Unilever tends to acquire and integrate.  Rolls-Royce perfers joint ventures.  Many airlines have opted for a Star Alliance partnership.  Agility is about making the most of two or more organisations' resources and capabilities, without destroying what you already have.  Adapting to market conditions and getting one step ahead of the competition means providing your service more efficiently and/or offering a new service.  Your goals may be achieved organically from within, but this route can sometimes take too long, cost too much, or be too risky.  Being agile then is about finding another route that could get you there sooner, more cheaply, and with less risk.

In the private sector, an increasing number of firms are opting for the acquisition of innovative businesses to help them adapt to the marketplace.  However, many then subsequently fall into the well-worn trap of assimilating them into their main business and in doing so, kill off the value they originally sought to acquire.  Others choose the joint venture route, with the anticipated benefit of bringing together compatible capabilites.  This though can be hampered by not accounting for potentially conflicting motives of the parent companies, such as when one business seeks short-term profit generation, while the other seeks longer-term technology development.

In the public sector, light collaboration between public bodies has been the norm until a change in political sentiment occures, when mergers are then forced upon them.  In the last few years, mergers in England and Wales have included bodies such as the Food Standards Agency with the Meat Hygiene Service, and The Crown Prosecution Service with the Revenue & Customs Prosecutions Office.  Meanwhile, since 2008, Scotland's public sector has been delivering on their Simplification Agenda, where they have taken the merger route to reduce the number of public bodies by 25% by 2011.

Agile Options
So how do successful businesses get it right? As diagram 1 below illustrates, there is a continuum of options abailable from acquisition and absorption, through to operating a loose network of consenting businesses.  Along this continuum, as you move from full integration to a loose network, a trade-off is made between increasing the incentive to take risks versus reducing your ability to settle conflicts and coordinate activities.  So, if cost cutting or realising efficiencies is your aim, then push to the right and go for full integration.  However, remember that your ability to then provide diferentiation in the marketplace could start to diminish. 

Let's look at each of these alternatives in turn.

• The integrated organisation is typified by businesses like Unilever and Vodafone, where a balance has been struck between providing core global or regional functions, and delivering local country-focused products and services.
• The conglomerate with autonomous divisions often feels the pressure from investors to integrate further, but some successfully resist, and for good reason.  ABF is a great example of this, it keeps the focus on profit accountability across its range of businesses, from retailing (Primark) to process manufacturing (such as British Sugar), and fast moving consumer goods (such as Twinings).
• In the private sector the joint venture approach is more appropriate for some industries.  Rolls-Royce and its airline customers use this model extensively.  But how one manages this business model differs significantly from managing the fully integrated business model.  See Managing Joint Ventures by Mark Goodrige.
• Alliances are typified by the airline Star Alliance with its 26 member alines, benefiting from the sharing of customers and capacity that avoids the more intensive approach of merging the businesses, whilst reaping some of the rewards.
• Networks opoerate successfully when a sharing of capability and knowledge helps the independent business in their own markets.  A good example of this is ER Consultants' affiliation with ACE (Allied Consultants Europe), which is a strategic partnership of nine European consulting firms in Czech Republic, Denmark, France, Germany, Italy, Sweden, Netherlands, Switzerland, and the UK.

Building strong foundations
So how do you improve your chances of making the right choice, and then successfully implementing that choice?  It is about being clear of your vision and building a business case that quantifies the benefit versus the risk, before identifying the best business model to achieve your goal.  The right option will also depend on how much control you have to invest, how much risk you intend on taking, and the degree of strategic alignment between you and the other organisation(s).  In order to achieve immproved organisational agility, ER Consultants recommends building a strong foundation, by implementing the following four building blocks of success.

Where?  Clarity of vision
The vision is about building from your existing core competencies and identifying what a future successful business in your marketplace will be able to offer, and at what price.  It is about setting aspirational goals that your staff and your investors can ultimately with and get enthused by.  And as this might be signalling a change in strategic direction for the organsiation, this vision needs to be built and owned collectively by the top team who will be leading the change.

What? - building a robust business case
From the vision, you need to build the business case that supports the vision the the extra value gained is worth the risk in striving for it.  The value that could be realised might depend on which business model you adopt.  A partnership route, for example, may provide less revenue gain than an acquisition, and be harder to enforce and maintain, but can be delivered with less cost and risk.

How? - Building the optimal business model
Based on the business case recommendations, you now need to build the architechure of the preferred business model, which articulates where the power and resources lie, and where revenue and costs get reported.

Who? - Defining roles, decision-making and leadership style
Now you can get into the detail of structure, roles, how decisions are made, and what leadership style will best suit that business model, and optimise on the chances of realising the business case.

ER Consultants has helped many organisations come together across the full range of business model options.  We have supported the full integration of mergers and acquisitions, built matrixed resource-sharing organisations, strengthened business partnerships and improved joint ventures.  In our experience, whichever route you choose to take, creating a strong foundation through working on the above four building blocks will help improve organisational agility.

Successful Collaborator
ER Consultants works across the public and private sectors, in designing and improving post-M&A integrations, joint ventures, and business partnerships.  We can advise and support top teams to think through and deliver on challenges from designing the business to managing the implementation of change, and maintaining the commitment and motivation of your workforce.

 For more information email gary.ashton@erconsultants.co.uk