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Redesigning for Resilience – Firms of the Future

June 15, 2015

Since the Industrial Revolution, we have achieved great feats of economic, social and technological advancement for which, as a species, we can be proud. Yet the challenges (and opportunities) now facing our businesses, economies and societies are all too apparent. These include:

  • volatile input costs
  • volatile prices
  • volatile consumer buying patterns
  • increasing complexity and risk in supply chains
  • changing demographics, world population shifts
  • shift to a multipolar world
  • increasing socio-economic/political tensions
  • increasing scarcity of finite natural resources
  • increasing propensity of food and water shortages
  • increasing frequency of natural disasters and epidemics
  • climate change
  • peak oil, peak elements, and so on
  • ocean acidification and dead zones
  • rapid decline in biodiversity
  • increasing inequality
  • rising world poverty
  • increasing mental health issues and stress-related illnesses
  • exponential growth in population and consumption rates.

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So what has all this got to do with business and business paradigms?

First, it is our current business paradigm that has exacerbated the imbalances, tensions and volatility we face today. As Albert Einstein observed: “We cannot solve the problems in the world with the same level of thinking that brought them about in the first place.” To operate in the world we now live in we need fresh approaches to businesses that are fit for the present and future.

Second, good business is fundamentally about seeking out opportunities for value creation, not about trying to get something for nothing. As our social, economic and environmental landscapes become ever more volatile, business approaches need to adapt and evolve to optimise the opportunities for value creation.

Third, in the words of Paul Hawken, “Business and industry is the only institution that is large enough, pervasive enough and powerful enough to lead humankind out of this mess.” Therefore, the re-evaluation and transformation of our business paradigm is fundamental to the successful evolution, not only of business, but of our species as a whole.

In times of pressing challenges, in this ‘perfect storm’ of social, economic and environmental volatility, it requires great courage to break rank from a paradigm that is ingrained in our business mindset. Transformational times call for transformational change. Businesses that wish to thrive and survive in these volatile times must transform themselves so that instead of responding in incomplete ways to these pressing challenges, they anticipate and embrace change in the most successful way.

To succeed in business we must be agile, creative, alert, spontaneous and responsive – often operating in completely new ways. Today’s rapidly changing business environment calls for businesses that thrive in rapidly changing environments: businesses more akin to living systems. These ‘firms of the future’ can learn and adapt; they aren’t structured and silo’ed, which stifles learning and agility. These firms are also bottom-up, decentralised, interdependent, multifunctional, emergent, self-organizing units–not the centralised, top-down, hierarchically-managed monoliths of the 20th century. Put simply, the business models and management approaches that served us well in the past, are no longer fit for purpose in a business context where dynamic change is the new norm.

Professor Michael Porter said late last year when addressing business leaders in New York: ‘The old models of corporate strategy and capitalism are dead.  We are witnessing a paradigm shift from hurting to helping’.

Organisations that are able to ‘let go’ of old business paradigms, having the courage to embrace new ways of operating whilst dealing with the pressing short-term issues of today, shall be the ones who can weather the storm, adapting to seek out opportunities in these volatile times. Other organisations, fearfully clinging to practices that are no longer fit for purpose for the times within which we now operate, shall struggle to cope with the level of change ahead.  It requires great courage to break rank from a paradigm that is so ingrained in our business mindset; to transform in the face of pressing short-term pain.

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The years ahead to 2020, in this Decade of Creative Destruction & Reconstruction, shall bear witness to the wheat being separated from the chaff – organisations who ‘get it’ adapting and evolving, and those that do not perishing or being acquired. Bold ‘Firms of the Future’ do not try and tightly manage change, they empower a culture of collaboration to unlock the creative potential of their own workforce, their partners and the communities they serve, initiating positive virtuous cycles of collaboration, innovation and value creation for all stakeholders. The result: more value and more well-being.

As Dawn Vance, Nike Director of Global Logistics at Nike succinctly puts it:

‘Organizations have 3 options:

  1. Hit The Wall;
  2. Optimize and delay hitting the wall; or
  3. Redesign for Resilience – simultaneously optimizing existing networks whilst creating disruptive innovations and working collaboratively with partners’.

