnated their growth.

The article goes on to mention that “It is the rare company indeed that focuses on “what we do better than anyone” in making every operating decision across every business unit and product line. Rarer still is the company that has aligned its differentiating internal capabilities with the right external market position. We call such companies “coherent.”” This aligns exactly with my experience at the sports apparel manufacturer, and I agree that my client was “incoherent” in this instance.

Once our team finished the project with the sports apparel manufacturer, we wrote some internal intellectual capital for Kearney, showing future teams how to navigate similar situations. Throughout our research, we came across various articles and studies that elaborate on coherent and incoherent companies, such as:

“Clueless executives, incoherent companies” (https://www.vault.com/blogs/consult-this-consulting-careers-news-and-views/clueless-executives-incoherent-companies)

“Gain sustainable advantage using a capabilities-driven strategy” (https://www.strategyand.pwc.com/gx/en/unique-solutions/capabilities-driven-strategy/approach.html)

“Does Your Small Business Have a Coherent Strategy?” (https://www.americanexpress.com/en-us/business/trends-and-insights/articles/does-your-small-business-have-a-coherent-strategy-1/)

Moreover, the article “Seven Ways to Fail Big” (Carroll and Mui, Harvard Business Review, Sept ‘08) mentions that “In most instances, the avoidable fiascoes resulted from flawed strategies—not inept execution, which is where most business literature plants the blame.” I believe that the two articles are closely interlinked, in fact, according to the article “The Coherence Premium,” “strategy becomes a matter of aligning that distinctive capabilities system with the right marketplace opportunities.”