Horizontal Strategy

 

Much of what we do at CROSS-SILO Management Consultants is focused on getting departments to collaborate more effectively to improve customer performance. To that effect, we utilize the ROUNDMAP™ Customer 360 Mapping System and Integrated Methodology as our guide. Our mission is to focus on achieving goals from a horizontal business strategy.

However, we don’t confine ourselves to improving cross-functional collaboration per business unit: horizontal collaboration between business units or divisions is already known to provide a concern with added competitive advantage, as suggested by several sources:

• In ‘Competitive Advantages’ Porter described what he referred to as ‘horizontal strategy’ to achieve competitive advantage in a diversified/multinational firm. A diversified firm has a number of advantages because it is a multi-business/multi-product organization. As companies face increased competition, the need for competitive advantage intensifies.
• Ansoff (1988) described the combined effect available to a diversified firm as ‘synergy’. He suggested that synergy can produce a combined return on resources that is greater than the sum of individual parts. This has been expressed as 2 + 2 = 5 to illustrate that the firm’s combined performance may be greater than the simple aggregate of parts.
• Hofer and Schendel (1978) referred to synergy as “joint effects”. The ‘development of interrelationships’ is suggested as a way to obtain synergy.
• Chakravarthy and Lorange (1991) see adapting the strategy process to the context of the organization as an important management task. This includes nurturing strategic thinking and promoting intrafirm cooperation.

Porter et al suggested that ‘interrelationships’ between business units/divisions are a precondition for obtaining competitive advantage from a ‘horizontal strategy’. However, it is important to note that he actually means ‘horizontal corporate strategy’. According to Porter, a business strategy is to achieve unit goals, while a corporate strategy focuses on portfolio management, restructuring, transferring skills, and sharing activities across the enterprise. We won’t dive in any deeper. There is ample documentation on these subjects on the internet.

However, be aware, while horizontal corporate strategy (interrelationships) is part of the curriculum of most business schools, horizontal business strategy (interdisciplinary relationships) is hardly ever. In our opinion it makes no sense to look for synergy on concern-level while ignoring similar leverages on the business-unit level.

As such, we’re convinced that it is critical for any business (unit) to improve customer performance by streamlining interdisciplinary collaboration – as suggested by the layout of the ROUNDMAP – in a similar matter to how a horizontal corporate strategy means to improve corporate performance.

In a scheme it looks like this:

https://cutt.ly/S4ADa75