1. Alza & Ciba-Geigy: Making relationships work
Professor Rebecca Henderson
MIT Sloan School of Management Phone: (617) ,

2. Managing a Discontinuity Through Acquisition?
ALZA/CIBA:
Managing a Discontinuity Through Acquisition?
ADDS
PERFORMANCE
Ciba
Alza
Tight Appropriability
(IP, speed to market, lead time)
Creative Organization
(Technical competence and culture of innovation)
EFFORT
Complementary Assets (regulatory capability, sales force, distribution, size, knowledge base)
Efficient Functional Organization (designed to maximize component innovation)

3. What are Alza and CG trying to achieve:
Entrepreneurial
Drive,
Freedom from
the “old ways”
Successful growth unites
entrepreneurial insight with
effective coordination
Alza?
Ciba Geigy?
Control & Coordination

4. Comparing “make” vs. “buy”
Alza
Asset
Ciba
Great energy
Alza
Asset
Ciba
Great control

5. Different deal structures give one different “starting positions”
Entrepreneurial
Energy
Acquire/
Partner
Joint
venture/
alliance
Internal
venture
Build inside
existing unit
Control & Coordination

6. But must then be managed!
Entrepreneurial
Energy
Acquire/
Partner ?
Joint
venture/
alliance
Internal
venture
Build inside
existing unit
Control & Coordination

7. Did it work?

8. Did Ciba manage “deep structure”?
Leadership
Structure
& Process
Incentives & Politics
People, Culture, Mental models 7

9. Successful relationships tackle every level
Leadership and strategy
Process & structure
Incentives, politics
People, culture, mental models

10. Did it work?

11. Good luck!