Model 8:
11C Synergy Model

1 February 2020
How can I organize synergies across business units in my company?

Key Definitions

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.

Conceptual Model

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.

Key Elements

The 11C Synergy Model is a 3X2 matrix with the following axes:

  1. Synergy mechanism. This axis distinguishes three different methods by which business units can work together. It is an answer to the question ‘how is added value created?’:
    1. Concentration. When resources and/or activities are brought together into a single organizational entity (one unit), they are concentrated.
    2. Coordination. When resources and/or activities split between business units are continuously orchestrated (on-going alignment), they are coordinated.
    3. Coalition. When resources and/or activities split between business units are aligned on a project basis (temporary team), a coalition is formed.
  2. Synergy driver. This axis distinguishes who has the power to get the business units to work together. It is an answer to the question ‘who owns added value creation?’:
    1. This is when working together is initiated at the corporate center and enforced on the basis of formal hierarchy (top-down) .
    2. This is when working together is initiated by the business units and achieved by mutual consent (horizontal).

Put together, these two axes create the six different ways of organizing synergies:

  1. Centralization. Activities can be taken away from the business units and folded into one unit reporting to the corporate center (e.g. corporate sales team),
  2. Combination. Business units can voluntarily bring activities together into one unit, which reports to them jointly (e.g. joint sales team).
  3. Connector. A corporate manager can be given the formal power to enforce ongoing alignment between business units (e.g. corporate key account manager).
  4. Community. Business units can voluntarily share information and align their activities by building cooperative networks (e.g. key account communities).
  5. Catalyst. A corporate manager can be given the formal power to drive a multi-business-unit project (e.g. corporate sales project).
  6. Cross-Unit Project. Business units can voluntarily band together in a temporary team to achieve a joint project (e.g. joint sales project).

Key Insights

  • Synergy doesn’t equal centralization. Too often the corporate balancing act between synergy and responsiveness is framed as a centralization-decentralization issue, whereby centralization is seen as the only way to achieve synergy. This is too simplistic.
  • Synergy doesn’t equal top-down. Too often synergy is seen as the responsibility of the corporate center, while the business units need to guard their autonomy. But half of the ways of creating synergy depends on the business units taking ownership of synergy initiatives.
  • Six ways to organize synergies. There are six different ways to organize synergies, each with their own advantages and disadvantages. Centralization is the most far-reaching of the six, having the highest negative impact on business unit responsiveness. The options lower down and to the right undermine responsiveness much less. Therefore, all five other options need to be considered before resorting to the heaviest medicine.
  • Organizing doesn’t equal structuring. Only centralization and connectors will typically show up on an org chart, which is probably why people think of them first. The other four options are less ‘structural’ ways of organizing synergies and therefore won’t come up if only org charts are used for thinking about corporate organization.
  • Using 11C Synergy Model as map. The 11C model can be used to map how synergies are currently organized and how they could be organized differently in future. As thinking frame, this avoids the danger of the central-decentral pitfall inherent in using an org chart.
Subscribe to our monthly Management Model

Do you want to be notified of our monthly Management Model? Please fill in your email address here.

Publication Schedule

November 2024
Self-Centered Thinking Traps

October 2024
Corporate Synergy Typology

September 2024
Guiding STAR Matrix

August 2024
Hunting & Farming Typology

July 2024
Wicked Problem Scorecard

June 2024
Time Management Funnel

May 2024
Digitalization Staircase

April 2024
Leadership Circle Map

March 2024
MOVING Mission Framework

February 2024
BOLD Vision Framework

January 2024
Duty of Care Feedback Model

December 2023
Best Practice Sharing Modes

November 2023
Stakeholder Stance Map

October 2023
Status Snakes & Ladders

September 2023
Customer-Centricity Circle

August 2023
Activity System Dial

July 2023
New Pyramid Principle

June 2023  
Cultural Fabric Model

May 2023       
Corporate Strategy Framework

April 2023  
Ambition Radar Screen

March 2023
Resistance to Change Typology

February 2023   
5I Innovation Pipeline

January 2023     
Thinking Directions Framework

December 2022      
Corporate Management Styles

November 2022     
Strategic Action Model 

October 2022
Psychological Safety Compass

September 2022
The Tree of Power    

August 2022
Value Proposition Dial

July 2022
Sustainable You Model

June 2022
Change Manager’s Toolbox

May 2022
Corporate Value Creation Model

April 2022
Organizational System Map

March 2022
Creativity X-Factor

February 2022
Strategic Alignment Model

January 2022
Market System Map

December 2021
Team Building Cycle

November 2021
Disciplined Dialogue Model

Oktober 2021
Strategy Hourglass

September 2021
Powerhouse Framework

August 2021
Fruits & Nuts Matrix

July 2021
Everest Model of Change

June 2021
Followership Cycle

May 2021
Knowledge Sharing Bridges

April 2021
Innovation Box

March 2021
Empowerment Cycle

February 2021
Digital Distribution Model Dial

January 2021
Digital Product Model Dial

December 2020
4C Leadership Levers

November 2020
Rebound Model of Resilience

October 2020
Strategic Bets Framework

September 2020
Storytelling Scripts

August 2020
7I Roles of the Corporate Center

July 2020
Strategy Development Cycle

June 2020
Rising Star Framework

May 2020
The Control Panel

April 2020
Strategic Agility Model

March 2020
Leadership Fairness Framework

February 2020
11C Synergy Model

January 2020
Competition Tornado

December 2019
Confidence Quotient

November 2019
House of Engagement

October 2019
Revenue Model Framework

September 2019
Interaction Pressure Gauge

August 2019
Digital Platform Map

July 2019
Mind the Gap Model

 

Double-click to edit button text. crossarrow-leftcross-circle