Chaos and Coherence in Business - Commoncog

My old company was acquired by Ant Financial a few months ago. I’d known for some time, of course, but only recently caught up with my old boss to celebrate. I told him about the business adventures I’d been on after my Judo experiment. He told me about the journey that led to the acquisition, and what he’d been up to ever since. (He was effectively retired for about a year before the acquisition; it was not like things were very different for him, materially speaking.) But he was — as always — up to interesting business adventures. We took some time to reflect on our journey together.


This is a companion discussion topic for the original entry at https://commoncog.com/chaos-and-coherence-in-business

Coherence is something I’ve been paying attention to for a while as a compass direction for effective organizations (and individuals). I’ve used the word alignment, as in getting everybody’s efforts pointed in the same direction.

In his book The Advantage, Patrick Lencioni calls it organizational health, which he defines as integrity: “when it is whole, consistent, and complete, that is, when its management, operations, strategy, and culture fit together and make sense.” He goes on to lay out a playbook for coherence, which is pretty simple: create clarity, overcommunicate clarity, reinforce clarity.

Creating clarity is about strategy, but strategy in the Rumelt sense, picking one threat or opportunity to focus your efforts on, which means not doing everything else you could be doing. I recently saw a Claire Hughes Johnson quote that “Strategy should hurt”, and I think that’s key - if you’re not making painful tradeoffs, you have a wishlist, not a strategy.

Overcommunicate clarity is obvious: repeat, repeat, repeat, so that everybody in the org makes the same tradeoffs without being told, because that’s how you create coherence.

Reinforce clarity is often missed. If your processes and systems don’t reflect the clarity, it’s a misalignment, a lack of clarity. If your strategy is to create great products through teamwork, but your hiring and promotion systems focus on individual performance, people will see the mismatch and respond to the system incentives, not the stated values.

When everything lines up, it creates disproportionate returns, as everything feeds everything else. 1+1+1 doesn’t equal 3, it equals 10. So I think creating coherence is a leadership superpower (and Claire is one of the people I’ve seen do it). But it’s hard to do when fighting fires and in survival mode - only by stepping back (like Gates’s Think Week) can leaders see the big picture and make the hard tradeoffs.

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Great article! At the risk of sounding like a broken record, I want to suggest that chaos and conscientiousness are two different dimensions, and a person can be high or low in both of them.

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Wait, could you say a bit more about this?

I just mean this stuff. Someone can be high conscientiousness, low chaos. Or low conscientious, high chaos. But also possible to be high conscientiousness and high chaos. And also low in both.

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Ahh yes, 100%.

To be fair, the original Barber Songhurst essay also does point this out. And it’s actually quite easy to see that this is true: Jeff Bezos, for instance, is more chaotic and more conscientious than I am.

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The point about alignment is interesting. When I posted about coherence on Twitter, somebody asked if this was equivalent to alignment. It took me awhile to think about this, but I don’t think it is. You can row in the same direction and still lack coherence in your business.

Coherence in this context refers to an outcome of competitive strategy — the ‘diagnosis, guiding policy, and coherent actions’ that Rumelt talks about. It’s different from alignment because the interlocking actions must:

  1. Make it difficult for competitors to copy while
  2. Making customers more likely to buy your offering versus your competitor’s.

So coherence has got more requirements than alignment alone.

Alignment, on the other hand, strikes me as entirely internal. When you’re running a project or initiative in a company, alignment matters. But alignment is necessary, not sufficient, for good, coherent strategy.

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Ah, I see what you’re saying. Thanks for connecting it to the Rumelt idea of coherent set of actions. Yeah, I think of alignment as getting everybody pointed in the same direction, so their work is reinforcing each other and not canceling each other out (vector math!). And, yes, it’s more internal, which I tend to focus on, as what leaders can change most easily.

But if I understand what you’re saying, coherence as an output implies taking the whole of the market and competitive landscape into account. Even if the organization is aligned, it can fail if it doesn’t have a coherent strategy to differentiate itself from competitors in a sustainable way (e.g. your POS competitors who didn’t have the subsidy). This is why copying the actions of a market leader rarely works unless you bring your own “special sauce”.

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Yes, absolutely! Another way of putting this is that ‘every tradeoff should interlock’ — so that while each tradeoff might hurt (to use your Claire Hughes Johnson quote), the interlocking ensures that the resulting boon far outstrips whatever disadvantage your strategy may incur.