Quadrant 1: Diversification Model
So, you’ve drawn the MIT framework (see previous post) and are now ready to start thinking about the levels of “integration” and “standardization” that are right for your organization. Let’s take a deeper look at Quadrant 1.
The “Diversification” model in the lower left quadrant is probably the simplest place to start. If your business units have few common customers, suppliers or ways of doing business, you have a diversified organization. Hence, you have minimal need for either data integration or standardization of processes across business units. But, fear not! You can still create major efficiencies with technology. Even in these situations, there are processes that tend to be similar across business units, such as Human Resources and Finance, and shared services are a powerful way to achieve economies of scale.
The many-to-one vs. one-to-many principle comes into play here. Many-to-one means that every business unit is staffed up and “technologied” up to execute the same processes. That’s redundant. Major cost savings can be gained when the processes are consolidated into a one-to-many shared services unit. That’s smart business.
Carlson Companies is exemplified in the book. They own Radisson Hotels, T.G.I. Friday’s restaurant, Carlson Marketing Group, Carlson Wagonlit Travel, Radisson Seven Seas Cruises, and the Gold Points Reward Network. Though the companies are run autonomously, Carlson has captured cost savings and synergies with a world-class, award winning shared services capability.
Stay tuned for the next entry, which covers the Coordination Model.
Tags: business process, corporate strategy, data integration, enterprise architecture