Negative Synergy & Dissynergies – How To Avoid Them Post-M&A?

There is a strong correlation between the size and success of a company and the number of mergers and acquisitions (M&A) it undergoes. However, they can also result in unfavorable dis-synergies that hamper the merged company's efficiency. When the combined performance is less than the sum of the individual performances, we say that there is negative synergy, and when there are dis-synergies between the parts, we say those parts are to blame.

To avoid these unfavorable results, it is necessary to pinpoint and rectify the underlying causes of dis-synergies, such as cultural differences, competing processes, and incompatible systems. Implementing an intranet synergy system that proactively identifies and resolves these difficulties is a viable method to limit their effects.

This article will discuss the concept of dis-synergies and negative synergies and give examples of how to avoid them by implementing an intranet synergy system. 

Understanding Negative Synergy – A Complete Guide​

Synergy is a term that refers to the interaction of elements in a system that produces a total effect that is greater than the sum of individual parts. In business, this term is often used to describe the impact of teamwork and collaboration. However, not all synergies are positive. 

Negative synergy refers to a situation where the interaction between elements results in a total effect that is less than the sum of individual parts.

The business sector employs the phrase "negative synergy" to characterize situations in which the combined performance of two or more companies is lower than the sum of their individual performances. It's a case of the whole being inferior to the sum of its components. 

This can happen when businesses join forces, form alliances, or collaborate on a project. 

Knowing the potential pitfalls of negative synergy is crucial to the success of any merger, partnership, or initiative. Discover what negative synergy is and how to avoid it with the help of this comprehensive guide.  

What is Negative Synergy? ​

When two or more entities are combined with decreasing performance compared to what would be achieved by each entity acting alone, this is known as negative synergy. This may occur when two parties have incompatible objectives, methods, or worldviews. 

There are several factors that can contribute to negative synergy in a business. 

Some of the most common causes include:

• Miscommunication - When different elements within a system do not communicate effectively, it can result in confusion, misunderstandings, and wasted time and resources.
• Conflicting priorities - When different elements within a system have conflicting priorities, it can result in a lack of alignment and cooperation, leading to negative synergies.
• Lack of collaboration - When different elements within a system do not work together, it can result in duplicated efforts, conflicting goals, and ineffective use of resources.
• Incompatibility of systems or processes -  When different elements within a system use different systems or processes, it can result in inefficiencies and reduced overall effectiveness.

Negative synergy can occur, for instance, if the sales divisions of two corporations join but their respective approaches to customer service are in conflict.  

Negative Synergies – What Causes Them? ​

In contrast to positive synergies, negative synergies occur when the combined performance of many entities is worse than the sum of their individual performances. It's possible to find yourself in this position after a merger, acquisition, or commercial alliance. Identifying the root causes of synergy problems is essential for finding solutions.

Some of the most common consequences include:

• Decreased productivity - When different elements within a system do not work well together, it can result in decreased productivity, as resources are wasted and efforts are duplicated.
• Reduced efficiency - When different elements within a system are not aligned, it can result in inefficiencies and reduced efficiency, as resources are not used effectively.
• Decreased morale - When different elements within a system do not work well together, it can result in decreased morale, as employees feel frustrated and unappreciated.
• Decreased customer satisfaction - When different elements within a system do not work well together, it can result in decreased customer satisfaction, as customers are not served effectively.

Disagreements in values, a lack of a common language, and other consequences of cultural gaps can have a chilling effect on any collaboration. A number of processes, including those involved in making decisions, exchanging information, and managing projects, can stymie productivity and lead to a loss of synergy. Difficulties in integrating the entities due to differences in systems like databases or technological platforms might result in unfavorable synergies like greater costs or decreased efficiency.

Similarly, negative synergies and conflicting priorities can arise when separate entities have distinct aims and purposes. For example, in a joint venture, one company may prioritize expansion while the other prioritizes profit. When employees of one firm fight against adopting the methods and procedures of another, this is an example of the negative synergy that can result from resistance to change. Negative synergy can result from misunderstandings, mismatched goals, and opposing processes that stem from a lack of communication between the involved parties. 

Another source of negative synergy is a failure to clearly define individual roles and duties, which can result in misunderstandings, unnecessary work, and ineffectiveness.

The root causes of negative synergies must be identified before firms can take corrective action. This may necessitate the creation of new systems or the modification of existing ones to facilitate integration better. When businesses do this, they increase their chances of success by ensuring that the combined performance of the entities is greater than the sum of their separate performances.

How can you avoid negative synergy? 

 Negative synergy can be avoided by several means. The first step in preventing negative synergy is understanding what is causing them. This can be accomplished through in-depth research into the entities' inner workings, structures, and traditions.

Identifying the causes of negative synergies is the first step in formulating a strategy to eliminate them. This may necessitate the creation of new systems or the modification of existing ones to facilitate integration better.

