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Management article
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Reference no. 5866
Published by: Harvard Business Publishing
Published in: "Balanced Scorecard Report", 2001

Abstract

This is an enhanced edition of HBR article R00103, originally published in January/February 2000. HBR OnPoint articles save you time by enhancing an original Harvard Business Review article with an overview that draws out the main points and an annotated bibliography that points you to related resources. This enables you to scan, absorb, and share the management insights with others. 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.

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Abstract

This is an enhanced edition of HBR article R00103, originally published in January/February 2000. HBR OnPoint articles save you time by enhancing an original Harvard Business Review article with an overview that draws out the main points and an annotated bibliography that points you to related resources. This enables you to scan, absorb, and share the management insights with others. 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.

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