Why is synergy important

For any leader wanting a results-oriented team, that team must operate in synergy. Strongly setting clear outcomes of where a project or the company as a whole is going into the future is the first step for any leader to establish. Your Objectives need to be powerful and strong — make them a declaration!

Remember also that each member needs to have an emotional connection with the Objectives in order to stay functioning at a higher level until they are met. This is especially true with a founding team or early-stage company. In physics terms, the emotional connection to the Objective is similar to the force felt by gravity. The result? The team can't help but be attracted to it! Once you have your Objectives and they connect to the emotions of everyone involved, be sure to share them widely.

Left unchecked, group norms can lead to some bad practices that make team members uncomfortable and, ultimately, lead to bad group dynamics. But by proactively setting group norms, you make it easier for your team to collaborate.

To avoid that, proactively set group norms. For examples of how team leads set group norms, read our article on tips to create group norms for high-performance teams, with examples from 7 Asana managers. With effective team synergy, you can empower a diverse team to work together effortlessly—and get their highest-impact work done. For more tips on how to enable great teamwork, read our article on 45 team building games to improve communication and camaraderie. Resources Collaboration Beyond the buzzword: How to build team What is synergy?

Read: What is change management? Collaborate in Asana for free The difference between diversity and synergy Diversity describes how similar or different your team is. To build team synergy, try these three strategies: 1.

Start with communication The core of any strong working group is communication. To start building good workplace communication skills: Establish where your team should communicate, and about what.

Read: 12 tips to effective communication in the workplace 2. Foster trust and collaboration In addition to knowing how to communicate effectively, team members also need to feel comfortable doing so. To foster collaboration: Invite co-creation. Is there anything to be gained by intervening at the corporate level? What are the possible downsides? The answers to these questions tell them whether and how to act. It also tends to undermine implementation, leading to scattershot, unfocused efforts as different parties impose their own views about what needs to be done to reach the imprecisely stated goals.

Executives should strive to be as precise as possible about both the type of synergy being sought and its ultimate payoff for the company.

Overarching goals should be disaggregated into discrete, well-defined benefits, and then each benefit should be subjected to hard-nosed financial analysis. Clarifying the objectives and benefits of a potential synergy initiative is the first and most important discipline in making sound decisions on synergy. Dismissing the idea, he tried to shift the discussion. Everywhere she went, the category manager found herself mired in similarly fruitless debates.

There was no common ground on which to build. Finally, the category manager stepped back and tried to think more clearly about the synergy opportunities. She saw that the broad goal—leveraging international brands—could be broken down into three separate components: making the brand recognizable across borders, reducing duplicated effort, and increasing the flow of marketing know-how. Each of these components could, in turn, be disaggregated further. Making the brand recognizable, for instance, might involve a number of different efforts affecting such areas as brand positioning, pricing, packaging, ingredients, and advertising.

Each of these efforts could then be evaluated separately on its own merits. All too often, executives set overly broad goals for their synergy programs—goals that make good slogans but provide little guidance to managers in the field. By disaggregating a broad goal into more precisely defined objectives, managers will be better able to evaluate costs and benefits and, when appropriate, create concrete implementation plans.

The exercise proved extremely useful. The category manager was able to go back to the local managers and systematically discuss each possible synergy effort, identifying in precise terms its ramifications for each local unit.

In some cases, she found she had to take the disaggregation even further. Each item required a separate evaluation of costs and benefits. The type of cap, for example, had a big impact on manufacturing costs—and thus was an attractive candidate for standardization—but some local managers argued that changes in cap design could hinder their marketing efforts.

Customers in different countries preferred different cap mechanisms. By carefully balancing the cost savings from economies of scale in manufacturing against the possible loss of sales, the category manager and the local managers were able to reach a consensus on how much to reduce cap variety.

By disaggregating the objectives, the category manager was also able to gain a better understanding of how each effort should be implemented. Standardizing bottle shapes across countries, for example, would require a corporate policy. Otherwise, many of the local managers would go their own way, and economies of scale would be lost. Increasing the flow of technical know-how, by contrast, would be best achieved simply by creating better lines of communication among the technicians in each country.

More heavy-handed, top-down initiatives would risk making technical managers resentful and could end up dampening rather than promoting efforts to share expertise. Once the overall synergy goal has been broken down into its main components, the next step should be to estimate the size of the net benefit in each area. Uncertainties about both the costs and the benefits, however, often lead executives to avoid this obvious task.