To counteract these synergies, the next step is to implement the plan. Changes to processes, systems, or culture, as well as the introduction of new integration-friendly systems, may be required.

To verify that any negative synergies are being handled and that the entities are cooperating efficiently, it is crucial to conduct regular progress reviews.

Negative synergy, then, is a phenomenon that can occur when entities operate together and can significantly affect the outcome of a merger, collaboration, or project. By identifying the causes of negative synergy and taking corrective action, failure can be prevented, and success ensured.

Dis-Synergies Examples 

When two or more entities work together, yet their overall performance is worse than the sum of their individual performances; this is an example of dis-synergies, sometimes called negative synergies. It's possible to find yourself in this position after a merger, acquisition, or commercial alliance. A number of issues can lead to dis-synergies, such as problems with integrating systems, processes, and cultures; layoffs and resulting low morale; loss of important personnel; and lower levels of customer satisfaction, profitability, and brand recognition.

For instance, combining two organizations might be a difficult and time-consuming task. Much like higher costs and lower efficiency, dis synergies can result from combining entities with vastly different systems, procedures, and cultural backgrounds.

Because of the requirement to eliminate redundant employment, dis-synergies can often lead to layoffs or reductions in staff. Dis-synergies can also arise when key employees leave one of the businesses due to the integration.

When a combined organization cannot provide the same level of service or quality as it did before the integration, customer satisfaction can drop.

The integration process itself can be costly, and the additional expenses and decreased efficiency caused by dis-synergies can further impact profitability.

Equally, if dis-synergies arise, the combined organization may find it difficult to keep the same degree of brand awareness and reputation it had before the integration.

The ability to foresee the negative effects of dis-synergies allows businesses to prepare for them and ultimately succeed. Establishing clear communication lines and a unified goal for the combined organization are two important first steps toward achieving synergy. 

Driving Synergy With Intranet Systems – What You Should Know? 

Intranets can be a powerful tool for fostering teamwork within an organization. Intranets can also help in change management. A company's internal communications, teamwork, and knowledge exchange can all benefit from adopting an intranet system. This unified system can significantly boost efficiency and output through streamlined procedures, enhanced decision-making, and more staff engagement.

One of the major advantages of implementing an intranet system is the enhancement of communication. It allows for better internal communication, the dissemination of helpful information, and the advancement of projects, all of which contribute to greater efficiency and output. The company's information, policies, and procedures can all be found in one place on the intranet system, eliminating the need for employees to create duplicate documents or rely on out-of-date resources.

The use of an intranet system can also enhance collaboration, which is crucial to any organization. The intranet may help teams collaborate by allowing them to exchange easily and access documents, monitor their own progress, and more. Results may improve, and output may rise as a result. The intranet system can boost employee involvement by giving workers a way to communicate with one another and with management. This has the potential to make the office a happier place to be and boost mood all around.

Finally, an intranet system can boost efficiency and output by facilitating better channels of communication, cooperation, and data dissemination. An intranet system can promote teamwork by, among other things, automating mundane tasks, standardizing procedures, and facilitating easy access to relevant information. An internal network can boost morale, facilitate smarter decisions, and lead to more fruitful business outcomes. 

The importance of intranet synergy system in 2023 

Intranet synergy systems are gaining popularity in today's corporate landscape. By 2023, most businesses will have adopted intranet systems to facilitate better internal communication, collaboration, and information sharing. Keeping an eye on top workforce management trends is also a good idea.

As the demands of businesses have changed over time, so have intranet systems, which have adapted by incorporating new technology and functions. By 2023, we should see intranet systems that are more open and accessible than ever before, with enhanced mobile compatibility and stronger security measures.

In addition, AI and ML are forecasted to play a more significant role in intranet performance. Algorithms developed by artificial intelligence can, for instance, be used to classify data, recommend specific content to users, and perform repetitive jobs automatically. Potential benefits include better efficiency and wiser choices.

Likewise, the use of cloud-based intranet systems will have increased in popularity. Organizations can benefit from the cloud's scalability, stability, and accessibility, as well as its lower cost and easier management of an intranet system.

In 2023, more businesses will likely adopt intranets in an effort to boost internal communications, teamwork, and knowledge sharing. Intranet systems are projected to become increasingly advanced and feature-rich as time goes on, giving businesses potent tools for fostering collaboration and increasing productivity. 

Final note

It's clear that dis-synergies and negative synergies can have a major effect on the outcome of a merger or acquisition. 

One of the keys to avoiding negative synergies is understanding what produces them, such as competing company cultures and mismatched systems. Organizations may boost collaboration, productivity, and results by identifying dis-synergies and taking action to eliminate them. 

Organizational synergy can be furthered through the use of intranet synergy systems that facilitate greater employee interaction and the sharing of knowledge and resources. 

Furthermore, most businesses will likely leverage intranet systems to produce improved results by harnessing the efficacy of advanced technologies like AI and the cloud.