Strategic Integration

We are what we do. Even the smallest enterprise – such as a family – engages in many activities. Each member of the family plays a different role and brings to the activities different strengths and weaknesses. How these roles and activities are fit together, and how this fit amplifies individual strengths and compensates for individual weaknesses, largely determines the effectiveness of the enterprise. By combining activities in a mutually supportive system the family develops a character and outcome much different than four or five people merely sharing the same house.

Porter writes, “Fit locks out imitators by creating a chain that is as strong as its strongest link… One activity’s cost, for example, is lowered because of the way other activities are performed. Similarly, one activity’s value to customers can be enhanced by a company’s other activities. That is the way strategic fit creates comparative advantage and superior profitability.”

Porter uses Ikea, one of my favorite retail organizations, to exemplify the self-conscious cultivation of strategic fit. Ikea has made a choice to define itself as providing a wide variety of home products at affordable prices. While the inventory of each store is both broad and deep, the style is consistently modern, and – well – Swedish. While Ikea has opened stores in many cultures across the globe, it remains true to its origins. It celebrates its outsider status by using obscure Swedish product names (e.g. Enklav and Orgel) and featuring Swedish cuisine in its in-store restaurants. Ikea is very effective in signaling differentiation.

To offer a wide variety Ikea maintains long-term relationships with carefully selected suppliers, invests in huge suburban stores, and ensures that most items are available to take home immediately. To reduce costs Ikea minimizes sales staff, does not provide delivery, and prominently features modular, self-assembled furniture. Ikea is inclined to say yes to most opportunities to increase variety. Ikea is inclined to say no to most opportunities that would increase costs. But even in leading with variety, Ikea is ready to say no to products that are not consistent with its personality – with the true self that gives Ikea such a differentiated position in the home products market. Ikea consciously limits itself to its true self.

Because Ikea consistently focuses on affordability, it has embraced self-assembled furniture. Self-assembled furniture supports further cost containment by eliminating the need for store delivery. Because of the modular nature of self-assembled furniture, greater variety can be inexpensively manufactured and made available. Because there is a greater variety available customers are more confident they will find what they want at Ikea. As a result, customers arrive at Ikea not just looking, but predisposed to buy. When they arrive childcare and the in-house restaurant remove potential distractions to making a purchase decision. The inter-relationships between the activities go on and on. Ikea is consistent, its activities are reinforcing, and this results in an optimized effort across the entire chain of activities.

Each choice and each activity is amplified across the linkages. Instead of a set of separate functions, the enterprise can behave as a strategic system.

Moses offers a framework for living that integrates belief and behavior. The framework focuses on the fundamentals of human life: eating, relationships, and work. Each behavior is linked to the belief that our core identity is found in a relationship with God. The linked behaviors are designed to reinforce the discovery – and recovery – of this identity. Moses assumes that if the linkages are broken or made more complicated the whole community will suffer.

Moses warns, “Everything that I command you shall be careful to do; you shall not add to it or take from it.” (Deuteronomy 12:32) “You must not distort justice… Righteousness only righteousness you shall pursue.” (Deuteronomy 16: 18-20)

The framework has served its purpose for over 3000 years. As Moses anticipated, the linkages were sometimes lost, but in time reclaimed. The framework has provided a sustained strategic advantage. Most of those in competition with the descendents of Jacob have disappeared. The community formed in the Exodus persists. Certainly it has struggled, often it has suffered greatly, but the community has also survived and thrived.