Applying systems design principles to business
A system is a collection of elements that interact to produce an effect that cannot be produced by any subset of the elements.
This interesting definition of what is a system guides Haeckel to define the synergy (the glue between the elements):
Defining synergy as a result that is "more than the sum of the parts" is closer to the mark. This definition, for example, is what the corporate office of the General Electric Company (GE) achieves by lowering the cost of doing business for its subsidiaries. Because they are part of GE's portfolio, the subsidiaries benefit from the economies of scope that come from sharing the GE logo: GE's AAA investment rating, GE's worldwide telecommunications network, and GE's 'boundaryless' knowledge, to name some of the assets that are shared accross units. The result is that the units are more profitable as part of GE than they would be as separate entities, which means that GE's revenue and profit are more than the sum of its part would produce as separate companies.
This interesting definition of what is a system guides Haeckel to define the synergy (the glue between the elements):
Defining synergy as a result that is "more than the sum of the parts" is closer to the mark. This definition, for example, is what the corporate office of the General Electric Company (GE) achieves by lowering the cost of doing business for its subsidiaries. Because they are part of GE's portfolio, the subsidiaries benefit from the economies of scope that come from sharing the GE logo: GE's AAA investment rating, GE's worldwide telecommunications network, and GE's 'boundaryless' knowledge, to name some of the assets that are shared accross units. The result is that the units are more profitable as part of GE than they would be as separate entities, which means that GE's revenue and profit are more than the sum of its part would produce as separate companies.
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