LADING

Synergy to Overcome Challenges and Grow

Focusing efforts on a single goal is the most efficient way to generate better business results.

When one hears medical explanations about the effects of malfunctioning of some organ or physical function, they usually include the description of a chain reaction. Those who deal with human life know that when a problem sets in, the tendency is for other functions to become complicated and the situation becomes seriously aggravated – even fatal. Fortunately, the opposite is also true: when all organs perform their function, the whole is stronger. And this cycle of cause and consequence is also the reason for the success of high-performance athletes. Constant training makes muscles, tendons, breathing, circulation and reflexes combine to move their performance towards excellence. Human physiology is one of the clearest examples of the strength of virtuous or vicious circles, and the effects they may have on individual performance, and all this is because the human body functions in synergy.

Synergy is a word that comes from the Greek and means putting all energies in the same direction, cooperating and joining forces so that the result greater than the simple sum of the parts. Thus, when there is synergy, 1 + 1 = 3 or 5 or 7 or 10. This is exactly this “operation” that explains the success of the Olympic athletes. As all the energies of the athlete are focused on strengthening their system, optimizing the muscles and movements that are important in their specific sport, the sum of common elements like eating, training, resting and concentration bring results well above average. The success we see in the courts, gyms and swimming pools starts at the cellular level, in the mitochondria trained to generate the maximum level of energy.

In fact, synergy is critical to the success of any and every system. In nature, ecological equilibrium is the result of synergy. Of course, each being dedicates its energy to its own survival; inevitably, implies that some will die to serve as food for others. But such an exchange of energy is part of the cycle of life. If anything is changed, imbalance ensues. Species that are somehow deprived of their natural predators end up suffering from overpopulation and may starve to death. It is the complexity of the system and the energy that each individual devotes to its role that ensure the survival of all the species of a biome.

With human beings it’s the same thing: societies that work synergistically, where every sector focuses on the same goal, tend to thrive faster than those living in conflict. One needs only to compare the quality of life in Scandinavia with that of countries plagued by civil war in the Middle East or Africa.

In the case of the Nordics, who are exemplars of a synergy-driven society, it should be noted that their companies adopt methodologies inspired by socialist philosophy that result in the integrated growth of all their products. In countries such as Sweden, Norway and Denmark, awareness of the importance of each part for the proper functioning of the whole is deeply rooted in the culture and reinforced by the good results of companies and governments. The overall outcome is an excellent standard of living for the population, despite the challenges of their climate and their exiguous territory. For generations, the Nordics have shown us that synergy is the magic that produces results far greater than a simple sum of the elements might indicate. For them, 1 + 1 will always result in a number greater than 2.

With evidence from macrogeopolitics and up to the cellular level, it might seem redundant to mention the importance of synergy in the corporate world. After all, in theory at least, companies always aim all their energy in the same direction to fulfill their vision and carry out their mission – and to do so in alignment with their values.

Unfortunately, theory doesn’t always translate into practice. In real life, communicating the value of synergy to professionals is not so difficult, as every piece of evidence points to its importance. Actually, a manager’s biggest problem is getting them to effectively adopt a proactive synergistic attitude.

The fact is that barriers exist that can effectively prevent teams and companies from acting with true synergy. These barriers are mainly historical, organizational, cultural and behavioral.

History

The first barrier is historical and its origin can be found in the Industrial Revolution. The period between 1760 and 1840 saw the development of mass production processes of various goods. Both to take better advantage of the new machinery and to increase the productivity of labor, the production process was fractionalized, that is, each department would manufacture only a part of the product – a very different dynamics from what had existed until then.

Artisans traditionally looked after every part of their products and, therefore, had an all-embracing view of things. Shoemakers took care that the density of the sole was such that it would make it easier to sew the leather seams. Tailors cut a piece fabric already bearing in mind the trappings they would later include. Bakers prepared their own yeast and relied on their experience to bake the right amount of bread to sell. The vision of the whole was also passed on to apprentices and everyone worked synergistically, even in large workshops, so that the various evolutions and innovations of the production process happened organically – that is how new recipes, new models, better products emerged. In effect, everyone’s goal was the same: to do a good job serving customers, in an efficient manner for the workshop as well, earning their goodwill and thus bringing in more work. In other words, they applied the 4Es of elegance, efficiency, eloquence and eminence.

