Desperately Seeking Synergy and Competing on Capabilities Essay

I.) I didn’t think that synergy was that much big of a deal until I read this article. I am one of those who assume that synergy exists, can be achieved, and will be beneficial, I didn’t really think about the downsides of synergy. When I read the article, it seems that it would be better if executives give more attention and evaluation to find real synergy opportunities. It’s good that the writer included in his article about the four managerial biases because it’s true that all too often, the managers are the ones being blamed for the failure of a synergy program, when the ones who really are to blame are the corporate executives themselves.

These four biases will help corporate executives evaluate better the managers and themselves, be more aware of the situation, and be able to make more successful synergy programs. The process of sizing the prize is also a good addition to the article. Being more precise as to what needs to be done rather than generalizing all the goals tend to be more efficient and successful. It clarifies the real costs and benefits of a synergy program, as the writer stated, sizing the prize is the first and most important discipline in making sound decisions on synergy. Overarching goals should be disaggregated into discrete, well-defined benefits, and then each benefit should be subjected to hard-nosed financial analysis. Pinpointing the parenting opportunity will clear up the parenting bias. Corporate executives must know when and how to intervene in the management.

The article conveniently stated the three relevant cases as to when intervention must take place to help the corporate executives. Then there is this bringing downsides to light which can clear up the synergy and upside bias. I think that in every action which anyone may undertake, being more familiar with the consequences and downsides of that action can help the individual evaluate that action and be more successful. All in all, corporate executives must take note of the disciplined approach the writers recommend, which is clarifying the real benefits to be gained, examining the potential for parental involvement, and taking into account the possible downsides of synergy programs.

In relation to business policy and strategies, corporate executives with the help of the managers must be able to make clear and effective business policies and strategies which can be implemented for the betterment of synergy programs within the organization. Good policies will be able to guide them and their future employees in engaging in more successful synergies. I think this is related to accountancy because good interdepartmental communication and cooperation will help accountants do their job more precisely and conveniently. As a future professional, knowledge of this article will help me become a more effective leader by applying the three disciplined approaches he writers has stated and a more efficient team member who can synergize well with my co-workers.

II.) The article uses the success of companies like Wal-Mart, Honda, and MedEquip to familiarize the readers with capabilities-based competition which is great because seeing a concrete example of the principle at work makes the article even more interesting, realistic and not plain and boring. The focus of the article was on Wal-Mart and the secret of its success, which is the set of strategic business decisions that transformed the company into a capabilities-based competitor such as the warehousing technique of cross-docking. Included in the article are these basic principles of a capabilities-based competition which can help a traditional company change or shape its organization into a more capability-based competitor.

First, is that the focus of their corporate strategy should not be on the products but on the business processes. Second, competitive success depends on transforming a company’s key process into strategic capabilities that consistently provide superior value to the customer. Third, companies should create these capabilities by making strategic investments in a support infrastructure for these strategic capabilities. Fourth, is that the CEO is the champion of a capabilities-based strategy. I think that this puts the pressure on the CEO because he will be the one responsible for the direction of his company and the decisions he make can shape the future of the company.

To be able to be a good CEO, one must outperform the completion in responding quickly to customer demands and to incorporate new ideas into products, produce a product that unfailingly satisfies customer’s expectations, see the competitive environment clearly, adapt simultaneously to many different business environments, and generate new ideas and to combine existing elements to create new sources of value. It is obvious that the CEO has a very big responsibility. In summary, the article speaks about the new logic of growth today, being a capabilities predator, a company focusing and investing more on its capabilities to satisfy the customer.

But a question comes to mind after reading this article, what is the future of capabilities-based competition? If some time ago, the traditional companies were successful and were replaced by the growth of capabilities-based companies, what will happen if most of the companies will become more capabilities-based? Will the growth of these companies be consistent? Or will there be a new kind of competitor that dominates the market in the future? One thing is for sure though, organizations are going to have to be very dynamic and adapt to the ever changing needs of the customers.

This is related to business policy and strategy because to be an effective capabilities-based competitor, the company must start on its core processes and making an efficient business policy can help this process. The company’s strategy will also determine the direction of the company whether it wants to focus on its capabilities or its products. This article can be related to accounting because a good accounting system can be a part of an organizations’ relevant business process, they can focus on investing and improving their accounting system to better satisfy their customer. Lastly, as a future professional, this has kind of updated my point of view on what to focus on, because until I read this article, I always thought that a good product is enough for you to be successful but in fact, one should focus more nowadays to the business processes and compete on capabities.

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