Comments

Tom, on the whole I agree with the three points you're making here. To encourage a little debate however, I'd like to say that predicting the "end of the financial supermarket" may be more media hype than a dead cert.

The concept may be unbundling a bit, divestitures etc., but in my view it's just undergoing a little fine-tuning. For example, for all that Citigroup is divesting itself of Travelers Insurance, the agreement specifies that Travelers must continue to let Citigroup distribute its products so it's shifting from who owns the product to who owns the customer relationship and can sell the product. In other words, the one stop shop model is set to focus more on the needs of the client rather than on the back-end integration of companies. I’m not sure this will prove effective. My view is that it is better to own and manage the businesses directly than it is to manage ‘partner’ relationships.

I’ve read about the cultural integration difficulties combining disparate financial businesses stemming from the Purcell example and I remember that Sandy Weill made it work. Of course the business environment has changed since then.

Perhaps another influencing factor causing the financial supermarket idea to undergo review is because business today is, for the moment, a regulatory-driven environment, and these powerful regulators take a very dim view of potential ethical conflicts, for example, the brokerage side of a business being allowed to sell customers investment products. In my view, they are influential in determining for businesses what are and are not appropriate investments based on what may and may not get them into trouble with the regulators.

Posted by Noel Guinane at June 15, 2005 4:19 PM

Synergy = cold fusion for human resource managers. "Listen to the fizz ..."

Posted by Paul Haskell at June 15, 2005 5:14 PM

Dr. Thomas - how about Phil Knight leaving Nike? How do you think they'll do since he is the 30+ year founder and Chair and CEO - he says he reserves the right to come back if he wants!

One thing I find interesting is that I recently have been attracted to Wal$Mart sports' clothes - then I found out Nike owns and revamped "Wal$Mart's Starter" brand! I've been loyal to Nike for 30+ - and now Starter ...

Posted by Sean at June 15, 2005 6:06 PM

I would have to agree on the concept of focus. The minute you take your eye off of what you can do for your customer, you've started your funeral march. All of these sad cases started as executive power plays covered by mirrors and lights that probably had little if any real customer input. Top talent was diverted to either making fighting elephants dance or to building an external network/escape hatch. Synygy always looks good on paper because personalities, cultures and personal agendas are not in the picture. Except for very special cases of government protection and long term intellectual property, it's incredibly easy for others to cherry pick good business of giants who are not paying attention because they are too busy digesting their last meal. I'm not sure why Wall Street continues to fund it, but hey - I can't figure out why Bubba and Stinky shovel coins into the one arm bandits in Vegas either, but they keep coming back.

Posted by Tom C. at June 15, 2005 9:12 PM

"Synergy" not "Synygy" (above post) - I spent too much time looking at HR Mgt systems (Synygy Corp.) last year.

Posted by Tom C. at June 15, 2005 9:15 PM

Ah! Am I glad to see this. I have started advising a very small magazine. It is based on a great idea that is completely unexplored in the market here (Pakistan): An English language quarterly religious-family magazine. When I say religious-family, I mean it's about family and lifestyle (they aren't focused yet), with a religious perspective. A bit like "Feng Shui for office" - its "Islam for daily life."

That idea is great. The niche is rather exact. Overall the magazine serves the motto of "enlightened moderation," which is the new mantra for the modern Pakistani. So which such a good idea, I was amazed when the magazine (5 issues so far) went for the we-want-to-cater-to-all approach. So it has sections on personal financing and then a few pages for the kids!

As a marketing and content consultant, I told them that even though its a "family" magazine, they have to move over the Pakistani publishing industry's current practice of putting everything in one publication. Some newspapers have learnt, and they have a variety of specialist magazines and sections which were previously all bundled together. Yet there are many magazines which have content for geriatrics, working women, housewives, kids, and college students - all in one!

But since many publication houses are family business or political partnerships, the need for power goes hand-in-hand with an aggregation of all kinds of content catering to everyone. This seems to be an in-built childish fantasy: I WANT TO BE EVERYTHING TO EVERYONE ALL THE TIME.

Posted by Ramla A. at June 16, 2005 5:30 AM

Continued from above....

And once I have convinced them about the need to be excellent in one thing rather than be just good or average in many things, my next step will be to question the "family magazine" concept. Even though something-for-everyone seems to be the general format for magazines in Pakistan, I wonder what's the utility of this concept? "Family magazine" seems to me to be a near oxymoron. I'd think a magazine is a very personal thing for most of its buyers. Especially with the breakdown of joint family system - there is an increased focus on individuality and personal space.

I was able to drive my point across with the help of an example (we were just finished with a home-made lunch prepared by the female entrepreneurs who own the magazine): I said, would you rather serve an excellent Chinese lunch with 2 main courses and a dessert? Or would you serve me Desi, Continental, Chinese dishes of ten varieties, out of which 2 may be really bad (thanks to the effort spread). I may remember the 2 dishes that I didn't like! (And they could sure use the saved up energy!)

With a real example from the "customer's" POV, I was able to help them understand why bundling all sorts of things together for distinct customers with distinct needs doesn't work. In fact, it puts off your primary market, if you have any at all.

Posted by Ramla A. at June 16, 2005 5:40 AM

I worked for a startup that was acquired in 2002 by Big Corp. Big Corp. was completely in love with the word "synergy." After breathing Big Corp. culture for a few years, I googled all the articles on the web in which Big Corp. execs used the word "synergy." In every case, "synergy" ultimately involved buying smaller companies, consolidating redundant operations, laying off redundant people, and retiring redundant systems.

Still nothing new under the sun.

Posted by Matt Mendrala at June 16, 2005 12:10 PM

Matt, you should read 'The Synergy Myth' by Harold Geneen, written about "synergy" in "synergy's" hey day. Parts of it will split your sides!

Posted by Noel Guinane at June 16, 2005 2:50 PM