Every once in a while it happens: you read an article that triggers you in so many layers of your brain that your thoughts immediately begin to wander off uncontrollably. It happens to me anyway, for example with this article I read about social business design. The article The connected company by Dave Gray starts off with companies and their struggle for existence, their growing pains and design failures causing all that. According to the author, the answer to that is social business design. Be that as it may – and it surely is an interesting and inspiring approach and you should definitely read the article – that’s not the part that triggered me most. What did trigger me more was the comparison between companies and cities.
I will not summarize the article – that would definitely devaluate it – but in the first part of the article the author starts comparing companies to cities. He mentions at some point that ‘companies that last’ and cities share some characteristics. I’d like to dwell on that for a minute because that metaphor is, as said, the part that triggered me.
According to the author, these are (some of) the characteristics of ‘companies that last’ that they have in common with cities:
Ecosystems: Long-lived companies were decentralized. They tolerated “eccentric activities at the margins.” They were very active in partnerships and joint ventures. The boundaries of the company were less clearly delineated, and local groups had more autonomy over their decisions, than you would expect in the typical global corporation.
Strong identity: Although the organization was loosely controlled, long-lived companies were connected by a strong, shared culture. Everyone in the company understood the company’s values. These companies tended to promote from within in order to keep that culture strong. Cities also share this common identity: think of the difference between a New Yorker and a Los Angelino, or a Parisian, for example.
Active listening: Long-lived companies had their eyes and ears focused on the world around them and were constantly seeking opportunities. Because of their decentralized nature and strong shared culture, it was easier for them to spot opportunities in the changing world and act, proactively and decisively, to capitalize on them.
So these companies were decentralized with ecosystem-like autonomy, had a strong shared culture and were actively focused on spotting opportunities outside of the company. If you add to that the fact that when companies grow (not ‘companies that last’ but companies in general), on average their productivity tends to decrease (per employee) whereas cities have increased productivity per capita when they grow, we now have quite some food for thought. Within these borders, I tried to explain for myself why cities become more productive when they grow. Is the author right in stating that we should organize and manage companies more like cities, supported by the fact that ‘immortal’ companies resemble cities much more than other companies do? Should we indeed try to manage companies rather than control them, similar to cities?
I truly believe the author drew a very truthful metaphor here. From a competitive intelligence point of view, I hardly know where to start summing up all the parallels. When it comes to the ecosystem part, I think the most important factor here is that an ecosystem should stimulate and facilitate initiatives for growth and innovation. By allowing the eccentrics, as the writer calls it, it facilitates creativity and thinking outside the box. There have been many examples of successful companies that display this kind of behavior to stimulate their employees to share their ideas for new products, improvements, et cetera. By stimulating partnerships and joint ventures they make sure the company expands its wisdom and that it is continuously challenged to innovate.
The fact that the organizational structure is decentralized shows that the company puts trust in the people in the field. They are the experts in their particular line of work and they should be made responsible for their turf. If they can operate as a more or less autonomous entity, it becomes their personal interest to perform!
Personally I believe this is an important aspect for every organization. I’m not saying every organization should ultimately be fully decentralized, but to a certain extent I believe people perform best when they are partially (if not wholly) responsible for their own tasks, making it their personal benefit if they do well (profit sharing for instance) and their personal problem when things go south.
And finally, the author states that one of the important shared characteristics is the fact they actively listen to their environment. That is almost the very definition of competitive intelligence (and no I did not pay the author to say this)! The first two characteristics set the starting point for this. If a company is decentralized, the right knowledge is present in the autonomous decentralized units (or at least I believe that’s a fair assumption). But in order to do things in a similar way and prevent overlap in activities, the centralized units need to communicate (either directly or via corporate). And that’s where shared values and culture play a role. Anyone in the organization needs to focus on their own activities, but care about the rest of the company. They should be aware of the rest of the company to help spot opportunities and possible synergy. And they should be willing to share for the benefit of the whole, instead of keeping everything to themselves.
What you have then created is the perfect environment for competitive intelligence activities, or for that matter for ‘actively listening to your environment to spot opportunities in a changing world’. You need to do that to survive. No matter how long a company can exploit their once unique and winning product, it will not last forever. Companies that keep winning are companies that – in a changing environment – change accordingly. No matter how powerful Shell is now, if they would stick to conventional fuel they will at some point lose.
A classic but still painfully clear example is the car industry in the United States in the seventies. Back then dominated by Detroit-based car manufacturers Ford, General Motors and Chrysler with no possible entry for non-American companies. But then the outside world changed drastically. Due to the oil crisis, fuel became much more expensive and ‘miles to the gallon’ became an issue for the first time. Besides that there was a more subtle demographical shift towards smaller families. The latter can arguably be missed but somehow I doubt if anyone back then didn’t see the first. Regardless what they knew, the Big Three refused to act on it and never started producing smaller cars with better mileage. Those changes in the environment did create a market segment and they either didn’t see it, or refused to act accordingly. As a result of this ignorance (or arrogance), opportunities were created for those out there that did watch the outside world (from their perspective). All of a sudden, there was a possible entry to this huge market! This is when Toyota first started selling cars in the US on a serious scale, expanding their market significantly. The rest of this story I believe is history.
So if and when the writer is right that these are the shared characteristics of ‘companies that last’ and cities, I fully agree with him that this increases the chances of survival for these companies dramatically. Cities last thousands of years and become more productive when expanding, both not being typical characteristics for the average company. So companies can learn a lot from cities, increasing their chances of survival by creating the right company structure (ecosystem) and company values (identity). And once they have done that, they can further develop their outside focus and anticipate on opportunities granted by a changing environment. So – with that in mind – is Competitive Intelligence really the elixir of life and will using it grant you immortality? No of course it isn’t, I’m sorry to say, but not drinking it surely diminishes your chances of survival.
The connected company by Dave Gray (Communication Nation)