In 1997 British Airways spent tens of millions of pounds repainting its tailfins with world art. The designs were attractive and the execution was competent. But the rebrand was a disaster. The problem was that no one had thought about what British Airways should be before deciding what it should look like. Margaret Thatcher famously draped a handkerchief over a model tailfin at a trade show. The planes were eventually repainted.
The usual postmortem calls this a branding mistake. In a new paper forthcoming in Strategic Management Review, Eric Mota and I describe the problem as something more specific and more general: a sequencing failure. The visual identity choice was made before the choice it was supposed to express. No amount of design talent fixes that, because the later choice had nothing to reinforce.
The problem with “alignment”
Strategy research has explored this issue for fifty years under various labels: strategic fit, alignment, consistency, congruence, integration, coherence. These constructs share a common feature that limits their usefulness: they describe a state that organizations exhibit or don’t. We can recognize coherence when we see it, usually in a firm that is already performing well. It’s less clear how managers can know in advance if a given set of strategic choices work well together.
Moreover, most of these constructs are non-hierarchical. They tell you that choices shouldn’t contradict each other, which is surely true, but not very helpful. Managers need to know which choice comes first, which choice should take precedence when two of them conflict, or what to do when a currently attractive option might counteract something the firm committed to a few years ago.
We did an interpretive synthesis across strategic management, marketing, product development, and resource allocation—literatures that have been working on pieces of this problem in parallel without much contact—and asked a narrower question: which choices actually establish coherence, and in what order?
Seven choices, one anchor
Our answer is a set of seven elements: positioning, customer identity, corporate visual identity, stakeholder messaging, salient features, feature exclusion, and strategic expenditure. These elements operate on different levels. Positioning is the anchor—it defines the territory the firm intends to occupy and, crucially, what it will not do. Customer identity follows, because identity claims have to be credible given the firm’s position (e.g., you can’t characterize customers into connoisseurs while positioning as a mass-market, accessible provider). Communication follows both, because a firm can’t consistently express what it hasn’t defined. Product development follows communication, because features and exclusions supply the evidence for the claim. Resource allocation comes last and enforces the whole package.
The last one deserves emphasis, and connects the argument to my previous work on capital and judgment. Bower showed decades ago that funding patterns reveal a firm’s real strategy regardless of what the strategy document says. The reason, in the language Nicolai Foss and I have used, is that strategy isn’t “real” until someone with authority over assets makes an irreversible commitment of those assets to a particular combination. Ghemawat’s emphasis on strategic commitment and Lachmann’s point about capital complementarity are getting at the same point: heterogeneous assets have value only in specific combinations, and choosing a combination forecloses others. Southwest’s single aircraft type isn’t a cost decision that happens to fit the strategy, it is the strategy.
Reinforcement and its discontents
Coherence, on our account, isn’t the absence of contradiction, but the presence of recursive reinforcement—later choices actively strengthening the anchor rather than simply tolerating it. We identify four pathways for coherence: proof (features demonstrate the claim), amplification (repetition raises salience), constraint escalation (commitments raise the cost of reversal), and credibility locking (accumulated choices make opportunistic repositioning implausible). Nike’s athlete endorsements, product-technology spending, and messaging all circle back to make the same “winner’s attitude” position more credible (and, importantly, harder to imitate—an isolating mechanism, in the language of Lippman and Rumelt).
A point we don’t address in the paper, but future research may consider, is whether recursive reinforcement can create core rigidities that make it difficult to innovate and adapt. Actions that lock in a valuable position can make it harder to see when that position has stopped being valuable (Christensen’s “resource allocation trap”). We say in the paper that discipline is not rigidity, but it may be difficult to tell these apart ex ante. (Put differently, the ability to tell them apart can be understood as a type of superior entrepreneurial judgment.)
What our framework doesn’t claim
A couple of caveats to our argument. First, we’re trying to explain coherence (how a firm’s internal choices reinforce each other), not fit (whether the resulting strategy matches its environment). A beautifully coherent buggy-whip manufacturer is still a buggy-whip manufacturer. These are different problems which the literature sometimes confuses. Second, our framework is conceptual and we don’t suggest specific techniques for identifying and measuring the seven attributes (e.g., how to code separately for positioning-identity fit, positioning-feature fit, and positioning-resource fit and then asking whether particular profiles predict performance). Post-merger integration may offer opportunities for natural experiments in which positioning gets reset and we can see how long it takes for recursive reinforcement to reappear.
In short, firms don’t usually fail because one decision was wrong, but because a bunch of individually defensible decisions were made in parallel, by different people, under different pressures, before anyone settled what the firm was committed to being. The fix is not coordination per se (though that is clearly important!), but being willing to make the anchoring commitment first, and making other choices to match. We hope our framework helps advance thinking about this kind of coordination.
Originally published at Judgment Calls.
Image credit: CC BY-SA 2.0, Aero Icarus from Zürich, Switzerland, via Wikimedia.
