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Does your company have a coherent strategy?

Guest post by: David Carter

Article Overview: "Coherence" is important, Booz & Company found. A simple, but not surprising conclusion of this study finds that companies with greater "coherence" -- that is, with strategy, capabilities and product offerings in sync -- performed better overall, whatever their industry.

Does your company have a coherent strategy?

Is your business struggling to set a clear growth strategy and prioritize all the things you need to do to execute that strategy? If you answer yes to this question, you're not alone. In a recent survey by Booz & Company, the majority of nearly 2,000 executives surveyed admitted that their companies lack "coherence." They struggle with setting a clear strategy, ensuring that day-to-day decisions are in line with their strategy and allocating resources in a way that supports their strategy.

"Coherence" is important, Booz & Company found. A simple, but not surprising conclusion of this study finds that companies with greater "coherence" -- that is, with strategy, capabilities and product offerings in sync -- performed better overall, whatever their industry.

Deciding on priorities is a difficult task for many companies. They become "drunk with possibilities." And, once determined, actually linking priorities to decisions is a hurdle that few companies get past.

Such incoherent operating environments can be found across industries and geographies, among all types of companies. What is the result? Employees are not aligned, focused nor as effective as they could be.

- Nearly half of executives (49 percent) admitted their company doesn't have a list of strategic priorities.
- While most executives say their company has a clearly stated set of capabilities, only one-third of executives say those capabilities support the company's strategy and the way it creates value.
- Sixty-four percent say their company has too many conflicting priorities.

"Too many companies grab too hastily for what seems like the next answer to growth. They don't have a solid framework to decide which set of opportunities will lead to sustainable success. They end up stretched thin, trying to play in too many disparate markets."

Does this sound familiar? It's all too easy for any size business to fall into this trap. Look at how companies surveyed choose their strategies:


- Most executives (57 percent) say their company creates strategy by either "pursuing a broad portfolio of strategic options and spreading the risks" or by "choosing an attractive market and figuring out how to be successful in it."
- Fewer than half (43 percent) say their company's strategy starts from the inside -- looking at what the company excels at and finding markets that capitalize on those capabilities.

Coherent companies follow a clear path to success. They define the fundamental identity of their company by:


1. developing a clear idea of what it does best (Core Competencies)
2. and how it creates value (Brand Promise)
3. and focuses investment on the capabilities that matter (Priorities)


Growth then follows as a consequence of the strategy, rather than as a set of separate initiatives. The survey showed that coherence has its rewards:

- Executives whose companies have very few (one to three) strategic priorities are the most likely to say their companies have above-average profitability and revenue growth (compared to those having more strategic priorities or no priority list at all).
- Executives who say their company's capabilities support its strategy are most likely to have above-average profitability and revenue growth.


Selecting a strategy that builds on your strength and remaining focused on that strategy instead of chasing after new opportunities is difficult for a business at the best of times -- but especially so in today's economy. However, this survey reinforces how important strategy is to your business's long-term success.

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Article Tags: capabilities, coherence, product offerings, strategy



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