When machines came into the scene, organic innovation became a problem. After all, equipment only did things the same way and changing the process was not seen as innovation, but as subversion. This is how workers stopped feeling responsible for the evolution of the company. This is how the “this is not my job”, “I do my part and that’s all” and “I’m not paid to do this” mindset emerged.

The practical effect of this attitude was that the entire focus of the companies became concentrated on the E of efficiency. Even in cases where the 4 Es could be seen, they were kept siloed in the departments, often separately. Elegance was for the research and development team, Efficiency was for administrative personnel, Eloquence for Marketing and the Eminence was entirely financial. Overall, employee engagement was minimal in the entire process. Most people in the companies did not think about innovation (elegance), did not give a damn about efficiency gains, did not care about the image of products (eloquence) and this because they did not participate directly in the results (eminence).

More than 250 years have passed and the strategy of compartmentalizing production processes and dividing companies into departments continues to be widely adopted in every industry. If everyone does it, it must be a good idea – or so it would seem.

However, what we cannot fail to see is that much has changed in the last quarter of a millennium and that people want to produce in other ways, they want to feel protagonists in their work environment and want to take active part in the innovation processes.

The good news is that companies, likewise, no longer want to have cadres of amorphous and emotionless people. The corporate environment increasingly values ​​proactive people with a thirst for innovation and a hunger for market share.

The problem is that this new vision does not automatically favor synergy between professionals and departments, and this happens because of another barrier, which I will address next.

Organization

As we mentioned before, since the Industrial Revolution professionals have developed a rather individualistic view of their role within companies. The “You do what is yours I do what is mine” mentality has become so deeply embedded in the world of work that it is difficult to discover whether it was the individualism of employees that inspired an ultra individualistic career rewards system or whether individualized rewards undermined the value of the whole in companies.

Most companies have created meritocracy-based compensation systems and career plans – which is great. The problem is that, in most cases, organizations reward performance individually and fail to celebrate – or even consider – their professionals’ ability to promote synergistic actions. In other words, if an executive in one area collaborated with another sector and this generated profit, he is generally not recognized or rewarded for his ability to act synergistically.

The issue is organizational. The most common reward methods, such as commissions, reinforce individualized actions. The result is that in most commercial departments, sales professionals are of the “one man show” type. They follow the style of James Bond, agent 007, who is part of a large organization but who always acts alone in his missions. His rewards and prestige is always individual.

And there is yet another difficulty: most companies today are divided matrix-like and by business units. This creates internal islands. I believe in the importance of focus for each business unit to grow, but this can undermine synergy and the synchronicity between the parts and the whole, with unequivocal negative effects on financial results, because it hinders the opportunities of cross-promotion and tie-in sales.

The point is that the list of challenges has changed over the last 20 years. The same modern technology that makes things easier for consumers has generated greater complexity in the internal processes of the companies, which now require multidisciplinary teams working in synergy to address the challenges of a rapidly changing scenario. Today’s missions require X-Men, heroes with different expertise who work together to attain significant results. Individual gains depend on the success of the group. Awareness of this changes everything.

Companies that value synergistic actions tend to create results-driven profit sharing systems, which motivates teams to act in an integrated fashion and prevents professionals or sectors from having the impression that no one will duly recognize them .

Motivating professionals solely by individual commissions is a practice that activates parts of the human soul that reinforce selfishness and reduce the urge to collaborate, which leads us to another barrier that hinders synergy.

Culture

Western culture reinforces individualism. Unfortunately, however, in the wrong way. It leads us more toward selfishness than toward the development of individual talents. This distortion is typical of post-industrial capitalism. Because most organizations in our society distribute awards individually, people become unaware of the importance of collaboration. This happens in schools, in sports, in universities and even more so in companies.

Subliminal ultra-competitiveness is highly valued in the lives of people and is served to them every morning in a bowl of cereal for children, in every click of the teenagers and permeates all adult relationships. The search for unattainable models of success, beauty and fame only reinforces individualism. From an early age, people are encouraged to shine on their own. Only recently, no more than 30 years ago, have some pedagogical lines began seeking to value individual talent based on their ability to integrate with their group.

