Saturday, July 18, 2009

Synergy - Part I

Synergy is the increase in performance of the combined firm over what the two firms are already expected or required to accomplish as independent firms.
-- Mark L. Sirower

Are you familiar with the concept of synergy? How do you define it? What does it mean to you? I can tell you this. Never has the importance of leaders creating synergy been more important than it is in business units and other teams today. If you are not thinking about synergy -- what it means and how you can get some -- you are missing out on what leadership is all about!

Synergy: The whole is made greater than the sum of the parts.

Since I am an engineer, I like to reduce this concept to a simple math equation: 1+1+1>3. the action verb (made greater) that enables this (seemingly impossible) possibility.

Synergy, like so many other characteristics of leadership, is only enabled by dynamic, visionary, positive leaders. Without leadership, you’ll end up with acquisitions that never quite fit together (think AOL TimeWarner) and an organization whose parts may actually decrease the value of the sum. Leaders are uniquely positioned and specifically employed to add value to the team, to create functional, profitable teams of teams. So that makes creating synergy -- Leader Business, right?

Successful organizations function as a team of teams. Mergers bring separate, independent units together to grow production capacity or leverage common customers. Functions in existing operations are combined to streamline processes and harvest efficiencies. And business units are grouped together to leverage capabilities that may not exist without each other.

Leadership makes this work. It is the grease that eliminates the friction inherent in team building. It is the forcing function that ensures the team of teams is, in fact, better than its former condition – more efficient, higher productivity, greater access to customers, and a better product.

But putting a group of good performers together under one roof does not guarantee synergistic success. How many companies have failed following a big merger or acquisition? How frequently do we see organizations whose family tree can only be described as dysfunctional? How about sports teams that acquire more and more superstar athletes, yet still can't win the championship? Think about all the consolidation going on in financial markets today. Bigger is not better. Better is better!

Over the next several posts, I'd like to share with you an example from my own experiences where the concept of synergy took form in my own mind as well as what I found it takes to make the whole greater than the sum of the parts. It was in the "heat of battle" at the Army's National Training Center that I learned these critical elements for creating synergy (another math equation!) --

Synergy =
Common vision and goals +
Big TEAM, little me +
Interdependence +

This is one of my favorite topics. I have spoken about this critical trait to leaders across the country dozens of times in a variety of different contexts (and perhaps this is something your group could use some encouraging words on). Until then, think about areas in your company or in your own life where synergy would be important. You'll find, as I have, that creating synergy is...Leader Business.

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