Who is synergy

The idea of synergy was one factor in what became a "merger mania;" unfortunately, business synergy often turned out to be harder to achieve than to imagine. These example sentences are selected automatically from various online news sources to reflect current usage of the word 'synergy. Send us feedback. New Latin synergia , from Greek synergos working together.

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In addition to merging with another company, a company may also attempt to create synergy by combining products or markets.

For example, a retail business that sells clothes may decide to cross-sell products by offering accessories, such as jewelry or belts, to increase revenue. A company can also achieve synergy by setting up cross-disciplinary workgroups, in which each member of the team brings with them a unique skill set or experience.

This team formation could result in increased capacity and workflow and, ultimately, a better product than all the team members could produce if they work separately. Synergy can also be negative. Negative synergy is derived when the value of the combined entities is less than the value of each entity if it operated alone.

This could result if the merged firms experience problems caused by vastly different leadership styles and corporate cultures. Synergy is reflected on a company's balance sheet through its goodwill account.

Goodwill is an intangible asset that represents the portion of the business value that cannot be attributed to other business assets. Examples of goodwill include a company's brand recognition, proprietary or intellectual property, and good customer relationships. Synergies may not necessarily have a monetary value but could reduce the costs of sales and increase profit margin or future growth. In order for synergy to have an effect on the value, it must produce higher cash flows from existing assets, higher expected growth rates, longer growth periods, or lower cost of capital.

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So why is this word so often ridiculed? Corporate synergy describes the expected additional value companies achieve by merging.

In other words, two companies working together under a merger or acquisition can produce more value than the sum of their individual effects. This is largely due to economies of scale. Larger, merged businesses not only support one another, but they also achieve cost reductions that ultimately lead to higher profitability. In practice, corporate synergy—and especially financial synergy, which is when two companies merge finances—is hard to achieve.

Integrating two businesses and the entirety of what those businesses represent—including finances, employees, products, culture, and practices—takes a lot of time and effort. This is called negative synergy. At its core, synergy describes a way to work together to produce great results. After all, the term comes from ancient Greek and was used in practice as early as the s. Team synergy takes the idea that the whole is greater than the sum of its parts and applies it to teamwork.

This positive synergy enables team members to be their full selves at work—with their unique life experiences, perspectives, talents, and communication styles. Diversity describes how similar or different your team is. The more varied experiences, backgrounds, perspectives, and beliefs you have on your team, the more diverse your team is.

Committing to a diverse team means doing the work to build a more equitable and inclusive environment. Team synergy focuses on the "doing the work" part of diversity.