Until very recently people were educated to “take care of their own”, to “do their part” and to “not meddle in what was not called.” Meddling in the lives or activities of others, even with the best of intentions, is still considered impolite in various cultures. In the Western world, collectiveness is often a source of annoyance. This individualistic vision disseminated in our culture generates unfolding in the personal scope, which we will see next.

Behavior

Because people are not educated to collaborate, they develop mental attitudes and behaviors that prevent synergy.

Because synergy is putting all energies in the same direction, any behavior or feeling that hinders this is a threat. It is as if these negative energies contaminated the process.

In the corporate world, the most common behaviors are: distrust, ultra-competitiveness, laziness and envy.

If someone is suspicious of a colleague in their team or of a group in another department working in the same project, they will unavoidably adopt an attitude that hinders the flow of synergy.

If someone is ultracompetitive and thinks they have to win always, in every argument and situation, they simply lack enough emotional intelligence to work synergistically. In synergy, the winner is the collective project, not the individual.

A selfish person is someone who thinks he or she has to shine on their own and win the rewards for themselves. Therefore, they don’t collaborate. They don’t share knowledge or even their lack knowledge, they don’t point out opportunities or warn of threats. Very often they state they don’t have time to help, but this is just an excuse; other times they don’t even attempt to disguise their ill-will. Such people do not have the slightest vocation to work synergistically.

Not to mention those who are envious, who never want to see anyone doing well, being happy or getting recognized. They sabotage the synergistic processes so that the laurels are not divided. They simply does not want to see “the guys from the other department” happy or resents the fact that, having collaborated in a project, others will earn commission or a bonus. An envious person never wants other people’s cakes to have a cherry.

It is frustrating to have to admit, but the human soul is full of black holes and this makes the task of managing people a challenge that cannot be overcome if problems are not faced head on.

It’s important to make it clear that internal competitiveness is welcome, it brings energy to the team, it’s good for productivity. But this only happens in an environment of healthy competition. And this means much more than simply having good intentions; wise companies can convey to employees at all levels and sectors that the sum of the efforts of different business units is always greater than their respective, isolated performances.

Thus, in order to address the historical, organizational, cultural and behavioral barriers that prevent synergy, companies must empower a professional with direct links to the CEO who is able to eliminate problems and promote synergy. We can call him Chief Sinergy Officer (CSO) –his role is similar to that of a conductor and his mission is to integrate the different areas of the company in the pursuit of synergistic actions.

When he took over the Walt Disney Co. in the 1980s, Michael Eisner also took on the task of making a firm grow consistently. He found that the shortest route would be to create synergies between areas. However, for his vision to become reality, he personally rolled up his sleeves and acted as a CSO. By identifying opportunities to make different areas work together, he promoted integration. Eisner realized that it was not only movie-based attractions that filled the parks; rather, movies with scenes that brought as many emotions as a roller coaster ride also drew crowds. It was not long before scriptwriters were encouraged to create scenes that might become attractions. Every opportunity for synergy was full exploited: movies, soundtracks, home videos, park rides and attractions, costumes and toys at Disney stores – everything coordinated to optimize each investment. If now people queue up to enjoy movie-like thrills at attractions such as Pirates of the Caribbean at DisneyWorld, they should thank the vision of this legendary executive.

Eisner’s strategies, combined with his legendary proactivity, have made this CEO a veritable model for what I call CSO.

The 4Ss of the Chief Sinergy Officer

The person in charge of fostering and protecting synergy in a company, whom we are calling CSO, has the mission of achieving the 4 Ss: surmounting, sapience, sociability, and synergy.

When I say Surmounting, I mean overcoming or rising above the main barriers mentioned above. To achieve this, the CSO must develop strategies, tactics and tools that will help create a climate of healthy cooperation among teams, allowing the flow of synergistic actions.

This may involve changing compensation schemes, career paths (including job descriptions and salary plans), the way goals are set, the distribution of commissions and bonuses, and how teams are formed.

