Synergy or synergism is a concept that shows that the combined effort of any two companies or businesses will produce a better and more efficient result than the case in which they worked individually. The idea of synergy and the word itself has been borrowed from the Greek word of sunergos which means ‘teamwork’ or ‘working together’. There are basically two types of synergies, positive synergy and negative synergy.
Organizations achieve synergy by merging themselves with another relevant organization. This is known as ‘merging’ and is a type of synergy called ‘mergers’ under the category of positive synergy. The objective of merging is to combine the efforts of both the businesses so that the benefit each of them receives is much more than the benefit that was initially achieved individually by these organizations. The popular proverb which states that “one plus one is equal to eleven” is also based on the concept of synergy.
A positive synergy takes place when the total sum achieved is greater than the individual numbers added together. This is called the 2 + 2 = 5 effect. Positive synergy can benefit a business organization in several ways. Depending on the type of business, it can have various long lasting effects and increase the chances of success of both the organizations due to their merge.
On the other hand, a negative synergy is completely contrary to the positive synergy. It takes place when the total sum achieved is lesser than the individual numbers added together. This is referred to as the 2 + 2 = 3 effect. Not only the merged companies have deteriorated in their performance but also the final outcome is dissatisfying. Hence a negative synergy possesses the capability to completely ruin both the mergers. There could be several reasons for the cause of a negative synergy such as implementation of wrong decisions and mixture of lazy staff with hard working ones. These factors in turn lead to a waste of time. Once a negative synergy is formed, everything the company does will have a negligible value and the business meetings will be wasted with already confused staff. However, a negative synergy is not only caused at the employees’ level but also can be due to the senior staff when ineffective strategies are followed and worked upon.
Generally, when any two companies are combined together by any kind of a synergy, the link formed between them is termed as ‘Synergistic Connection’. A synergistic connection can either make or break a company. Hence when it comes by improving or depreciating the end result product produced by these two companies. Thus, a strong or weak synergistic connection is what leads to a positive or negative synergy based on the efforts of the mergers.
Synergy can affect business implications in the following ways.
Better or Worsened Performance
When two businesses or companies merge, their teams join together leading to the possibilities of better work performance. This is supported by the facts that there will be an efficient communication between the merged departments and more than one employee will be available to work under a particular role. There is also a possibility of achieving more skilled staff from a merge which possesses the capability to positively affect many aspects of the company. However, just as a positive synergy can raise a business one step above, a negative synergy can be equally distressful in its consequences. It is very much possible for the merge to cause inefficient department of a company to combine with an efficient department of the other causing communication clashes and reduced work speed. This will further have an impact on the final product produced by the company or the end result.
Increased or Decreased Work Speed
Certainly two is better than one. Merges allow the staff employees to increase in quantity making it possible for more people to be dedicated to a single task thus leading to an accelerated work. The roles that were once only occupied by a single employee would be occupied by more than one which would positively affect the work speed. In case of a negative synergy, the work speed can be reduced with the mixture of inefficient employees with efficient ones.
Strategy & Team Combination
When two companies combine together and share their strategies, a dull business can be transformed into a profitable and competent business. It is possible for a company to have great ideas whereas the other with great workers. When these two merge together, a perfect team combination can be produced. This in turn can have a decisive effect on staff communication and work speed. Furthermore, sharing of strategies between the two organizations can result in enhanced quality of work.
More and Different Products & Services
A company selling or providing only few products or services can be made even better with the help of synergy which can nurture creativity and innovation. Synergy encourages sharing knowledge and infuses in employees the motivation to work harder. A healthy competition can be formed when employees are excited to do their best and impress their team to earn respect among them.
An employee who is only dependent upon his or her past experiences is more likely to be very narrow in his perspective towards work and risk tasking. Synergy ensures the combination of the strengths of two companies and the sharing of experiences. Everyone is able to share together their knowledge and different experiences to learn together from the mistakes and to avoid it in the future. Furthermore, risk taking is less likely to be attempted by an individual and much more likely to be tried by a team because each of the team members supports each other and in case of failure the fingers will not be targeted at a single individual but rather the whole team which will once again allow a better learning experience.
Though synergism can have long lasting mixture of positive and negative effects on the companies merged, there can also be some consequences that have no positive side in them and can have a breaking impact on the companies. These consequences include false expectations, different objectives, and extra payment burden.
Sometimes two companies before merging have different perspective of each other in mind. Hence considering the fact that each company has its own custom culture and work environment, it can be disastrous if reality is contrasting the assumed expectations. In most of the cases, this does not show up immediately but is a slow killer as employees start to notice considerable differences between their and others working style, pattern, timing and also efficiency. This in turn means that instead of having a unified objective to achieve, both the companies are deprived of their reachable targets that could once be accomplished when they were individual. Such a manifest effect is caused by a negative synergy.
Moreover, merging two organizations doesn’t just mean that their departments, profits, aims and teams combine but also their costs. Usually one company has much more running costs than the other company and can be a cause of internal conflicts and arguments when these costs gradually start to become a burden to handle. Most of the times these costs are much more than the end benefits. Once again, this is the 2 + 2 = 3 effect where after the combination of two businesses, losses are evident.
Last but not least, synergisms sometimes fail when the working environments and cultures of the merged companies are contrary to each other. Different styles of working and deadlines can affect the working schedule of both the companies and cause confusions to rise. Besides, each company may has its own working pace and different objectives in mind. Similarly, the staff of one may not be very social and comfortable with the staff of the other. It is certainly not easy to see a company where you have worked for so many years is suddenly having a new staff tomorrow. Not just a new staff but new working patterns, times and combined aims with the pressure of achieving that which the other company was progressing towards.
Conclusively, synergism has its distinct benefits. It is good for those companies who are tough and rough and can handle a sudden load of pressure and increased work. Also, it is suitable for those who are financially strong and can manage the overpayments along with the increased salaries per month due to extra staff. However, in case of a positive synergy, it is a matter of few months when the positive results start to reveal their presence and benefit the merged companies much more than they could have possibly imagined before. The results of a synergy depend on the working attitude of the junior and senior employees along with the company owners. Since there is no guarantee to those perfect or desirable results will be obtained, still the expected level can be obtained if the willingness and determination to improve and move ahead exists in both the businesses.