Companies that mimic living systems out-perform mechanistic ones

Companies that mimic living systems have been gaining market share over more traditionally managed firms, which generally model themselves on mechanical systems.

Firms that mimic living systems have an existential awareness that they are living communities of people, committed to serving other people, and that they all depend on Nature for their sustenance. This fundamental recognition creates spontaneous demands within the firm to live harmoniously and respectfully with the larger living systems on which we all depend (biosphere, society, markets).

SoL (a leading business management organisation that explores the connection between organisational learning precepts and business success) published ‘Profit for Life’ a few years back by Jay Bragdon.  Since this publication, SoL has been researching and tracking how certain organisations (ones that mimic living systems) perform against other more traditional organisations (mechanistic, short-term profit maximising, capital-centric organisations).  In essence, this research explores the business paradigm of machine versus living,  or as I refer to it in The Nature of Business (here for North American version ) mechanistic firms of the past versus organic firms of the future.

Mechanistic, reductionist firms of the past -> Organic, emergent firms of the future

Northfield Information Services (a global consultancy advising many of the largest banks and asset managers) performed an in-depth analysis to assess these ‘living’ firms that mimic nature with the more traditional mechanistically-focused firms.   This resulted in the Global Living Asset Management Performance (LAMP) Index®.  For more detail on this please see ‘Companies that Mimic Life’ where the market returns of these organisations are researched and tabulated.

The conclusion drawn from the detailed research is that businesses that model based on living systems (businesses inspired by nature) gain market share and out-perform those that model on mechanistic systems.  Leading organisations, it would seem, are adapting to the social and environmental damage caused by traditional business approaches.

So why aren’t all organisations becoming ‘inspired by nature’ why is it still only for the leading pioneers?

The barrier to adaptation is inertia.  For over five centuries our prevalent approach to business (likewise for science and society) is rooted in empirical thought which flowered during the Enlightenment, yet inhibiting our evolution to further ‘enlightenment’.  As SoL report:

‘Today, most leaders in business and finance – indeed most business schools – are so captivated by empiricism and its material successes that few dare to question its linear thinking assumptions.’

As Peter Drucker once insightfully said

‘in times of great turmoil, the danger lies not in the turmoil itself but facing it with yesterday’s logic’

Hence the prevailing business paradigm has sown the seeds of its own demise.  The good news is many in business are ‘seeing the light’ and challenging yesterday’s logic.  For instance,  Paul Polman, CEO of Unilever, said recently:

‘Too many people think in terms of trade-offs that if you do something which is good for you, then it must be bad for someone else.

That’s not right and it comes from old thinking about the way the world works and what business is for: Milton Friedman’s optimisation of short-term profits.

We have to snap out of that old thinking and move to a new model.’

So what is the new model?   A business inspired by & in harmony with nature.  This is what is explored in ‘The Nature of Business’.

The attributes that are highlighted in the LAMP research of ‘companies that mimic life’ as out-performers in their respective markets strongly resonate with the firm of the future characteristics put forward in ‘The Nature of Business’:

• T hey are highly networked to facilitate feedback and information exchanges within the firm and without. Many of these networks are informal, self-organizing consortia of employees, suppliers, and customers. When you layer these networks over one another and the firm’s chain of command, you get a structure that looks much like a double helix.
• T hey manage by means (MBM), understanding that people and relationships are the primary means by which they build network capacity and create value. They strengthen and empower employees by practicing servant leadership. They also give employees decision-making authority in their areas of competence and hold them accountable for results.
• T hey optimize their use of physical resources by “closing the loop” so the waste of one process becomes food for another. In doing so, they aim for factor efficiencies by producing more value for customers with less input of energy and materials.
• T hey are exceptionally open in the ways they share information with employees and in their desire for stakeholder feedback. They know such openness builds trust, learning capacity and adaptability.
• T hey nurture the larger living systems of which they are a part (Nature, society, markets) because they understand the inherent connection of all life.

Now we know the problems with the old paradigm and we know what the new paradigm looks and feels like, the only challenge left is (admittedly quite a sizeable challenge) transforming old thinkers and doers from yesterday’s logic into prototyping for the future – inspired by nature.  For that we need to transform business education (still inherently empirical and mechanistic), business leaders (the majority still short-termist and reductionist), business managers and employees (fortunately Gen Y seem more clued up about the transforming landscape but the reality is that the majority are still inured by the prevailing  paradigm, having been educated that way). Hence, the vital importance of education – business education at a leadership, management and employee level – that is creative and forward-thinking, pushing boundaries and prototyping the future while challenging yesterday’s logic (not simply regurgitating past dogma). That is the challenge and also an immense opportunity for those in positions of influence within business education.

Fortunately, there are already good examples of business academia prototyping the future, for instance SoL mentioned above (associated with Harvard Business School & MIT) and Exeter University Business School’s One Planet MBA.

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