Organisations are increasingly exposed to dynamic change: change upon change upon change – while dealing with one change, another affects us, then another, and so on. This dynamic change upsets the traditional business paradigm we have been working to over the last few decades. It is no longer appropriate to simply ‘manage’ change through traditional change management methodologies or ‘manage’ risk through tried and tested risk management techniques. We need to look deeper to successfully operate in these turbulent times.

It is this ‘redesigning for resilience’ which drives the transformation to a firm of the future. The firm of the future is one that:

  1. Drives transformation through values-based leadership and stakeholder empowerment using the catalysts of education, innovation, inspiration and collaboration;
  2. Encourages synergies across its business ecosystem, engaging with multiple stakeholders in an open, transparent way; where common values create connections enabling mutualism;
  3. Harnesses the power of social networks and the ‘pull’ media; uses crowd sourcing, co-creation, open source collaboration platforms and transparent branding for differentiation;
  4. Evolves ecological thinking for innovating and new ways of operating and generation value for every stakeholder within the community it serves; and where our authentic human nature immersed within a deeper inter-relational Nature inspires the purpose, people, processes, products and places.

‘The major problems in the world are the results of the difference between how Nature works and the way people think’ – Gregory Bateson

The pressure for change is increasing all the time. Well publicised forward-thinking organisations are already making headway on their transformational journey – Unilever, Puma, Interface, General Electric, Patagonia, Nike and Marks & Spencers, for instance; plus the fast-moving world of e-commerce social enterprises such as Uber and AirBnB. Visionary business leaders of today are already making bold steps on this transformational, emergent path for themselves and their businesses. And it is a journey rather than a destination. Transforming towards a Firm of The Future is not about designing the right business model and implementing it, it is about understanding the ethos, ethics and environment that will allow the organisation, individuals and wider stakeholder community to best flourish, adapt and evolve. It’s an emergent journey, a journey that encourages diversity in approaches and outcomes, one where it is good to make mistakes, even fail, as it generates learning to move forward in a more resilient way.

The good news is that inspiration for the current pressing challenges is all around us in nature. Nature has been dealing with dynamic change for over 3.8 billion years, and the more we explore and connect with nature’s ways, the more we find inspiration for operating in a dynamically changing business environment.

Our understanding of nature has evolved over the last few decades, from viewing nature as a battle ground of competition to one of dynamic non-equilibrium, where an order within chaos prevails due to unwritten natural patterns, feedback loops, behavioural qualities, interdependencies, and collaboration within and throughout ecosystems. Nature adapts within limits and creates conditions conducive for life. Recent discoveries in microbiology and quantum mechanics uncover the importance of cellular membranes in the adaptation and evolution of organisms. Likewise, the perceptions and beliefs of the individual, organisation and ecosystem can affect their ability to sense, respond, adapt and evolve to volatility in their environment.

 

The more we grapple with the challenges our businesses now face in these volatile times, the more we realise that nature’s patterns and behaviours can inspire approaches for our own evolutionary success in business and beyond. The more we build a bridge between business and nature, the more we realise what good business sense really is.

Biomimicry for Creative Innovation (BCI), a collaborative of specialists applying ecological thinking for business transformation, has developed a set of business principles for the firm of the future, developed from the ‘life principles’ created by the Biomimicry Institute. These ‘inspired by nature’ business principles are:

Build resilience: It’s more effective to build resilience than to correct poor risk-based decisions that were made with partial information. A business inspired by nature builds resilience by:

  • Using change and disturbance as opportunities rather than fearing them as threats.
  • Decentralising, distributing and diversifying knowledge, resources, decision making and actions.
  • Fostering diversity in people, relationships, ideas and approaches.

 

Optimise: Optimising delivers better results than maximising or minimising. A business inspired by nature does this by:

  • Creating forms that fit functions, not the other way around.
  • Embedding multiplicity into both functions and responses.
  • Creating complexity and diversity using simple components and patterns.

 

Adapt: Being adaptive pays back better than ‘staying a fixed course’. A business inspired by nature adapts by:

  • Creating feedback loops to sense and respond at all levels of the system.
  • Anticipating and integrating cyclic processes.
  • Being resourceful and opportunistic when resource availability changes.

