A new-old concept is being touted as a panacea for company profits in the current recession. These days it is called “partnering.” The idea is that a company with certain skills, products or services should link up with another one that lacks those assets, but has complementary ones. For example, a company that makes a good product but doesn’t have the ability to distribute those products should marry a company with a strong distribution network.

The problem is all too often it doesn’t work in practice, as was proved in many disastrous “partnerships” when the idea was in vogue.

It was called “synergy” and the idea was that 1+1=3.

A few years ago when “conglomerates” were running around doing “synergistic” acquisitions and mergers, a major investment bank commissioned a study to find out how often the parts put together equaled more than they would have individually.

They found that these kinds of deals fell into two rough categories. The first was called “banking,” not because every company that did it was a bank, but because these were the kinds of “partnerships” that worked best. A regional bank in New York might swallow up another regional bank next door in Connecticut. This would give New Yorkers access to new markets, and saved money by trimming corporate fat: You don’t need two CFO’s or two general counsels. In theory it was a stroke of genius–and it seemed to work.

The second category was dubbed “story” partnerships, because every deal had a “story” behind it that seemed to make it work. But the investment banker found that 90 percent of those “partnerships eventually tanked.

I had personal experience with two of those “story” deals.

The first was at PepsiCo, which had been formed by a merger of the Pepsi-Cola soft drink company and the Frito-Lay snack foods maker. The joke was that they could put more salt on the potato chips and make consumers thirstier for soda pop.

Pepsi thought that worked so well that it ran around buying other companies, mainly I think because they were cheap: The North American Van Lines household moving business (the rationale here was that NAVL, like Pepsi-Cola, was a franchise business) and Wilson Sporting Goods, that made tennis racquets and footballs.

Of course, there was a problem rationalizing this, so I plead guilty to selling the concept that PepsiCo wasn’t a food and drink company, but really in the leisure time business.  This, too, seemed to work well, so Pepsi expanded further by buying a number of fast food chains — pizza and Mexican places. The “story” seemed logical on its face: Owning Pizza Hut would let the company sell more Pepsi-Cola.  That’s when the problem started. Because Pepsi was not in competition with those people selling hamburgers who immediately switched to selling Coke.

PepsiCo eventually sold all those diversions from its core business of beverages and snacks.

I had another front row seat on how sometimes “story” synergy doesn’t work at Trans World Airlines. Not to confuse you, but Trans World Airlines owned a lot of companies, one of which was an airline called TWA. The principal other business was Hilton International. Here the “story” seemed to make a lot of sense.

TWA flew people to lots of places all over the world and every destination had a Hilton International hotel. Hey, the airline would be a feeder to the hotel business, and vice versa. Also, the airline business is notoriously cyclical, and the hotel business would iron out some of the bumps.

But it didn’t work, mainly for a reason that couldn’t have been anticipated, which was that the airline’s rank and file people were up in arms, believing that the monies they earned from flying people around the world were being pumped into new and unrelated businesses, when they should have been spent buying more planes so TWA could fly to more cities which would create more jobs and advancement opportunities.

I don’t recall there being a program in which a TWA telephone sales agent on booking a trip to Paris would volunteer, “We have a lovely Hilton Hotel right new to the Eiffel Tower; can I book you a suite there?” (And even if there had been such a protocol, with the hatred of the airline people for these other businesses, I doubt anyone would have followed it).

This is typical of the problems with merging corporate cultures, where the old guys rarely get along with the new ones.