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When Companies Trump Biology

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School of tunaOver the last 50-plus years businesses have achieved tremendous growth and efficiency by applying the scientific method to an array of problems: efficient manufacturing, optimal pricing, capital financing and management control are just a few. This approach has yielded impressive results, except when you have people in the frame.

The problem is, unlike many other parts of a company, people are not controlled by some natural law like gravity. They can’t be relied on to react exactly the same way every time, like a computer. And, when you put people together, sometimes you get great collaboration and innovation, and other times you get … nothing, or worse, destruction.

Companies are complex, dynamic systems that are hard to understand and control. And technological innovations over the last 25 years or so have added stresses to company systems. For example, the pace of decision-making has speeded up as information has become so easily captured and shared. The bottleneck in decision-making is no longer getting the data, it’s getting management together to make a decision.

Technology has also eliminated many middlemen, not just whole industries of brokers like recruiters, real estate agents and match-makers, but also layers of middle management. With fewer layers between upper management and the front line, each manager is now directly responsible for more employees and more decisions.

With more information to analyze, more decisions to make faster and the wildcard of people acting independently, the traditional top-down command and control structure of traditional companies is showing signs of an inability to cope. As an alternative to the traditional hierarchical organizational structure, some thought leaders and company heads have looked to biological systems for answers.

Importance of adaptability, resilience and diversity

Biological systems are similar to companies in that they consist of entities, like employees, that respond independently to their local environment. At the same time, the overall system reacts to its larger external environment and can live on beyond the lifespan of individual entities. Adaptability, diversity and resilience are key concepts in explaining the sustainability of a biological system.

The ability of a biological system to adapt to changes in the external environment is key to survival and sustainability. Just as the flu virus creates new antigen zones to evade vaccines or a coral reef changes its structure after a hurricane, companies must adapt their products and services to meet changing customer needs, regulations and competitive activity in order to survive.

What allows a biological system to adapt is the ability to mix genetic material in different ways, some of which may survive the change in the external environment. The more diverse the genetic material available to work with, the greater the chance of survival of the system. The analogy to companies is this: the greater the diversity in thinking styles in a company, the more information and ideas there are to work with and the greater the odds of producing products and services that will be successful.

Resilience is the ability of a system to recover from a disturbance and return to approximately its original state. A more resilient biological system will be able to recover more quickly from a bigger shock. For example, when a coral reef rebuilds itself after a hurricane it is demonstrating resiliency. Companies need resiliency in order to respond and adapt to changes, such as the introduction of a disruptive product by a competitor or substantial change in regulations.

Where biology falls short

Self-organization is a key characteristic of biological systems credited with enabling adaptability, resilience and diversity. Self-organization is a process in which order arises out of chaos. The pattern of the overall biological system is created by the interactions of the entities based only on local information; there is no leader or a plan for the overall system. Examples in nature include a school of fish or a flock of birds flying in tight-knit formation.

Self-organization means control is distributed, not centralized or even decentralized. There are no pockets of power. Self-organization also means there is no attempt to organize activities, to plan together to reach a goal or to make decisions based on the benefit of the entire system. Thus as a metaphor for a company, or the rationale for recommending self-organizing teams, a biological system falls short.

Where companies have an advantage over biological systems is in the ability to anticipate changes in the external environment, to consciously build-in diversity, build-in resiliency and to adapt products and services for future requirements.

In other words, companies have the ability to identify assumptions and risks, to gather information and to drive down risk as they innovate for the future.  So, a “biological system guided by a strategic framework” would be an apt description.

kmorrissey@strategy2market.com www.strategy2market.com 312.212.3144

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