How-to... Synergy

Once the individual Business Models have been identified, the next step is to consider the potential for synergy between them. This involves analyzing how the separated Business Models can work together in real-world business scenarios, taking into account the availability of resources. The Synergy module is then used to combine and rationalize the separate models into a cohesive and effective overall Business Model for the company.

It's important to consider how many strategically different business models are desired or feasible, given the internal resources and market factors. Should a single business model should be chosen although it's impossible to achieve the optimum performance on all fronts?

If the Separation of business models brought clarity about what needs to be achieved, Synergy brings a rational touch as to what is possible to achieve vs. what is optimal, the kind of organizational infrastructure is needed, and whether it is feasible in the given circumstances.

With Synergy, separated business models are analyzed for compatibility.

The best insight is gained by comparing individual SWOTs and then combining them into a single SWOT analysis. This process provides information on the resources and conditions that are required, as well as whether they are achievable. Depending on the answers to these questions, it's possible to perform the following synergies:

• rationalize all business models within the company and treat them equally, or
• give priority to some (usually from the core activity), and accept less-than-optimal performance of others, or
• give up some business models and focus only on winning ones, or
• separate some business models into different companies.

The usual approach is to make compromises and choose only those business models that create synergy, acting as one strong business model.

Such a "synergized" business model will have a chance of surviving and beating the competition in the market.

Implementing synergy is simple; each category of the synergized final business model should be formulated by comparing and analyzing the corresponding categories of all previously separated business models.

The resulting synergy is thus complete. It now represents the unique Final Business Model of the company.

Example: How Ice Glee LLC abandoned one business model they were considering during the synergy.

It was a Wholesale of frozen cocktails and other  HoReCa assortment to a wide hospitality market.

First. Expansion in that direction seemed logical, but it turns out to be difficult to compete with other HoReCa wholesalers, primarily because the competition delivers goods late in the evening and on weekends, when cafes and restaurants need it the most. To introduce such a delivery time, it would be necessary to hire more people and introduce shifts with unpopular working hours, for which it would be difficult to find new employees and the existing ones would be dissatisfied with shift work.

Second. The existing HoReCa wholesalers had a wider assortment and bound restaurateurs with long-term exclusive contracts.

Third. It would be a big problem because of mixing distribution channels. HoReCa wholesalers do not take kindly to the announcement of Ice Glee's entry into the HoReCa market and some of them started canceling the distribution of frozen cocktail mixtures.

Fourth. The cost of increasing inventory would be high. It turns out that regional warehouses would need to be built as well. There was a need for more vehicles and with larger dimensions, which required specially trained drivers.

That was enough to conclude that the functioning of this business model would not contribute to synergy at the level of the business model of the entire company. It would be too expensive and competitively inferior. It would reduce financial resources for the basic business model. In addition, it would distract the attention of owners and managers from the core business, which would slowly begin to stagnate.