Synergy — another 4-letter word

A friend and professor of mine, Peter Goodson, teaches the meaninglessness of the term “synergy” when applied during a merger or acquisition.   Essentially, he has found that M&A folks who use the phrase ascribe it to anything that cannot be measured or accurately determined through logical means.  Peter’s beliefs reflect my own experience.

I recently left a large company well known for its technology acquisitions.  In the course of my tenure there, the company acquired as many as 30 firms a year!  In virtually every case the successful purchases were those strongly grounded in immediate, short-term, and tactical improvements to the technology portfolio.  Less likely to succeed were acquistions that were designed to build market share.  Failures tended to hinge on some unknown factor — the mythical “synergy”.

But I think there is a valid place in technology portfolio analysis for the term synergy when it’s used in a restricted sense.

Technological synergy is a powerful concept that describes how multiple products or technologies work together in a clearly defined and differentiated system.   This system could be a solution that incoporates a number of products in a new and compelling way.  It might be a number of code modules that are recombined in a unique manner.  It might be as simple as a mashup of web information into a single interface that drives consumer interest.

In all such cases synergy provides

1. Something unique and different
2. Something greater than the sum of its parts
3. Something compelling

Because I frequently work across technology companies (usually strategic technology alliances) and with a wide range of portfolios, I’ve seen technical synergy frequently occur when assembling multi-vendor solutions. 

One such solution was the first Video-over-IP (TV over Ethernet) delivered by FastWeb in Italy.  The solution included encoders/transmission gear/set-to-boxes/etc. from a number of vendors all brought together in a new and powerful way.  While working on this early deployment of what has become commonplace I was struck by how all the parts were already available.  Not a single new product needed to be developed, they were all already in place.

Another technology synergy I worked with was an MPLS open-access system for DOCSIS cable modem ISPs (Comcast, etc.)   When designing this system we used all off-the-shelf code already resident on the CMTS systems from Cisco.  No need to write new code or develop new products — we just needed the creativity to combine old products in new ways to build “synergy”.

~ by joelmckelvey on July 3, 2009.