A synergy is a nonlinear relationship between two or more elements whereby they generate a combined outcome that is more or less than the sum of their parts taken separately, due to their capacity to work together or against each other. The idea of a synergy is one of the core concepts within systems theory in that it forms the foundation to the idea of emergence and the concept of a system as being more than the sum of its parts.
Although the basic idea of a synergy is of importance in many different domains of science, management and engineering its existence as a generic term is not always noted. The term takes various forms in different areas, being strongly associated with such concepts as emergence, interdependence, cooperation, self-organization, order and interaction among others.1 The interactions between the parts of an organization can be defined as either linear or nonlinear. Linear relations are those that simply combine or recombine the parts without that interaction changing the overall system. For example, a zero-sum game involves linear interactions where the parts exchange resources but the overall amount does not change. Thus linear interactions do not add or subtract value above that pertaining to the elements within the system. In contrast, a nonlinear interaction is one that adds or subtracts value from the whole. A non-zero sum game would be an example of this, due to the cooperation between actors the overall pie can get bigger, thus adding value to the combined organization. Synergies define a nonlinear relation between the parts of an organization. Unlike linear interactions that are context-independent, synergies are context-dependent, the overall value is added out of the interaction between two or more specific parts. With synergies, it is the interaction that adds or subtracts the value and that interaction is dependent upon the specific components that are combined within it. For example, synergies will only occur within a business if the right people are connected in the right way, in the right context. We can not just connect any people in any fashion, doing so would remove the synergies.
Interdependence is a foundational part of synergies. The elements within a positive synergy are interdependent in that they have to each perform different functions or roles with respect to each other. For example, a football team works synergistically due to the various roles that the members occupy within the whole organization. Moreover, not only do they have different roles within the team they are also adapted to and interdependent on the specific characteristics of the other members of their team. If we suddenly switched the quarterback from one team and put them in another we would likely find the performance reduced substantially. In this way, synergies are always contingent upon the particular context within which the component parts have developed interdependencies with other elements in that system. This is in contrast to linear relations that do not engender interdependencies. For example, in building a brick wall we could just swap out one of the bricks and replace it with another of the same specification or move the block from one place in the wall to another.
Differentiation and Integration
This interdependence between the parts within a synergy is a function of the degree to which they are both integrated and differentiated. Differentiation means that the parts are performing different functions or occupying different states with respect to each other. All the players on a football team do different activities, the bees in a colony perform different functions, the cells, tissues, and organs of the human body perform different functional roles. This differentiation means that the parts can focus specifically on a limited number of functions and thus perform them more efficiently as they become more specialized. But differentiation is of no use if those different parts can not be then reintegrated towards performing a collective function. All the members of a team or the members of a business need to be coordinated into the common process required to achieve the overall objectives.
Integration is just as important as differentiation in that it ensures all the different parts are working together. It is only by having the integration mechanism of market changes that we can all do different specialized occupations, without the macro systems for integrating all our differentiated skills we would not be able to specialize. In every synergy and relation of interdependence there is a dynamic of differentiation between the parts – that is to say, they must be doing different things or in some way have different form and structure – and of integration so that they create a combined organization. The degree of effectiveness of the organization will be largely defined by the extent to which this is achieved and how balanced the dynamic between the two is.2
A positive synergy describes how the combined organization is more than the sum of its parts due to the parts working together constructively. Indeed, the term synergy can be defined as a measure of the effectiveness of the joint efforts of various subsystems acting in coordination.3 Positive synergies are a product of the elements effectively achieving both differentiation and integration.
For example, in the process of brainstorming to come up with new ideas, the process will be most successful if given a wide diversity of ideas and the capacity to synthesis those different ideas into a finished outcome. Positive synergies in group decisions may well include the generation of more ideas, more creative solutions, a greater acceptance of diversity, increased acceptance of the decision by team members and a greater capacity to work together towards delivering a finished solution.4
The degree of positive synergy in a group can be understood as a function of the level of both differentiation and integration added to how balanced these two are. The more specialized the parts, the greater their integration and the greater the balance between these the more functional the overall system will be.5 The human body can perform the many functions that it can because of both the extremely high level of differentiation between its parts – creating interdependency – and its capacity to integrate those. Simpler organisms lack this high degree of differentiation and integration and thus lack many of the functions of the human body. Likewise the same would apply to a multinational corporation, to a production process, or a technology. A modern car delivers much greater functionality than one of fifty years ago; but to do this, a car today has about 30,000 parts, which are all well integrated. A computer can perform many more functions than a calculator because it has many more specialized subsystems that are coordinated. Thus it is this combination of differentiation and integration that creates positive synergies and creates the functionality that adds value to the whole organization.
A negative synergy is a nonlinear interaction where the combined outcome is less than the sum of the parts effects taken in isolation. A good example of a negative synergy is competition, such as an arms race, it is the specific way the two parties interact that we get the overall outcome that is counter-productive and detrimental to all. Another example of a negative synergy would be two creatures fighting over the same territory. Negative synergies can be understood as the failure of the parts engendered in the relation to differentiate or integrate. Either the parts become too different without integrating – meaning they are doing very different things and can find no way to interoperate – or vice versa they become too integrated and similar. An example of the former might be a body of knowledge becoming too specialized without finding ways to interrelate the different domains, the result being fragmentation. The same could be true of a family as the members grow-up and become focused on their particular lives without being able to find common ground between them. Worse than fragmentation the parts can end up pulling in different counteractive directions, such as in a meeting where the members have different ideas while needing to find a common outcome thus leading to deadlock and potential conflict. Too much integration between the parts can likewise create a negative synergy as all the parts come to occupy the same state, the full set of possibilities are not explored, there is a lack of specialization and diversity, and there can be crowding out as all the parts try to occupy the same state or function. A good analogy for the negative synergies of both over integration and over differentiation would be the example of free market capitalism and communism. Free market capitalism often overemphasizes competition resulting in a lack of integration, ending up with millions of products on the market, all competing as they assert their difference and merits while many of them are the same, resulting in an excess of economic activity going into differentiation and a loss of overall productivity. Likewise, communism worked in the opposite direction with an over emphasis on the commonality between people and their economic activities, with the result being a lack of capacity to harness the individuals’ diverse motives.