Companies that mimic nature out-perform those that do not
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 as 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.
To explore ‘business inspired by nature’ further, join the Face Book community here
A personal thank you to Geraldine for connecting me with the good work of the LAMP research – after all we need research and ‘stats’ to win over mechanistic minds : – )
Can good business sense prevail? Let’s take a look…
Simon Robinson, a fellow colleague in the collaborative BCI: Biomimicry for Creative Innovation, had the opportunity recently to meet with Luís Norberto Paschoal, President of DPaschoal. DPaschoal is one of the largest auto repair organizations in Brazil, with more than 200 centres. Auto repair business may not be cool or hip (like Patagonia with Fortune Magazine recently called them “the coolest company on the planet”); yet, where there’s business there’s opportunity for good business sense – let’s take a look at this organization on the journey to being a ‘firm of the future’.
Luís Norberto joined the company in 1963, and as he says in those days they did not have the term sustainability. Sustainability in the early days was only about the planet and not in the broader sense. Luís Norberto met many interesting people in the 1970s and 1980s who he discussed the real meaning of sustainability with. Luis says bluntly:
You don’t need to be afraid of being selfish. And you don’t have to be altruistic. Be selfish but think about the future. Think long term.
For Luís Norberto sustainability means four things. You have to be
- Economically sustainable (able to invest in the long term)
- Industrially sustainable (you have to be systemically sustainable in relation to all your partners and industrial ecosystem)
- Marketing sustainable (avoiding green-wash marketing and being sure about your promises)
- Ecologically sustainable (do not destroy the future to protect the present, and do not destroy the present to protect the future)
Luís Norberto is very direct when he says that “tyres and shock absorbers are bad for the planet when you produce, bad for the planet when you transport, bad for the planet when you use, bad for the planet when you recycle. The whole chain is bad for the future.”
Many years ago he had to decide whether or not to carry on with the business. In the end he decided that if he does not continue the company, someone else will fill the gap and sell tyres, so why not do the best possible. And so the company has the philosophy of selling the customer a tyre only when it is really required, and not to try and sell tyres when the old tyres have plenty of life left in them. Luis puts it simply by saying:
It is a crime to sell someone a new tyre 5000 miles before the right moment.
Yet this philosophy in business seems to fly in the face of the current prevailing approach and mindset in business today. DPaschoal seeks to educate its employees so they can educate their customers and suppliers to encourage a healthy business ecosystem to thrive.
Can big business transform to a new paradigm?
Deloitte recently released a fascinating publication titled Toward Zero Impact Growth. Taking the general premise that our economy is bumping up against some hard limits in terms of resource availability, climate impact and a context of growing population their postulation is that the global economy and business in particular needs to change – and fast.
Leon Richards of Good Talent explores this.
Of particular interest, Richards notes, is the work that Anneke & Ralph have done around mapping the current position of a number of high profile companies on that path of transformation. Some solid analysis using a robust trajectory model developed by Volans clearly highlights where these organisations have got to and what still needs to be done.
What struck Richards from these results was the relative slow pace of progress toward maturity on this scale for many of these businesses. The fact that most of them seem to be battling at an “enterprise level” of development highlights the difficulty for most companies to break free of the myopia around their own business confines and parameters. The implications of truly embedding sustainable business practice mean engaging in change right the way up and down an organisational value chain. This barrier between internal and external or as the model articulates it “Enterprise” and “Ecosystem” seems to be a big jump.
There looks like a rich seam of research could be done here, looking through a sustainability lens at the difficulties incumbent organisations face when attempting to make this internal to external shift. Organisational structures, employee capacities, leadership, innovation, collaboration will all weigh heavily on the eventual success of shifting to another state of operation for a business. We all know the penalties businesses face for not changing, history is littered with their ghosts.
During a lecture last week at the LSE, Giles Hutchins made a bold prediction from his latest book The Nature of Business, he said that by 2020 at least 50% of organisations in business today would be gone. Why was he so sure of this prediction? Hutchins felt that current trilemma we are experiencing, financial, environment and social are just the beginning of a rapid transformation to new operating paradigm for everything everywhere including business. Jack Welch, of GE fame stated that for a business, “If the rate of change on the outside exceeds the rate of change on the inside, the end is near.” Perhaps this is what we are experiencing right now – change but on a scale and at a pace not experienced before.
Can incumbent brands and businesses transform to a new paradigm and do so quickly? Richards thinks the changing environment may be too turbulent for most big businesses to adequately adapt to, while Hutchins points to some brands already on the road to transformation e.g. Nike, Google, Akzo Nobel, Toyota, Interface. If most can not, then is this going to mean a catastrophic breakdown of life as we know it? Perhaps not.
The answer to how business operates within a new sustainable paradigm tomorrow may lie at the periphery of what exists today. Outside of the behemoth brands and multinational corporates exists a whole eco-system of smaller companies, typically relatively young who don’t need to change because they have consciously embedded this new paradigm in their DNA from the very start.
To join the Nature of Business FaceBook community click here
For the original and full post please see The Good Talent Blog
When we consciously connect with our inner selves and the world around us, we gain ‘presence’ and awareness takes over from thinking. An enhanced state of consciousness gradually flows into all we do. The creative power of life comes through in our actions and interactions. There is a stillness and alertness in us that brings a joy of being while doing. As a consequence, our actions and interactions in business and beyond have a ‘rightness’ resonating in them.
Re-connecting with ourselves and the world around us can be a struggle, especially with our hectic schedules. And yet, if we can take time out and find the space to re-connect it can greatly benefit us, as only when we consciously connect can we really undertake actions with our full potential.
In the words of Confucius,
He who is in harmony with nature hits the mark without effort and apprehends the truth without thinking.
Is that a goal worth striving for?
The mind and ego have a deep seated habit of seeking the fullness of life in the future ignoring the only true point of access to fullness – the present moment.
It reminds me of a phrase someone kindly passed on to me ‘the present will always seem insufficient, until we are sufficiently present’.
Ecological Thinking for Business Transformation
Most people in business subscribe to an out-dated worldview, a perception of reality inadequate for dealing with the volatile and globally interconnected business world. What is required for the health and vitality of our businesses and economies is a radical shift in our perceptions, our thinking and our business behaviour. We are witnessing a change in business paradigm from one suited for the industrial era to one suited for the interconnected era.
At the core of this paradigm shift is a perception shift from ‘seperatedness’ to ‘interconnectedness’
Just as in science we have discovered that no longer can the universe be viewed as a machine composed of elementary building blocks, so too organisations need not be viewed as atomised, silo’ed and tightly managed machines more they need to be viewed as vibrant, living organisms interacting within emergent, self-regulating and self-organising business ecosystems.
Likewise evolution is no longer seen as a competitive struggle for existence, but rather as a ‘cooperative dance in which creativity and the constant emergence of novelty are the driving forces’ (in the words of Fritjof Capra, founding director of the Centre for Ecoliteracy).
Ditto for business evolution and so business people need to shift perceptions from seeing isolated, competing aspects of the business environment to seeing the interconnected and emergent nature of the business reality ahead.
In fact, the more we understand how life works, the more we recognise how the organising principles of life can be applied to business. It is as if the challenging business environment we find ourselves in (this ‘perfect storm’) gives the perfect environment for us to shift our perceptions to see the business world for what it really is – a part of life.
Knowledge of the core principles of how life works becomes a critical skill for business leaders and change agents wishing to successfully transform their organisations in these volatile times. It is what BCI (Biomimicry for Creative Innovation) calls ‘ecological thinking for radical transformation’.
Here are some ecological principles of nature:
Networks: All living systems are interconnected and share resources across their boundaries.
Cycles: As a whole, an ecosystem generates no net waste, as one species’ waste becomes another species’ food with matter and energy transforming and cycling continually through the web of life.
Partnership: Life did not take over the planet by combat but by co-operation, partnership and networking.
Diversity: Ecosystems achieve robustness and resilience through the richness and complexity of their ecological webs. Increased diversity equals increased resilience.
Understanding the patterns and principles of nature can provide vital insight into how to best future-proof business for the unpredictability ahead.
To explore ‘business inspired by nature’ further, join the Face Book community here
Time to transform.
What lessons can organisational culture take from nature?
Business is on the cusp of a paradigm shift, moving from structures and hierarchies to networks and webs. Insights from nature can act as inspiration for this transition.
Thinking in terms of systems is difficult, but it is vital to operating successfully in the increasingly interconnected and uncertain business world. Observations from nature, which is made up complex systems, can yield important lessons.
The concept of emergence is fundamental to how nature operates. Physicist and systems theorist, Fritjof Capra, noted that: “Throughout the living world, the creativity of life expresses itself through the process of emergence.”
The future of organizing?
What are the barriers to transforming beyond our current business paradigm? Do our organizations have to be apart from nature or can they be a part of nature? Can nature inspire how we re- organize?
Questions, questions…Patrick Andrews in a guest blog post for The Nature of Business provides some ideas and insights….I hope you enjoy them and find this post useful – now over to Patrick:
Inspired by some of Giles’ writings, I have been thinking about what we can learn from nature about the way we organize ourselves.
My first thought took me off at a tangent. I realized that the very question implies that we are somehow separate from nature. This is what our thinking has told us. Yet we really ought to know better by now. After all Charles Darwin showed long ago that we have emerged from the same evolutionary processes as spiders, orchids and the Alps. This implies that our creations are also products of the same evolutionary processes. So an Aston Martin, a marshmallow and a Tesco Express are all part of nature.
A New Business Paradigm
The Nature of Business explores how the increasingly unpredictable, interconnected and uncertain nature of business calls for a more emergent, dynamic approach to organisations and leadership.
Giles Hutchins, the author, explains through business insights, quotes and examples that a new business paradigm is emerging which challenge prevailing perceptions of business.
The prevailing business paradigm of maximization, monoculture and self-interest, he states, is weakening its own resilience and is no longer fit for purpose for the business world we now operate in. Our prevalent business concepts, values, perceptions and practices are being disrupted and systemically challenged; Giles Hutchins argues that they are ripe for a paradigm shift. What is called for is a ‘redesigning for resilience’; a new business paradigm, one that is inspired by nature.
Leading with Love
In 1986 the average knowledge worker carried in their heads 75% of the knowledge they needed to do their job. By 2006 the average had dropped to 8%, today it’s around 5%, and within 10 years the average will be 1%. (ref. Carnegie-Mellon rolling study by Robert Kelley).
This is a paradigm shift. To succeed as a 1% knowledge worker requires learning different capabilities to before, not just trying harder. This is hitting leadership roles hardest, soonest. Leadership today requires much that leadership used to require; and a lot more that is part of a different paradigm.
As Peter Drucker said:
in times of turmoil, the danger lies not in the turmoil, but in facing it with yesterday’s logic.
Open innovation catalysing transformation
Just as organisations seek out new ways to operate in challenging times, the approaches to innovation themselves are transforming. Traditional processes and models of innovation are no longer good enough on their own to assist organisational adaptation amidst such volatility and uncertainty.
Paradoxically, this perfect storm of social, economic and environmental challenges our businesses now face is creating the perfect conditions for radical transformation to take root; new ways of innovating and operating are finding fertile environments, beginning to seed and flourish.
Open innovation and co-creation approaches are still in their infancy, yet emerging in all walks of business and social life to catalyse transformation. So what do we mean by ‘open innovation’?
Put simply, open innovation is ‘internal/external co-creation’: where ‘internal’ stakeholders within an organisation (employees, designated intrapreneurs, innovation teams, product designers, change agents, etc.) engage with ‘external’ stakeholders connected to the organisation (partners, suppliers, customers, etc.). The ‘co-creation’ part of this engagement is important for it to be true ‘open innovation’. Co-creation is where people collaborate to create; for instance, customers share ideas and concepts for new products or services with each other and with the organisation leading to a new creation (new product design, upgraded service, new business process, change in cultural behaviour, etc.). Here are some examples to shed some light on this pioneering space:
GreenXchange – A platform bringing together companies and people to share ideas for sustainable transformational change
InnoCentive – An open innovation market place
Kraft First Taste – where consumers share views on product tastes
Threadless – a community based tee-shirt company where the community engages in design ideas
