Coordination

Strategic coordination, or coherence, is not ad hoc mutual adjustment.

A strategy coordinates action to address a specific challenge.  The idea that coordination, by itself, can be a source of advantage is a very deep principle.  It is often under appreciated because people tend to think of coordination in terms of continuing mutual adjustments among agents.

Strategic coordination, or coherence, is not ad hoc mutual adjustment.  It is coherence imposed on a system by policy and design.  More specifically, design is the engineering of fit among parts, specifying how actions and resources will be combined.

ACTION POINT: Coordinate your actions to accomplish your strategy.

Conflict

Strategic actions that are not coherent are either in conflict with one another or taken in pursuit of unrelated challenges.

Strategic actions that are not coherent are either in conflict with one another or taken in pursuit of unrelated challenges.  Consider Ford Motor Company.  When Jacques Nasser was the CEO of Ford Europe and vice president of Ford product development, he said, "Brand is the key to profits in the automobile industry."  

Moving into the corporate CEO spot in 1999, Nasser quickly acted to acquire Volvo, Jaguar, Land Rover, and Aston Martin. However, at the same time, the company's original guiding policy of "economies of scale" was fully alive and kicking.  A senior Ford executive said in 2000: "You cannot be competitive in the automobile industry unless you produce at least one million units per year on a platform."  Thus, the actions of buying Volvo and Jaguar were conjoined with actions designed to put both brands on a common platform.  Putting Jaguar and Volvo on the same platform dilutes the band equity of both marques and annoys the most passionate customers, dealers, and service shops.  Volvo buyers don't want a "safe Jaguar"; they want a car that is uniquely safe.  And Jaguar buyers want something more distinctive than a "sporty Volvo."  These two sets of concepts and actions were in conflict rather than being coherent.

ACTION POINT: Look for potential conflicts that actions may cause and avoid them.

Coherence

Using such a cost advantage to good effect will require the alignment of many actions and policies.

The actions within the kernel of strategy should be coherent.  That is, the resource deployments, policies, and maneuvers that are undertaken should be consistent and coordinated.  The coordination of action provides the most basic source of leverage of advantage available in strategy.

In a fight, the simplest strategy is a feint to the left and then punch from the right, a coordination of movement in time and space.  The simplest business strategy is to use knowledge gleaned by sales and marketing specialists to affect capacity expansion or product design decisions--coordination across functions and knowledge bases.  

Even when an organization has an apparently simple and basic source of advantage, such as being a low-cost producer, a close examination will always reveal a raft of interrelated mutually supporting policies that, in this case, keep costs low. Furthermore, it will be found that these costs are lower only for a certain type of products delivered under certain conditions.  Using such a cost advantage to good effect will require the alignment of many actions and policies.

ACTION  POINT: Ensure your actions are aligned with your policies.

Coherent Action III

...strategy is primarily about deciding what is truly important and focusing resources and action on that objective

The kernel of strategy -- a diagnosis, a guiding policy, and coherent action -- applies to any complex setting.  In many situations the required actions are not mysterious.  The impediment is often the hope that the the pain that those actions may cause could be avoided.  Indeed, we always hope that a brilliant insight or very clever design will allow us to accomplish several apparently conflicting objectives with a single stroke, and occasionally we are vouchsafed this kind of deliverance.

Nevertheless, strategy is primarily about deciding what is truly important and focusing resources and action on that objective.

ACTION POINT: Strategy is a hard discipline because focusing on one thing slights another.

Coherent Action II

"Without action, the world would still be an idea."

INSEAD, a global business school located in France, was the brainchild of Harvard professor General Georges F. Doriot. The INSEAD library holds a bronze statue of Doriot inscribed with his observation "Without action, the world would still be an idea."

In many situations, the main impediment to action is the forlorn hope that certain painful choices or actions can be avoided--that the whole long list of hoped-for "priorities" can all be achieved.  It is the hard craft of strategy to decide which priority shall take precedence.  Only then can action be taken.  And, interestingly, there is no greater tool for sharpening strategic ideas than the necessity to act.

ACTION POINT: Determine and decide on priorities, then act.