Understanding
Functional
Integration

Functional Integration (FI) reframes growth for the digital age. Instead of chasing endless horizontal expansion or squeezing costs through vertical plays, FI builds inter-connected ecosystems that compound value as they scale. Leaders like Amazon and Nike win by adding new user functions (what people want to get done) and tightly integrating them across products, services, data, and channels. The result is outsized “Functional Value” delivered faster than rivals can react.  

The model has two reinforcing dimensions. First, User Functionality: expand the brand into adjacent user jobs so the experience gets simpler, richer, and more trusted. Second, Services Integration: wire your portfolio so capabilities amplify one another; cloud, logistics, data, and devices working as one system. When both dimensions “click,” growth accelerates beyond what classic horizontal/vertical moves can deliver.  

To make FI operational, the model introduces two gauges: User Functional Value (UFV), the external score for how well a new function meets user expectations; and Business Integration Ratio (BIR)—the internal score for how well your capabilities can deliver it. The strategic aim is simple: conquer the expected function first, then scale it through integration to maximise value capture.  

Many corporate “innovations” stall. The Loss of Innovation Flow map shows friction points where high-value ideas die (strong traction but under-resourced inside corporates; or startups with UFV but no scale). The remedy is an outside-in, ecosystem approach: let startups and external partners create UFV where they’re strongest, then match it with your BIR (capabilities, distribution, brand) to commercialise at scale.