At the conference I was at yesterday Traci Entel, from Booz, presented on 'The Power of the Coherence Premium'. She talked about a revised 'palette' of organizational elements which combined the forma (F) and informal (I) of the organization.
Structure (F) and networks (I)
Decision rights/management information (F) and behaviors (I)
Motivators (F) and identity (I)
Information (F) and beliefs (I)
She told us that organizations must decide what capability they are trying to compete on. Having done this ensuring 'coherence' amongst and between the palette elements in a way that delivers the capability is the route to success.
This is not a new tack for Booz, In one of their articles 2010 Media Industry Perspective the author observes that
Our recent research has demonstrated that companies with greater portfolio coherence (that is, those whose business units have mutually reinforcing capabilities that distinguish the company as a whole) outperform their peers in terms of operating margin. …. We expect smart, strategic buyers to focus primarily on acquiring coherent capabilities, rather than on portfolio diversification or cost synergies.
This is because, as exlained in another (2008) article, How to Win by Changing the Game) Booz authors point out:
A true capabilities driven strategy is the most reliable way for a company to thrive when the of game for its industry are in flux .
Entel gave several examples of organizations that have done this successfully – Starbucks, for example, decided to compete on the 'coffee experience' capability (The 2008 article gives several others).
Their 'palette' is 'coherent' in support of this. Listening to this I was struck by the language of it all – I remembered a book The Power of Alignment: how great companies stay centered and accomplish extraordinary things. which seemed to be saying much the same thing about coherence and capability but thirteen years ago and in a slightly different language. So does 'new' language act to re-energize something? Does it enable a slightly different perspective that would open new opportunities to act? What is the difference between ensuring organizational element 'coherence' and organizational element 'alignment'?
Later that day I was reviewing the work of a class I am teaching in organization theory. The student task this week is to study three different theoretical perspectives of organizations and then discuss the topic of "Each theoretical perspective examines organizations and their perceived relationships to the environment differently. For this discussion, describe these differences. What are some of the enacted features of your organization's environment and the ways these features are displayed or perceived that might be consistent with one of the perspectives?" Again, the language of this struck me. Basically the theory is also asking questions about what makes an organization capable of responding successfully to a competitive environment
One of the learners had picked up on the film/media industry and how the environment in which it operates is forcing companies in that industry to rethink their capabilities and where/how they can stay competitive. Two recent articles in the Economist look at this one reports on the television industry. "Television is adapting better to technological change than any other media business". The other on the film industry (Hollywood) "The sign is still there, but the film crews increasingly aren't". Both articles discuss each industry's response to the changing environment and the capabilities they need to develop to stay competitive and what they need to do to get the organizational coherence or alignment behind this. (And in academic terms which theoretical perspective are they adopting which will foster the alignment/coherence?)
The language of the Booz and Economist articles was strikingly different (maybe because of different audiences), and each is different again from the academic language. I'm still wondering about the language to use in helping organizations compete successfully.
Naomi Stanford 