Sustainable, superior returns accrue to companies that focus on what they do best. It is that simple. Yet it is incredibly hard to ![\"\"](\"https:\/\/flevy.com\/blog\/wp-content\/uploads\/2019\/03\/Business-CApabilities-Coherence-300x189.jpg\")
internalize. It is a rare company that focuses on what we do better than anyone in making every operating decision across every business unit and product line. Rarer still is the company that has aligned its differentiating internal capabilities with the right external market position.<\/p>\n
These companies are called coherent.<\/p>\n
Most companies do not pass the coherence test because they succumb to intense pressure for top-line growth.\u00a0 They chase business in markets where they do not have the capabilities to sustain success. Being coherent allows our companies to establish our differentiated capabilities to achieve greater profitability and market leadership.<\/p>\n
Coherence is achieved when a capabilities system supports a focused strategic purpose, otherwise known as a Capabilities-Driven Strategy (CDS)<\/a>.<\/p>\n Any company in any market must carefully consider its external market positioning and its internal capabilities (i.e. Core Competencies<\/a>).\u00a0However, for the company to maximize its chances of success, it must have in place a “coherent” set of Business Capabilities.<\/p>\n Specifically, Competitive Advantage is achieved when Value Creation<\/a>, Capabilities System, and Product & Service Fit are aligned.\u00a0 This concept is outlined in the Capabilities Coherence Framework<\/a>.<\/p>\n Understanding our Value Creation, Capabilities System, and Product Fit requires our company to go through a simple diagnostic that will determine whether our company is going off the rails.<\/p>\n The consumer health care business of Pfizer is a good example of capabilities coherence.\u00a0 After its back to back acquisitions of Warner-Lambert and Pharmacia in the early 2000s, the pharmaceutical giant owned several leading consumer products: Listerine, Benadryl, Sudafed, Nicorette, and Rogaine.<\/p>\n In 2002, Pfizer set the goal of becoming a leader in global consumer health care. A capabilities lens was applied to the business. Let us look at the market conditions that prompted Pfizer to take on this strategic direction.<\/p>\n Pfizer was faced with a market that was highly fragmented and no player enjoyed more than 5% share globally.\u00a0 Competition was stiff as there were mass retailers enjoying alternatives to brand name drugs.\u00a0 Country by country regulations were tight pulling the overall growth to a very low level.<\/p>\n To gain headway in the market and remain in the lead where competition is stiff, Pfizer realized the need to take the giant step to coherence guided by the 3 Principles of Value Creation, Capabilities System, and Product Fit.\u00a0 When coherence in capabilities was achieved, breakthroughs were reached leading Pfizer to greater profitability.<\/p>\n By 2006, Pfizer was able to grow its Consumer Healthcare to nearly $4 billion in annual sales. The company redeemed the value by selling the business to Johnson & Johnson 20x EBITDA.\u00a0 This is a basic example of coherent companies that gain superior financial performance.\u00a0 Beyond the result is the approach. Pfizer was able to take on the high road to achieving Business Capabilities Coherence<\/a> in the road called Competition.<\/p>\n Interested in gaining more understanding of Business Capabilities Coherence<\/a>? You can learn more and download an editable PowerPoint about Business Capabilities Coherence<\/strong> here<\/a> on the Flevy documents marketplace<\/a>.<\/p>\n You can download in-depth presentations on this and hundreds of similar business frameworks from the FlevyPro Library<\/a>. FlevyPro<\/a> is trusted and utilized by 1000s of management consultants and corporate executives. Here’s what some have to say:<\/p>\n “My FlevyPro subscription provides me with the most popular frameworks and decks in demand in today\u2019s market. They not only augment my existing consulting and coaching offerings and delivery, but also keep me abreast of the latest trends, inspire new products and service offerings for my practice, and educate me in a fraction of the time and money of other solutions. I strongly recommend FlevyPro to any consultant serious about success.”<\/p>\n \u2013 Bill Branson, Founder at Strategic Business Architects<\/p>\n<\/blockquote>\n “As a niche strategic consulting firm, Flevy and FlevyPro frameworks and documents are an on-going reference to help us structure our findings and recommendations to our clients as well as improve their clarity, strength, and visual power. For us, it is an invaluable resource to increase our impact and value.”