But without some concrete sense of the payoff, the decision maker will be forced to act on instinct rather than reason. That does not mean that an exhaustive financial analysis has to be performed before anything gets done.

In most cases, order-of-magnitude estimates will do. Is the impact on return on sales likely to be half a percentage point, or one percentage point, or five? This is back-of-the-envelope stuff, but we have found that even such rough estimates promote the kind of objective thinking that counters the biases.

The difficulty lies in knowing when the opportunity costs are likely to be greater than the benefits. At one consumer-products company, for example, the corporate center was spearheading an initiative to take a product that had been successful in one country and roll it out in a number of other countries. The local managers resisted the idea. They argued that the program would incur considerable opportunity costs, forcing them to divert marketing funds and management time from other local brands.

The key to resolving the dispute lay in determining the strategic importance of the planned rollout. If the rollout was strategically important, either to the units involved or to the overall corporation, then the benefits would likely outweigh the opportunity costs. But if some other more strategically important initiative was likely to be delayed in order to implement the rollout, then the opportunity costs would be greater.

After some soul-searching by the units and by corporate marketing, it was agreed that the rollout had low strategic importance, except in three units. Headquarters scaled back the initiative. It would give advice and support to those units that wanted to go ahead with the product launch, but it would not impose a rollout on the other units.

Sizing the prize provides a counterweight to the synergy bias, forcing corporate managers to substantiate their assumptions that the synergy initiatives they propose will create big net benefits. And, by leading to the disaggregation of broad initiatives into discrete, well-defined programs, sizing the prize can set the stage for a focused, successful implementation. Even when a synergy prize is found to be sizable, corporate executives should not necessarily rush in.

We would in general urge a cautious approach unless the need for corporate intervention is clear and compelling. Corporate executives should start with the assumption that when it makes good commercial sense, the business-unit managers will usually cooperate without the need for corporate involvement.

When is intervention by the corporate parent justified? Only when corporate executives can, first, point to a specific problem that is preventing the unit managers from working together; second, show why their involvement would solve the problem; and third, confirm that they have the skills required to get the job done.

In those circumstances, there is what we call a parenting opportunity. We have found that genuine parenting opportunities tend to take four forms:. Perception opportunities arise when businesses are unaware of the potential benefits of synergy. The oversight may be caused by a lack of interest, a lack of information, or a lack of personal contacts.

The parent can help fill the perception gap by, for example, disseminating important information or by introducing aggressive performance targets that encourage units to look to other units for better ways to operate. In general, the greater the number of business units in a company, the more likely it is that perception opportunities will arise.

ABB, for example, has 5, profit centers organized into a number of business areas. In its power transformer area alone, there are more than 30 units. It is clearly impractical for every unit head to know what is going on in each of the other 29 units. The cost of scanning is too high. The area head, therefore, plays an important role in facilitating the information flow, passing on best-practice ideas and introducing managers to one another. In addition, the area head regularly publishes financial and operating information about each business, enabling cross-unit comparisons and helping each business identify units from which it can learn useful lessons.

Evaluation opportunities arise when the businesses fail to assess correctly the costs and benefits of a potential synergy. The German subsidiary of one multinational company, for example, was fiercely protective of a new product it had developed. It was not only reluctant to help other units develop similar products, it even refused visits from unit and corporate-center technicians. The reason? The German managers did not trust their French and Italian colleagues to price the new product appropriately.

They feared those units would not position it as a premium product and, as a result, would undermine price levels throughout Europe, reducing the exceptional profits being generated in the German market. The standoff was resolved only when corporate executives walked the German managers through the cost-benefit calculations step by step and guaranteed that prices would be kept above a certain minimum in all countries.

Motivation opportunities, which derive from a simple lack of enthusiasm by one or more units, can stop collaboration dead in its tracks. Disincentives come in a number of forms. Unit managers may, for example, believe that the personal costs of cooperating are too high—that their personal empires or bonuses may be put at risk.

Or transfer-pricing mechanisms may, in effect, penalize one unit for cooperating with another. Or two unit managers may simply dislike each other, preventing them from working together constructively. That raises many internal conflicts. Failure is also due to strategic differences, in which each party pursued its own interest.

Citing from CNBC , here is a list of successful mergers:. Synergy often involves two entities or parts with complementary resources or capabilities. It then brings mutual benefits, especially when joint work or activities support the same goal. Even though synergy is ideal, however, it is difficult in practice.