A couple of weeks ago I left a comment on a post by Andrew Mitchell, co-founder of Ophir Asset Management. I mentioned a concept that has been ‘living rent free in my head’ for years.
The Coherence Premium.
His response was generous, and the part I keep coming back to was this: that Ophir assesses management teams partly on whether they’re “coherent” — whether they stay true to their vision and comparative advantage…or drift from it.
Not that it’s the only lens - Andrew runs a sophisticated fund; there are many. But the fact that coherence shows up at all as a scoring metric and that a conversation with a management team about strategic focus can influence an investment ‘appraisal’… tells you something important.
Those who ‘beat the market’ are paying attention to something…most organisations aren’t actively managing.
And in the middle of an AI cycle where the pressure to “do something” is relentless, that gap deserves a closer look.
What the Coherence Premium actually is
The concept comes from strategy consultants Paul Leinwand and Cesare Mainardi, writing in Harvard Business Review.
Most are tempted companies compete broadly. To diversify when threatened, acquire when optimistic, respond to every competitive signal. They’re actively developing capability across many things, in order to become genuinely ‘world-class’ at very few.
Coherent companies do the opposite. They identify 3–6 interlocking capabilities, build those to a genuinely best-in-class standard, and align everything to them. Every investment, every hire, every strategic decision runs through the same filter: does this deepen what we’re actually best at?
The market rewards this with measurably superior returns. That’s the premium*.
Macquarie Group is a clear Australian example. The world’s largest infrastructure asset manager didn’t get there by chasing every opportunity in financial services.
The counterexample — and one I know with some personal familiarity — is Elders.
At various points in its modern history, Elders’ portfolio spanned automotive components, managed investments, forestry, brewing (Foster’s), and telecommunications. The drift from its core agricultural expertise nearly destroyed a company that had operated for over 180 years.
The recovery, built on the Eight Point Plan and a deliberate return to pure-play agribusiness, is well documented and stands as one of the best modern examples of coherence restoration in Australian corporate history.
*Not all Coherence is equal
A note of intellectual honesty here: the specific Coherence Premium measurement is proprietary consulting work. A 2025 Boston Consulting Group study of the Global 1200 confirmed that focused companies consistently outperform diversified ones.
But the academic literature adds the more interesting nuance. The relationship between focus and return isn’t linear — and it’s not really about simplicity per se.
It’s capability-aligned focus. A conglomerate with a coherent management system can (and likely will) outperform a narrowly focused company without one.
In other words, the wisdom is ancient: “Know Thyself”
Know Thyself (…I wonder if there’s an AI for that?)
Right now, organisations everywhere are under enormous pressure to demonstrate AI momentum. Tools are being adopted, pilots are being launched, committees are being formed.
I called this Innovation Theatre in an earlier piece on why ‘the Magic Number’ kills genuine innovation. The appearance of transformation, without the substance.
In my last article, I referenced ActivTrak’s analysis of 164,000 workers — AI adoption is intensifying fast but the Planning Fallacy means leaders consistently underestimate how long transformation actually takes.
Most AI tools are horizontal. They make individuals faster across a wide range of tasks. That’s genuinely useful. But it’s not strategic. It’s not coherent.
The coherence question reframes the whole conversation.
Instead of “how do we make sure our people are using AI?” the question becomes: which 2–3 things do we do better than our known competitors? And what does AI look like in service of those things?
That’s a harder conversation. It requires an honest answer to what your comparative advantage actually is. And not what your strategy slide says, but what your customers, investors, and people would say if asked independently.
And in my experience, that answer is almost always buried under layers of accumulated habit, legacy structure, and well-meaning but incoherent investment.
Here’s the ONE question I’d implore you to ask:
Can your leadership team name your 3–6 distinctive capabilities without looking at a slide?
Then: does your AI investment map to those — or does it map to a desire to look like you’re keeping up?
Because here’s what I’ve noticed, sitting across the table from executive teams navigating this: the organisations getting the most from AI aren’t the ones with the biggest budgets or the most pilots. They’re the ones who can answer the coherence question clearly.
When AI initiatives are coherent — when they visibly connect to what the organisation is actually best at — they build momentum naturally. People lean in, because the investment makes sense.
When they’re not, The people who carry institutional knowledge, who make the capability system actually work, the quiet influencers disengage first.
Culture absorbs and reacts to confusion WAY before your Board sees it.
What this means in practice
The practical version of all this is simpler than it sounds, but harder than most organisations are willing to do.
Run every significant AI investment through a coherence filter. Does this deepen one of our genuine differentiating capabilities? If not, it’s a utility play — treat it accordingly.
To be clear, broad efficiency isn’t bad. It’s a noble pursuit…but it won’t earn you a premium.
Have the honest capabilities conversation before the aspirational AI strategy conversation. The one where you name what you’re actually best at, not what you wish you were best at.
And treat coherence drift as a change risk, not just a strategy risk. The moment your AI programme starts to feel like everything-for-everyone, you don’t just have a strategy problem. You have a change problem.
The strategic and the human are not separate conversations. Holding that conversation together from the Boardroom to the customer, is where the real work lives.
The Coherence Premium concept originates with Paul Leinwand and Cesare Mainardi — their HBR article from 2010 is still one of the most practically useful pieces of strategy writing I’ve read. Thanks to Andrew Mitchell at Ophir Asset Management for the exchange that brought it back to the surface. And for being a good bloke to have a beer with and ‘talk shop’ at the cricket - now THAT is a world class capability!