They learn, evolve and eventually die in 13 years, plus or minus 5.
They consume sales, and excrete costs.
They are omnivores. The more sales a company consumes than costs it excretes, the more it grows.
Yet most companies operate like machines that walk at right angles, with one foot stuck in the tar pit of analog. In the industrial era, a business was like a clock with a long and short hand, devised by engineers and pencil-pushed by accountants for maximum productivity; every worker was an undifferentiated cog and wheel, interchangeable, disposable.
This machine-view of business operations prevailed because smokestack industries were stable, predictable; the most valuable assets were hard and fixed; electrical plants, factories, work-in-progress inventory, and finance capital. Deprioritizing humanity for the sake of optimizing profit was considered good business judgment, because human bonds were too fragile. Ayn Rand’s Fountainhead popularized the notion of companies being the birthright of clever individuals atop a pyramid of workers who did their bidding. Thus, management people were the brains and relationships were secondary.
But in this new digital ecosystem, the business world is a vast, murky and clandestine rainforest, where machines constantly bump into things, spin uncontrollably, rust and malfunction. Henry Ford, a pioneer of the mass-market automobile industry, once said “Any customer can have a car painted any color that he wants so long as it is black.” As a monopoly car manufacturer, such arrogance by Ford was pardonable, but today’s customers want personalized experiences and different products and services every day.
In order for a business to survive threat of extinction, companies have to create a new nervous system, and high performance infrastructure. It must be responsive to environmental changes as a living thing would; and protect crucial nerve endings from getting damaged and paralyzed. For example, if you are in a cold environment and you don’t know; you are dead. This is an advantage living organisms have over machines. Machines don’t know they are dead. In my experience, the business’ nervous system can be destroyed by miscommunication and conflict, if there is no understanding of self and management.
Thus, a knowledge system that is distributed throughout all the employees must be restored, where continuous p2p learning about one’s environment is the aim. This process is not mechanical; learning is creative, fluid, soft, messy and magical. And the power of digital is that it automates the mundane and frees up bandwidth to do more learning. Employees can be then redeployed to think, strategize, learn and see into the future.
As a result, companies need to invest in connectedness both internally and externally. And move away from centralizing digital like it is another cog and wheel. Evolutionary biology defines an organism as a body composed of different pieces that coordinate well for a common purpose. Organisms have self-control and derive power from within. In his book, “Living Company”, Arie De Geus argued that as a living organism organization’s first loyalty is not to any individual or crowned figurehead, but to its existence, growth and factors that extend its longevity.
A living company is a connected company.
A connected company operates as a band of self-directed pods that are supported by platforms and connected by common purpose, not by fear of a supervisor. Amazon and Google are great examples of the open, living, connected company. They disperse digital staff across key departments, with change agents that lead key initiatives, set up processes, and synthesize the dots while empowering others to lead. They see companies as a complex ecosystem of connections and potential connections. Here is the survival kit for a living company:
- Living companies have to encourage creative binging. E.g. Google used to give its workers 20% of time to do side projects which produced Adsense and Gmail.
- Living companies have to have a strong, unified culture. See sustained superior performance of Proctor & Gamble, Zappos, Netflix, because of the importance of culture.
- Living companies have to be self-aware and in touch with the world around them constantly on the prowl for new opportunities. E.g. Google investing in self-driving cars and home automation(Nest). Facebook investing in virtual reality (Oculus)…
As we move towards the next wave of digital disruption, customers will be more and more connected with each other on mobile, social and the cloud. A successful company must adapt, reinvent its product and services and connect with customers. The best way to do that is as a living company not a dead machine.