Strategy and your stronger hand
Strategy and your stronger hand
Moore G.A. Harvard Business Review, December 2005, Vol. 83 No. 12, Start Page: 62, No. of pages: 10
Purpose – To suggest reasons why so many mergers and acquisitions fail to deliver business benefits. Design/methodology/approach – Argues that the most effective strategic moves are those that supplement rather than complement the organization’s existing business model. Distinguish between two distinct business models, one based on volume operations and large numbers of customers, the other on complex systems and a select customer base. Reviews the differences between the alternative business models at each stage of the value chain: research, design sourcing, manufacturing, marketing, selling and the provision of services. Findings – Observes that these two business models approach value creation very differently. Finds that they each have a very different end-to-end value chain and suggests that trying to “mix and match” between the two is “asking for trouble”. Uses the metaphor of being left- or right-handed, noting that ambidexterity is rare. Points out that if acquiring and acquired organizations are “opposite-handed”,the junior partner is likely to be obliged to compete using their weaker hand,adopting the acquiring company’s approaches and therefore finding it more difficult to create value. Notes that the two business models lead to very different assumptions about organizational design and attitudes towards overheads and tend to appeal to different types of people. Comments on the problems that arise when solutions offered by a complex-systems business turn into commodities and the challenges of operating effectively where a mixture of business models is unavoidable. Practical implications – Recommends that organizations recognize the nature of their business model and align their behaviors accordingly. Originality/value – A review of the implications of deep-seated organizational inclinations towards either complex systems or volume operations.ISSN: 0017-8012Reference: 35AB136
Keywords: Corporate strategy, Mergers and acquisitions, Organizational behaviour, Value chain
