RESULT OBTAINED
Canonical method
Portfolio synergies: testing the value of the common owner
What must be established
A useful analysis keeps its controls visible.
- 01
Describe the precise mechanism of the synergy and the activities concerned.
- 02
Separate gross value, coordination cost, prior investment and realisation lead time.
- 03
Compare the current owner with autonomy, divestment or an external partnership.
Decision reference
Make the next choice more explicit.
DECISION SUPPORTED
Does grouping activities create demonstrable value greater than their coordination costs?
DELIVERABLE TO KEEP
A register of proven, conditional or abandoned synergies, linked to the portfolio choices.
NEXT ELEMENT TO EXAMINE
BCG matrixExplore →Name the mechanism
A synergy describes a shared resource, a transferred capability, a cross-sale or a risk reduction. The word alone is not evidence.
- Activities concerned
- Shared resource
- Beneficiary
- Horizon
Count the cost of the link
Coordination, integration, internal decision-making and loss of autonomy can absorb the gross value. These costs must be tracked with the same rigour as the gains.
- Integration
- Coordination
- Complexity
- Dependency
Test the best owner
The final question is comparative. Does the activity create more value in this portfolio, on its own, divested or linked through a partnership?
- Current owner
- Autonomy
- Alternative acquirer
- Partnership
DECISION ASSET
Register of the value of the common owner
Each announced synergy is described by its mechanism, its costs, its evidence and its ownership alternatives.
Mechanism
- Input
- Revenue, cost, capability, risk
- Control
- Who creates what for whom?
- Output
- Gross value
Investment
- Input
- Integration and lead time
- Control
- What must be committed before the gain?
- Output
- Initial cost
Coordination
- Input
- Complexity and dependency
- Control
- Which recurring cost?
- Output
- Net value
Alternative
- Input
- Autonomy, divestment, partnership
- Control
- Who would be the better owner?
- Output
- Portfolio choice
- Strategy for a multi-business group, Presses des Mines (opens in a new tab)Full text on portfolio balance, best owner and synergies.
- Strategy Explained, Harvard Business School (opens in a new tab)Distinction between business strategy and value creation at portfolio level.
MOVE FROM ANALYSIS TO YOUR DECISION
Produce a testable decision mandate
MOVE FROM ANALYSIS TO YOUR DECISION
Produce a testable decision mandate
RETURN TO THE DECISION SYSTEM
See the canonical definition of marketing strategy→