Coevolving - At last, a way to make synergies work

The promise of synergy is the prime rationale for the existence of the mult i-business corporation. Yet for most corporations, the 1 + 1 = 3 arithmetic of cross-business synergies doesn't add up. Companies that do achieve synergistic success use a corporate strategic pro cess called coevolving; they routinely change the web of collaborative link s among businesses to exploit fresh opportunities for synergies and drop de teriorating 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 surv ive: They should assume that links among businesses are temporary and that the number of connections - not just their content - matters. Rather than p lan collaborative strategy from the top, as traditional companies do, corpo rate executives In coevolving companies should simply set the context and t hen let collaboration (and competition) emerge from business units. Incentives, too, are different than they are in traditional companies. Coev olving companies reward business units for individual performance, not for collaboration. So collaboration occurs only when two business-unit managers both believe that a link makes sense for their respective businesses, not because collaboration per se is useful. Managers in coevolving companies al so need to recognize the importance of business systems that support the pr ocess: frequent data-focused meetings among business-unit leaders, external metrics to gauge Individual business performance, and incentives that favo r self-interest.