Remix Strategy: The Three Laws of Business Combinations
Benjamin Gomes-Casseres
Harvard Business Review Press (2015)

How to create organizational value with a strategy that maximizes the impact of both internal and external resource

As Benjamin Gomes-Casseres observes in the first chapter, “Although the remixing of businesses is not a new phenomenon, we have not previously recognized full how to use it to advance strategy. The real issue is not whether you should be looking outside your walls for resources. The question is how are these ventures going to enhance your competitive position? How will they create value? And how are you going g to capture that value? Whether you are at the top of the company driving the remix, in the middle managing an acquisition or a partnership, or among the operating ranks keeping the pieces humming, you need to know the answers such questions.”

Gomes-Casseres offers a three-law framework within which to create, strengthen, and then sustain a successful business combination: “First, it must have the potential to create an amount of joint value in that market that exceeds the total value that would degenerated by the same resources without the combination…Second, the way the combination is designed and managed must enable you to actually create the joint value…Third, each party involved in the combination must earn a share of the joint value produced — a profit — that provides the incentive for the party to commit its resources to the joint effort…Furthermore, you need to remindful of the relationships between all of these laws.”

Although Gomes-Casseres calls them ”laws,” they are in fact realities, indeed necessities, that must be taken into full account. With regard to the process — identify potential joint value, govern the collaboration, and share the value created — he quickly identifies the “What,” then devotes the bulk of his attention to explaining the “How.” He also points out that it remains for each reader to determine what is most relevant in the material provided and then modify in ways and to the extent that are appropriate to the given enterprise.

Many (most?) organizations now face or will soon face a major challenge, in two parts: whether or not to combine internal and external resources; in that event, how to formulate a remix strategy to drive that combination and, meanwhile, make that strategy part of everyday business thinking and operations. It is important to keep in mind that a remix strategy will have a significant impact on decisions that must be made in five key areas: strategy, competitive advantage, governance, change and innovation, and ROI. Years ago, someone whose name is unknown to be suggested that managing computer programmers resembles “herding cats.” Based on what Gomes-Casseres shares in this book, managing those who pursue a remix strategy would probably resemble herding kangaroos on steroids.

These are among the several dozen passages of greatest interest and value to me, also listed to suggest the scope of his coverage in Chapters 1-6:

o Why Business Combinations Are Now Vital (Pages 9-14)
o The Three Laws (14-21)
o How to Use the Three Law Model (22-23)
o The Relationship Spectrum (32-39)
o Visualizing Your Relational Footprint (48-50)
o Value Creation in Combination (56-59)
o The Five Main Sources of Joint Value (65-70)
o Divestments: The Mirror Image of Combinations (78-79
o Three Relationship Models (87-93)
o Tools for Alliance Design (107-116)
o Rivalry Remains, Despite Collaboration (118-121)
o How to Manage Co-opetition (130-136)
o An Approach to Managing Your Share of Value (144-147)
o Competition Between Bundles of Assets (154-156)
o Joint Value Potential in Constellations (158-172)
o Governance of Constellations (172-186)

Also, be sure to check out “Complete Collection of Remix Strategy Tools” (Pages 219-241). This material all by itself is worth far most than the purchase price of the book in which it appears. Of course, obviously, the value of the 20 management “Tools” will be determined almost entirely by how effectively they are used when mastered and adapted to the given situation. “In reality, every business combination involves complexities theater not covered by these tools — regulations, legal frameworks, cultural considerations, personal, cities, and the like. As you navigate these complexities, these tools will help you stay focused on the strategic goal of creating value for your business.”

I cannot think off a better way to create value for a business than to create value for the clients and customers it is privileged to serve. Many years ago, when asked to explain the extraordinary success of Southwest Airlines, its then chairman and CEO, Herb Kelleher, replied, “We take great care of our people, they take great care of our customers, and our customers take great care of our shareholders.”

When concluding his book, Benjamin Gomes-Casseres reminds his reader, “What matters most, though, is what you ultimately make of the ideas in this book. Recombine these ideas with your own and with those of others [such as Kelleher]. The theme of this book applies not just to business strategy. Mixing and matching is a way of life in the arts, in invention and innovation, and in personal life. The real value of this book for you will emerge from your own remix.” There’s your challenge…and, yes, your opportunity.