Synergy means that a system can achieve more, sometimes much more, than the sum of its parts. This extra power is not easily understood and thus it is difficult to manage.
It is straight-forward to see the value of synergy in sports. You can build a basketball team by bringing together great players, each excels in one particular role, and let them play and hopefully win. Does it ALWAYS work?
When it does, one might get the impression that the power of the team is far more than the accumulated level of each player. This is when the mystery of synergy works.
When it does not work then there is no ‘team’ but just a group of excellent players, each playing according to his own interests. We in TOC call it: local thinking rather than holistic. I think it is quite natural that a person thinks and acts based on his own interests. The only rational way to cause a person to think holistically is to make a convincing argument that synergy does work, in other words the success of the whole would contribute much more to the person than whatever he can achieve by himself.
Theoretically there is a way to create such a clear win-win structure that the interests of every player are exactly the same as the holistic ones. I understand the theory, but I admit I have not been able to construct such a network of win-wins in reality. Still, the intuitive recognition that synergy exists in a big way could help in aligning different parts into a holistic system.
Very large organizations use their natural synergy to gain much more value. We can recognize some of the causes of such synergy, and by that reduce its ‘mysterious’ impact. When some of the products/services of a giant company get excellent recognition the other services gain recognition as well. The stability and security radiated by large organizations is a synergy asset and its cause is pretty clear.
However, many other causes for synergy are not all that clear, but this does not mean they do not exist. A strange way of speech calls ‘chemistry’ the effect where two players play with great understanding of each other and thus generate synergy. It is funny, on my side, to call a ‘scientific’ name something that is hard to map the cause and effect of. Still, in reality we see how some product-mix have more impact than others. One needs to look for the overall characteristics of a ‘package’ to understand the advantage of one supplier on another rather than go to the details of every product. It is exactly as recognizing a forest rather than trees.
Project-portfolio is a managerial topic that calls for assessment of its synergy. It means that when we consider a new project there is a need to assess the somewhat vague impact of adding this project to the portfolio and predict the total impact of the whole portfolio on the organization.
As such assessment is mainly intuitive we need to recognize it as ‘partial information’ or basically uncertain information. We should NOT ignore the synergy impact just because we are unable to predict its exact impact. While we recognize “never say I know” we should not take the position of “we don’t know”, because we do know something. We are able to carefully assess the impact of synergy as a reasonable range and thus take the range as part of the decision making process.
Any good Strategy planning has to strive to gain synergy from all the initiatives that are integrated into one effective decisive-competitive-edge. Synergy is a critical part in the creation of ever-flourishing organization and it requires a holistic view and good tolerance of using ‘partial information’ to guide our decisions.