Internal consistency: The benefits of consistency between your resources

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What is internal consistency?

Internal consistency within a firm refers to decisions made being consistent with one another. The underlying resources and capabilities of the firm, as well as the activities that the firm undertakes, are all aligned with one another – supporting the same overall strategy. Essentially the different parts of the firm are all pulling in the same direction, with consistent decisions reinforcing one another. 

Example: Mass customization

Mass customization is an approach that allows individual customizations of products – potentially each individual product is unique to each customer. Achieving the ability to offer full customization without the prices associated with bespoke commissioned products, requires an integrated set of choices throughout the firm. These may include:

  • Online order: An online ordering system that allows the specific dimensions that a user can customize the product to be specified, while potentially also including a visual display of the customized good to ensure customers are happy with their customizations. 
  • Technology: Investments in IT to support the integration of the ordering system with manufacturing.
  • Manufacturing: Automated manufacturing to allow the customizations to be made without confusion often associated with one-off orders. 
  • Outbound logistics: Ways of packaging and shipping individual orders without confusing different customers’ customized products. 

As illustrated with this example, to successfully implement the firm’s approach, multiple different decisions must be integrated with one another. It is not sufficient to just make investments in say manufacturing or online ordering, all parts need to work in harmony. This is the idea of internal consistency – consistent decision-making across areas of the firm, with decisions made in one area reinforcing one another. 

The role of strategy at achieving internal consistency

A firm’s strategy plays a key role in enabling internal consistency. The strategy of the firm sets the overall direction of the firm – helping to ensure that lower decisions are made that reinforce one another. The strategy thus helps ensure that different decision-makers are making aligned decisions, rather than decisions that may appear beneficial to solely their activity, but undermine the overall way that the firm is attempting to compete. 

Benefit 1: Decisions reinforce one another, and everything works better together

Benefit 1: Decisions reinforce one another, and everything works better together

The first way that firms benefit from internal consistency is that the decisions reinforce one another. The alignment means that things simply work better in harmony. You get a greater advantage from one area because of aligned decisions made elsewhere. 

Benefit 2: May allow the firm to provide a completely different offering

As illustrated with the mass-customization example above, the internal consistency in decisions may allow you to offer a completely different offering from other firms – providing unique benefits to customers that other firms are not able to provide.  

Benefit 3: Can make imitation more difficult

A final advantage that comes from consistency between all resources within the firm is that it can make the organization more difficult to imitate by others with a different configuration. Integrated decisions – that only work well when they are all simultaneously implemented – can act as a barrier to imitation. Other firms can only gain the benefits associated with the configuration of the operation if all components are imitated, and imitating an entire firm is essentially impossible.

If we take the example of mass customization again – it is not possible for a firm to offer mass customization simply by changing their online ordering system. Rather, it would take a complete reconfiguring of the activities – something very difficult for a firm already operating in the industry to achieve. 

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