Economic logic is
driving two clear organizational trends. The need to be entrepreneurial
and responsive to markets favors agile and focused companies. However,
an unprecedented $3.4 trillion in corporate mergers and acquisitions around
the world during 1999 is powerful testimony to the benefits of scale and
scope.1
Corporations are increasingly unwilling to sacrifice size and breadth
for market responsiveness or vice versa; companies are now organizing
to realize the benefits of both. IBM, for example, seeks to foster the
entrepreneurial spirit of their employees by encouraging people in their
lower reaches to show initiative. And companies such as British Petroleum,
having disaggregated themselves into focused units, don’t hesitate to
grow larger through acquisitions.
Nevertheless, many companies are still struggling to create entrepreneurial
focus and to leverage and integrate their far-flung resources at the same
time. One of the most important benefits of scale and scope is the ability
to give employees privileged access to a wide range of resources throughout
an organization. A global entity like Citigroup, for instance, boasts
a considerable array of resources—including people, knowledge, products,
and even relationships with outside partners—residing in functional, product,
industry, and geographic units. But integrating such resources to serve
a...