The Grey Chronicles

2009.January.8

What Synergy?


The word ‘synergy‘ comes from the Greek words: syn-, together + ergon, work, meaning—the simultaneous action of separate agencies which, together, have greater total effect than the sum of their individual effect.

The concept of synergy appeared in some of the earliest writings in corporate strategy and has recently reappeared in the 1990s under the label "core competencies" (Prahalad & Hamel, 1990). They defined:

“Core competence is an integrated bundle of skills and technologies; a "messy accumulation of learning" which contributes to a business’s competitive success.”

Literature state that originally the term ‘synergy’ was first coined by the pharmaceutical industry but contemporary usage in multinational companies transformed the term to mean the cooperation of entities toward a common goal by sharing core competencies. Today, usually the term ‘synergy’ involves at least two separate entities to make its magic work. Examples: synergy of TQM and JIT (Sim, 2001), or the synergy of vision and core competencies (Nicholls, 2001).

Canel & Khumawala, (1996) described synergy as:

“When a company produces in more than one country, the facilities in these countries can take advantage of the learning experiences and benefits from each of these locations.”

The most common instance that this word: ‘synergy’ is used is in conjunction with another word: ‘diversity’, thus we often would read: synergy in diversity, or similar words to that effect. Another common buzz word associated with ‘synergy’ is win-win (Schneider, 2000)

In simple terms, synergy is the notion that the whole is greater than the sum of the parts (Phelan, 1997). The biggest benefit of synergy effects in a global business can only be obtained when all different (sub) systems within the business are viewed as a system (Ashayeri, et. al., 1998).

Liker, et.al.(1992) confirmed that:

“Where the business units work together to achieve the goals of the firm, the competitive position of the
firm is likely to be stronger than if no integration and synergy exist among the business units.”

Thus, the challenge would be not only to develop a greater cultural sensitivity, but
also to understand local competencies, and use them in a more efficient way. (Fleury, 1999). With these factors considered, the Not Invented Here! syndrome, might be a thing of the past! There can never be a synergy, if one entity overwhelms the other.


Notes:

Ashayeri, J.; Keij, R.; & Bröker, A. (1998). Global business process re-engineering: a system dynamics-based approach. International Journal of Operations & Production Management, 18:9/10. New York: Emerald Insight and MCB University Press, 1998. pp. 817-831. back to text

Canel, Cem & Khumawala, Basheer M. (1996). A mixed-integer programming approach for the international facilities location problem. International Journal of Operations & Production Management, 16:4. New York: Emerald Insight and MCB University Press, 1996. pp. 49-68. back to text

Fleury, Afonso (1999). The changing pattern of operations management in developing countries; The case of Brazil. International Journal of Operations & Production Management, 19:5/6. New York: Emerald Insight and MCB University Press, 1999. pp. 552-564. back to text

Liker, J.K., Fleischer, M. & Arnsdorf, D. (1992). Fulfilling the promise of CAD. Sloan Management Review, 33: 3, 1992. pp. 74-86. back to text

Nicholls, John (1995). The MCC decision matrix: a tool for applying strategic logic to everyday activity. Management Decision, 33:6. New York: Emerald Insight and MCB University Press, 1995. pp.4-10. back to text

Phelan, Steven E. (1997). Exposing the illusion of confidence in financial analysis, Management Decision 35:2. New York: Emerald Insight and MCB University Press, 1997. 163-168. back to text

Prahalad, C.K. and Hamel, G. (1990). The core competence of the corporation. Boston: Harvard Business Review, May-June, 1990, pp. 79-91. back to text

Schneider, William E. (2000). Why good management ideas fail: the neglected power of organization change, Strategy & Leadership. 28:1. New York: Emerald Insight and MCB University Press, 2000. pp. 24-29. back to text

Sim, Khim L. (2001). An empirical examination of successive incremental improvement techniques and investment in manufacturing technology. International Journal of Operations & Production Management, 21: 3. New York: Emerald Insight and MCB University Press, 2001. pp. 373-399. back to text

Disclaimer : The posts on this site are my own and doesn’t necessarily represent any organization’s positions, strategies or opinions.

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1 Comment »

  1. very gud…………………

    Comment by randy — 2009.August.28 @ 03:35 | Reply


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