Coevolving: At Last, a Way to Make Synergies Work

The promise of synergy is the prime rationale for the existence of the multibusiness corporation. Yet for most corporations, the "1-plus-1-equals-3" arithmetic of cross-business synergies doesn't add up. Companies that do achieve synergistic success use a corporate strategic process called coevolving; they routinely change the web of collaborative links among businesses to exploit fresh opportunities for synergies and drop deteriorating ones. The term coevolution originated in biology. It refers to the way two or more ecologically interdependent species become intertwined over time. As these species adapt to their environment, they also adapt to one another. Today's multibusiness companies need to take their cue from biology to survive: They should assume that links among businesses are temporary and that the number of connections--not just their content--matters. Rather than plan collaborative strategy from the top, as traditional companies do, corporate executives in coevolving companies should simply set the context and then let collaboration (and competition) emerge from business units. Incentives, too, are different than they are in traditional companies. Coevolving companies reward business units for individual performance, not for collaboration. So collaboration occurs only when two business-unit managers both believe that a link makes sense for their respective businesses, not because collaboration per se is useful. Managers in coevolving companies also need to recognize the importance of business systems that support the process: frequent data-focused meetings among business-unit leaders, external metrics to gauge individual business performance, and incentives that favor self-interest.

• Organizational restructuring
• Corporate strategy
• Entrepreneurial management
• Strategy execution