<\/p>\n \u2013 David Coloma, Consulting Area Manager at Cynertia Consulting<\/p>\n<\/blockquote>\n “As a small business owner, the resource material available from FlevyPro has proven to be invaluable. The ability to search for material on demand based our project events and client requirements was great for me and proved very beneficial to my clients. Importantly, being able to easily edit and tailor the material for specific purposes helped us to make presentations, knowledge sharing, and toolkit development, which formed part of the overall program collateral. While FlevyPro contains resource material that any consultancy, project or delivery firm must have, it is an essential part of a small firm or independent consultant’s toolbox.”<\/p>\n \u2013 Michael Duff, Managing Director at Change Strategy (UK)<\/p>\n<\/blockquote>\n “FlevyPro has been a brilliant resource for me, as an independent growth consultant, to access a vast knowledge bank of presentations to support my work with clients. In terms of RoI, the value I received from the very first presentation I downloaded paid for my subscription many times over! The quality of the decks available allows me to punch way above my weight \u2013 it’s like having the resources of a Big 4 consultancy at your fingertips at a microscopic fraction of the overhead.”<\/p>\n \u2013 Roderick Cameron, Founding Partner at SGFE Ltd<\/p>\n<\/blockquote>\n “Several times a month, I browse FlevyPro for presentations relevant to the job challenge I have (I am a consultant). When the subject requires it, I explore further and buy from the Flevy Marketplace. On all occasions, I read them, analyze them. I take the most relevant and applicable ideas for my work; and, of course, all this translates to my and my clients’ benefits.”<\/p>\n \u2013 Omar Hern\u00e1n Montes Parra, CEO at Quantum SFE<\/p>\n<\/blockquote>\n","protected":false},"excerpt":{"rendered":" Sustainable, superior returns accrue to companies that focus on what they do best. It is that simple. Yet it is incredibly hard to internalize. It is a rare company that focuses on what we do better than anyone in making every operating decision across every business unit and product line. Rarer still is the company… Taking the High Road to Competition: Achieve Business Capabilities Coherence<\/span><\/a><\/p>\n","protected":false},"author":111,"featured_media":4626,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"neve_meta_sidebar":"","neve_meta_container":"","neve_meta_enable_content_width":"","neve_meta_content_width":0,"neve_meta_title_alignment":"","neve_meta_author_avatar":"","neve_post_elements_order":"","neve_meta_disable_header":"","neve_meta_disable_footer":"","neve_meta_disable_title":"","footnotes":""},"categories":[82,81],"tags":[1523,1524,1522,1521,1199],"class_list":["post-4624","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-operations","category-strategy","tag-and-product-service-fit","tag-business-capabilities-coherence","tag-capabilities-system","tag-coherent","tag-value-creation"],"_links":{"self":[{"href":"https:\/\/flevy.com\/blog\/wp-json\/wp\/v2\/posts\/4624","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/flevy.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/flevy.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/flevy.com\/blog\/wp-json\/wp\/v2\/users\/111"}],"replies":[{"embeddable":true,"href":"https:\/\/flevy.com\/blog\/wp-json\/wp\/v2\/comments?post=4624"}],"version-history":[{"count":7,"href":"https:\/\/flevy.com\/blog\/wp-json\/wp\/v2\/posts\/4624\/revisions"}],"predecessor-version":[{"id":8151,"href":"https:\/\/flevy.com\/blog\/wp-json\/wp\/v2\/posts\/4624\/revisions\/8151"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/flevy.com\/blog\/wp-json\/wp\/v2\/media\/4626"}],"wp:attachment":[{"href":"https:\/\/flevy.com\/blog\/wp-json\/wp\/v2\/media?parent=4624"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/flevy.com\/blog\/wp-json\/wp\/v2\/categories?post=4624"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/flevy.com\/blog\/wp-json\/wp\/v2\/tags?post=4624"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}Capabilities Coherence Framework<\/strong><\/h2>\n
![\"\"](\"https:\/\/flevy.com\/blog\/wp-content\/uploads\/2019\/03\/1st-slide-Business-Capabilities-Coherence-1024x768.png\")
<\/p>\n\n
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The Pfizer Case Study: A Showcase of Coherence in Action<\/strong><\/h2>\n
Do You Find Value in This Framework?<\/h2>\n