 

Integrate systems: With limited resources and a changing environment, it’s better to be systems-based rather than independent. A business inspired by nature works with whole systems by:

  • Fostering synergies within communities.
  • Fostering synergies within energy, information and communication networks.
  • Creating extended systems to continuously recycle wastes into resources.

 

Navigate by values: In uncertain times, it’s better to be based on a compass of values than a fixed destination point or set of predefined metrics. A business inspired by nature reflects values by:

  • Knowing what’s really important to the communities in which it operates, interacts, and impacts.
  • Using values as the core driver towards positive outcomes.
  • Measuring what is valued rather than valuing what is measured.

 

Support life: In the long run, it takes less effort and less resource to support life-building activities than to be damaging or toxic and pick up the cost later. A business inspired by nature supports life-building activity by:

  • Leveraging information and innovation rather than energy and materials.
  • Learning to open up and go with the flow of life rather than swim against the stream.
  • Creating support for individual components that can support the whole ecosystem; supporting the ecosystem so that it can support the individual.
  • Making products water-based, renewable, bio-based, and biodegradable.
  • Embedding a life-affirming sense of purpose throughout the organisation and partner ecosystem that encourages a shift from life-damaging to sustaining to flourishing enterprise.

 

These business principles build on a wide set of existing business theories and are not aimed at providing perfection in organisational design (if such would ever exist). They provide a framework to guide successful transformation towards a firm of the future – a business inspired by nature.

Such business principles are aimed at creating business conditions conducive to collaboration, adaptability, creativity, local attunement, multi-functionality and responsiveness; hence, enhancing the evolution of organisations from rigid, tightly managed hierarchies to dynamic living organisations that thrive and flourish within ever-changing business, socio-economic and environmental conditions. Organisations that understand how to embed these principles from nature into their products, processes, policies and practices create greater abundance for themselves and their business ecosystems in times of rapid change, flourishing rather than perishing in volatile business conditions.

While, on the surface, diverse, interconnected, open, emergent organisations may appear more chaotic and difficult to manage, they are vibrant places for people to become self-empowered and to inspire others – self-managing through mutual understanding of correct behaviours rooted in core values and clarity of purpose. It is this shared value set of core ethics that ensures the chaotic nature of self-empowered diversity naturally emerges towards delivering the value creation goals of the organisation, while maintaining flexibility, adaptability and sense of purpose.

Increasingly, as the organisation is required to become more emergent, so leadership is more about empowering, empathising and encouraging interconnections, innovation, local attunement and an active network of feedback. As organisations and business ecosystems become more self-organising and self-empowering, the working environment and culture becomes more emotionally and mentally healthy, where business goals are met without sacrificing personal values and integrity. Quite the contrary, in fact: work acts to reinforce personal integrity in providing a rich emergent experience for individual and collective learning and ethical growth.

The more our working environments become life-enhancing, the more alive the organisations and the more aligned we become to the true nature within us and around us. A growing number of business leaders recognise this, including: Paul Polman of Unilever, Mark Parker of Nike, Richard Branson of Virgin, Andy Wood of Adnams, Ricardo Semler of Semco, to name a few.

In these challenging (yet pivotal) times for business and humanity, we must realise that to become truly sustainable, human and business life has to become scientifically inspired, emotionally connected and spiritually entwined with nature and Gaia. Nature and business (as with nature and humanity) must be symbiotic and operate in mutualism for there to be anything resembling a successful outcome. The sooner business realises the opportunities that come with being connected to and inspired by nature, the better for humanity, and for all species.

Learning to live in harmony with Nature is what this shift in consciousness is all about, and it leads us into a more creative, heartfelt, soulful, passionate and compassionate way of living and leading. This is the birthing of a new evolutionary stage of human consciousness no less. What an exciting time to be engaged the future of business.

It is one thing to intellectually understand this shift and quite another thing to actually embody it. Hence why Ashridge Business School is hosting a workshop on Steps Towards a Deeper Ecology of Business to explore and embody just this. For more information on this workshop please emailVictoria.brown@ashridge.org.uk 

To explore ‘the new paradigm’ further, join the Face Book community here

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