Michael Goold & Andrew Campbell
Harvard Business Review September-October 1998
Biases that cause Synergy Initiatives to Fail
Synergy Bias
Synergy Bias exists when managers feel a focus on synergy is important because it seems like “something should happen.” It might not be needed or relevant.
For example, one CEO of a consulting firm pushed a “one firm” initiative and placed a client manager in front of clients, responsible for cross selling across divisions and pushed back the actual implementors contact with the firm. The result was clients who didn’t get to talk to they needed to to get the job done and consequently, lost clients.
Parenting Bias
One example of this is at Worldwide Foods where an executive tried to push a worldwide marketing campaign but was rejected by local managers because it wasn’t appropriate for their company. Always remember that local managers want to succeed and rejecting the national campaign was because it would have resulted in a worse opportunity cost.
Skills Bias
The manager might not have the chops to build synergy. They may lack the fortitude, the experience or latest knowledge. If the executive tries to build synergy but doesn’t have the skills it will fail.
Upside Bias
Executives focused on building synergy tend to focus on the upside of the efforts and overlook the downside.
Size The Price
Use a framework to evaluate the benefits and appropriateness of the objective.
Disaggregate the program into manageable chunks. If your trying to generate a universal brand, don’t assume rolling out the same artwork or ads are the answer. Instead understand the objectives and allow for flexibility in implementation unless there is good reason otherwise.
Disaggregating the problem into the outcomes and then the implementation components allows the manager to understand what really needs corporate policies and what should remain in the hands of the local managers who may know best.
Each component can be evaluated in terms of benefit and if the benefit isn’t large enough it may be necessary to abandon the effort.
Pinpointing the Parenting Opportunity
Parenting opportunities are occasions where it is appropriate for executives to step in. If an opportunity does not exist the executive should not step in.
- Perception Opportunities: When businesses are not aware of synergies that exist, particularly in terms of economy of scales. Important information can be disseminated or targets put in place that can only be achieved if different businesses discover the synergies.
- Evaluation Opportunities: If managers are rejecting synergy initiatives because they have improperly evaluated the cost benefit or if their judgement is skewed by focus on other objectives. Executives may intervene to correct the fallacies.
- Implementation Opportunities: Exist when executives have some skills or tools that managers do not. Parenting may be necessary to bring in the proper skill set.
Motivational Opportunities: Intervention may be necessary if personal differences exist or motivation is lacking. Managers may need a kick in the pants to play nice with each other.
Bringing Downsides to Light
Remember to highlight where objectives might by undermined by by synergy objectives.
“First, Do No Harm”
Fewer initiatives are okay. Pick right ones that are less risky and have a real purpose.
Doing nothing is an okay course of action.
Disclaimer: These are my study notes and are intended for that purpose. All text is cited from title article and direct questions may be un-noted. This is purely a study aid that others might find useful. Please notify me of any inaccuracies. This is not an essay, article, or writing of any scholarly quality – just study notes. Please buy the article from Harvard Press to obtain a copy of the article.
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