The most significant factor in any organization’s success lies not in the value of its brand or any asset, but rather, in its ability to put together all the pieces of strategy and execution into a feasible and coherent system.
Business leaders constantly face the challenge of building an essential advantage that is not easily matched by competitors. Unfortunately, not all decisions made by business leaders are fruitful. In fact, when it comes to business strategy planning and execution, the majority of business leaders are often left red-faced because of poor operational execution. These leaders fail to realise and understand why coherence matters.
To be consistently successful and possess a crucial advantage that is not easily replicated by competitors, the organization must focus its efforts on the products and services that bring the desired business success. In addition to streamlining their efforts, business leaders must also continuously and consciously reinvest in the capabilities that distinguish them the most thereby making it very difficult for their competitors to catch up.
Successful companies do not succeed because of what they own, their size or because they are placed in the right industries. They succeed because they are coherent. Their advantage lies in what they do and the ability to fit everything together to create value.
Where incoherence exists, organizations are bound to pursue numerous growth opportunities with considerable investment of time and effort, but without creating much value. Business leaders must learn to start initiatives that fit well with the company’s strategic direction and achieve the desired results.
To unlock the benefits of coherence, senior executives must devote enough time thinking about the organization as a whole. This involves reviewing current business strategies, aligning the outward-facing and inward-facing activities and bringing the organization into focus. Creating value through strategic coherence requires business leaders to:
- Establish how value will be created and captured in a particular market. The approach chosen by senior management must be able to differentiate the company from all other companies and be broad enough to enable flexibility and growth. For example, being an innovator, a low cost-provider or a premium player. The best way to determine the relevant approach to take involves first gaining thorough insights about your markets and in-depth understanding of what your organization uniquely does well, namely, your capabilities.
- Identify the organization’s capabilities. These must be distinctive, difficult to replicate and give the organization an edge over its competitors. Correctly organized, capabilities have the potential to assist your organization consistently outdo rivals. Building a results-producing capabilities system requires an understanding that it’s not just the assets you own or the products and services you sell that are crucial. It’s what you do repeatedly for your customers. Examples of capabilities include the ability to secure shelf space in particular types of stores, to use customer-data mining to develop new products, to manage various stakeholder relationships or to package products and services in an exclusive way.
- Determine the right product and service fit. This involves making sound decisions on product and service offering based on the organization’s capabilities. Business leaders must be able to decide what products and services would be sold and to whom. Products or services that are not supported by the organization’s unique capabilities might require removal via sell off. Determining the right product or service fit also involves scanning the external environment for promising products and services capable of being supported by the organization’s capabilities system.
The better aligned these three elements, the more coherent the company. Without these three working together, it becomes difficult for the organization to build a leading advantage that differentiates itself from other companies.