Sapience means applying the lessons learned from surmounting the barriers against synergy to improve the internal processes in pursuit of the third “S,” Sociability.

When I say sociability I mean, literally, the ability to be social, that is, to both share and get along with others. Socialization is essential for people to get to know the company as a whole. Socializing ideas and concepts allows people to work together in ways that everyone grows.

I particularly like the fact that the notion of “social” is at the root of this word, reminding us that everything we do has consequences for other people, that our efforts and energies always impact people, teams, companies and society.

The value of synergy

Those who imagine that Synergy is too ethereal a concept to be quantified should observe its effects on companies and conglomerates that value it and apply it systematically, such as 3G Capital, Walt Disney Co., Apple and Netflix.

A surprisingly large number of private equity firms focus on short-term returns for their shareholders; others, however, achieve similar or better results by establishing long-term policies – such as 3G Capital, which is constantly seeking to capture synergy opportunities for the group’s companies, and even created mechanisms to ensure that synergistic actions are prioritized.

Organizationally, for instance, 3G Capital developed a business model and an organizational structure that identify and reward meritocracy in alignment with the transfer of knowledge and expertise (which is the basis of synergy).

To achieve the kind of harmony that synergy requires, all the group’s businesses follow the same set of time-tested rules, including changes in corporate culture, cost-cutting initiatives, zero-based budgeting, and a focus on profitability.

One of the company’s traditions is to move executives among companies of the group so they can learn to identify opportunities for synergy. A good example was the executive who had been CEO of America Latina Logística and Burger King, and was named CEO of Kraft Heinz. After learning the details of the fast food retail industry, this individual had a living experience of what it means to be on the supply side of the same market. After all, you only recognize an opportunity when you are knowledgeable enough to identify it.

At the Walt Disney Co., the synergy between different businesses emerges quite clearly. The company prioritizes the release of films with the potential of being turned into attractions in parks, themes for shows and merchandise for the stores. Movies like Frozen, for example, impact each and every one of these businesses. The film publicizes the soundtrack and generates interest in toys, costumes and myriad categories of licensed products related to the Frozen mythology. Other films, like those of the Star Wars franchise, are carried over to ABC’s interview shows and newscasts.  In short, the corporation learned that every step, every investment can reverberate in every business, and that synergy was the shortest path to the financial success of the group as a whole.

In order for this to happen and be effective, the Walt Disney Co. developed internal communication strategies that, whenever a new film is released, enable every business of the company to simultaneously offer related products.

Netflix is ​​another example of faith in synergy. In addition to using their own spaces – e.g., their website’s landing page – to promote its programs, the production and distribution branches also use the gathered information on the tastes and preferences of subscribers to guide their investments in original series – and to maintain people’s interest in their offerings.

One of the most eloquent examples of the ability to optimize opportunities is Apple, another masterful company when it comes to orchestrating synergistic actions. From the very start of the iPhone project, there was a vision that it would be connected to the iTunes store, and that in the future the partnership was destined go way beyond the mere sale of songs, iTunes’ original function. As iTunes became a major apps distributor, it made the iPhone even more amazing and innovative, because consumer choices at the iTunes store now help to customize iPhone functions, which translates into empowering their users. As this feeling of power is almost intoxicating,  each iPhone user becomes an advocate for the device and a publicizer of the latest iTunes novelties. The synergy between these two Apple divisions reinforced its innovative mien and brought immeasurable benefits to the company in terms of image – not to mention billionaire financial results in app sales.

In addition to the direct gains derived from collaborative action, these synergistic efforts are also likely to arouse the interest of both traditional media and consumers. Thus, instead of paying for media or investing in their own media, these companies may be spontaneously mentioned in editorial pages, as well as by consumers in social networks (earned media), enhancing the credibility and visibility of their products.

The truth of the matter is that not acting synergistically is more than a waste of earning opportunities; it constitutes a dangerous waste of resources. Much like the human body, when something doesn’t go well or act in the best interests of the whole, the whole system is compromised.

Acting synergistically means that a company will always navigate a Blue Ocean, free from competitors. Thanks to synergy, it’s possible to see and seize opportunities efficiently and strategically.

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