Larger companies are often divided into business units, each with a measure of autonomy to tailor their approach to the competitive dynamics in their specific market. At the same time, these companies will seek to benefit from having two or more business units by pursuing synergies – added value by leveraging their resources (e.g. knowledge, money), activities (e.g. operations, sales) and/or value propositions (e.g. products, brands) across business units.
These corporate synergies need to be organized. This is tricky, as working together to achieve synergies undermines the autonomy business units need to be responsive to the specific demands of their market. This is called the paradox of synergy and responsiveness.
The 11C Synergy Model challenges the broadly held assumption that synergy is achieved by centralization, while responsiveness requires decentralization. Framing the balancing act of synergy and responsiveness as ‘centralization-decentralization’ negates the fact that there are five other ways of organizing synergies besides centralization.
The 11C Synergy Model is a 3X2 matrix with the following axes:
Put together, these two axes create the six different ways of organizing synergies: