Thursday, July 20, 2006

Is DLS-CSB a “Living” Academic Organization?

According to a famous study conducted by Shell, many companies of Fortune 500 fame live only to an average life of 40 to 50 years. The topic of organizational longevity is an interesting one. What causes organizational failure and demise? This has been the subject of many studies and researches. For instance, Danny Miller in his book Icarus Paradox (1990) used the Greek mythology figure to analyze organizational failure. Icarus made himself a pair of wings to escape from an island where he was being held as a prisoner. So well did he fly, higher and higher, ever closer to the sun. We know that the heat of the sun melted the wax that held his wings together, and he plunged to his death in the Aegean Sea. The Icarus paradox tells us that the greatest asset, his ability to fly, caused his demise. We can prepare a litany of companies that were very successful before that became dazzled by their successes. These companies have become inner-directed and lost sight of market realities and the fundamental requirements of competitive advantage. Like Icarus, these companies have plunged into bankruptcy and drowned in their own success.

Where will DLS-CSB be 40 or 50 years from now? We fervently hope that it will not suffer the same fate as Icarus.

Arie De Geus, in his book The Living Company gives a very insightful analysis of why organizations fail. He believes that most companies fail because they focus too narrowly on financial performance. He argues that organizations must not fail to put sufficient attention to themselves as communities of human beings with the potential to learn, adapt, and grow. To De Geus, a living company emphasizes knowledge rather than capital, adaptability rather than core competencies.

Much has been written about the turbulent and chaotic environment organizations are exposed to these days. Changes in the macro environment and demands of the internal environment have made it very difficult for organizations to quickly adapt to these changes. However, living organizations excel in surviving and adapting in a world that they recognize they cannot control. De Geus, in his study, points out that a policy of tolerance enables a company to diversify without courting disaster; by allowing it to engage continually with its environment without damaging its capacity for growth.

There are companies that do pass the century mark. Interestingly, the study concluded that these companies bore striking resemblances to one another, having four essential traits in common:
  • Sensitivity to the environment – a company’s ability to learn and adapt;
  • Cohesion and identity – a company’s innate ability to build a community and a persona for itself;
  • Tolerance and decentralization – a company’s ability to build constructive relationships with other entities, within and outside itself, and a willingness to experiment; and
  • Conservative financing – a company’s ability to finance its own growth and evolution effectively by retaining resources that enable flexibility.
De Geus has an apt name for these organizations - “living companies”, as distinguished from “economic companies”. Living companies have an important purpose, which is to fulfill their potential and perpetuate themselves as ongoing communities. Economic companies on the other hand, are in business to produce wealth for a small inner group.

He writes, “A manager of a living company… must let people grow within a community that is held together by clearly stated values. The manager, therefore, must place commitment to people before assets, respect for innovation before devotion to policy, the messiness of learning before orderly procedures, and the perpetuation of community before all other concerns … The feeling of belonging to an organization and identifying with its achievements is often dismissed as soft. But case histories repeatedly show that a sense of community is essential for long-term survival.”

An economic company, whose purpose is to produce wealth for a few people is likened to a static puddle of rainwater, collecting any new drops into its stagnant basin, while a living company is like a river – turbulent and changing but permanent and always ready to aid a species’ learning.

Does DLS-CSB have what it takes to be a living company? Will it still be around after 50 years? A commitment to values, to people, to learning, and to innovation is necessary to be a “living company”. Will our sons and daughters see the College as a living organization? As one aphorism puts it, the goal of becoming a living organization is a journey, not a destination.

Are we on this journey yet?


At 3:32 PM , Blogger Zaldi said...

"Are we on this journey yet?"

Bob, this is very similar to the "Are we a living system yet?" question which I posed in my DLS-CSB as a Living System post. Unfortunately, no one is replying yet. Not interested? Grasping for words? Indifferent? I don't know.

But what I know is that meaningful conversation is important. Some people, like us, are reaching out. I hope others will respond to these initiatives so that we can start the ball rolling. I'm just hoping that, if not through this blog (you'll be surprised how many people are too "shy" or too "busy" to post anything here), they will avail themselves of other opportunities for conversation we have out there in the College.


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