The Power of Integrated Services in a Multinational Ecosystem
Operating across sectors only creates value if the sectors are genuinely connected. Most conglomerates never manage it.
The diversified group is out of fashion for a good reason: most of them are holding companies pretending to be businesses. The ones that work share something specific between their divisions.
Shared capability, not shared ownership
Common ownership creates no value by itself. A shared engineering platform, a shared logistics network or a shared customer relationship does.
Route capital across boundaries
The advantage of a group is being able to fund the best opportunity anywhere in the portfolio. That only happens if allocation is decided above divisional level.
Beware the internal customer
Forcing divisions to buy from each other hides poor performance. Internal supply should win on merit, or lose.
Keep the center small
Every additional central function is a tax on the operating businesses. The center should do what genuinely benefits from scale and nothing else.
Be honest about fit
A division that shares nothing with the rest of the group is worth more owned by someone else.
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