In
the world of institutions, commercial corporations are newcomers. They have
been around for only 500 years—a mere blip in the course of human civilization.
In that time, as producers of material wealth, they have enjoyed immense
success. They have sustained the world’s exploding population with the goods
and services that make civilized life possible
Just like a living body
composed of several organs which work in interdependence to create a whole
human body. The company is being compared with a living human being capable of adapting to external stimuli
, changing and getting affected by other
parts of the body. The argument by Aria De Gaus only living (dynamic) not static things are capable
of learning and this forms the most important ingredient in companies that has
been in existence for so many year.
Mintzberg Model of Organization
Why do so many companies die young? Mounting evidence suggests
that corporations fail because their policies and practices are based too
heavily on the thinking and the language of economics. Put another way,
companies die because their managers focus exclusively on producing goods and
services and forget that the organization is a community of human beings that
is in business—any business—to stay alive. Managers concern themselves with
land, labor, and capital, and overlook the fact that labor means
real people.
What is so special about long-lived companies?
Aria De Guaus explains living companies as a personality that allows them to evolve
harmoniously. They know who they are, understand how they fit into the world,
value new ideas and new people, and husband their money in a way that allows
them to govern their future. Those personality traits manifest themselves in
behaviors designed to renew the company over many generations. Throughout,
living companies produce goods and services to earn their keep in the same way
that most of us have jobs in order to live our lives
In 1983, a group at Shell set out to learn something about
long-term corporate survival by studying companies older than Shell. Shell was
about 100 years old at the time, so we looked for companies that already
existed by the fourth quarter of the nineteenth century, that were important in
their industries, and that still had strong corporate identities. they selected
30 such companies to study them in detail.
here are the four things that emerged common to all those companies.
here are the four things that emerged common to all those companies.
1.
Conservatism in Financing. The companies did not
risk their capital gratuitously. They understood the meaning of money in an
old-fashioned way; they knew the usefulness of spare cash in the kitty. Money
in hand allowed them to snap up options when their competitors could not. They
did not have to convince third-party financiers of the attractiveness of
opportunities they wanted to pursue. Money in the kitty allowed them to govern
their growth and evolution.
2.
Sensitivity to the World Around Them. Whether they had built
their fortunes on knowledge (such as DuPont’s technological innovations) or on
natural resources (such as the Hudson’s Bay Company’s access to the furs of
Canadian forests), the living companies in our study were able to adapt
themselves to changes in the world around them. As wars, depressions, technologies,
and politics surged and ebbed, they always seemed to excel at keeping their
feelers out, staying attuned to whatever was going on. For information, they
sometimes relied on packets carried over vast distances by portage and ship,
yet they managed to react in a timely fashion to whatever news they received.
They were good at learning and adapting.
3.
Awareness of Their Identity. No matter how broadly
diversified the companies were, their employees all felt like parts of a whole.
Lord Cole, chairman of Unilever in the 1960s, for example, saw the company as a
fleet of ships. Each ship was independent, but the whole fleet was greater than
the sum of its parts. 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. Managers in the living companies we studied were chosen mostly from
within, and all considered themselves to be stewards of a long-standing
enterprise. Their top priority was keeping the institution at least as healthy
as it had been when they took over.
4.
Tolerance of New Ideas. The long-lived companies in our study
tolerated activities in the margin: experiments and eccentricities that
stretched their understanding. They recognized that new businesses may be
entirely unrelated to existing businesses and that the act of starting a
business need not be centrally controlled. W.R. Grace, from its very beginning,
encouraged autonomous experimentation. The company was founded in 1854 by an
Irish immigrant in Peru and traded in guano, a natural fertilizer, before it
moved into sugar and tin. Eventually, the company established Pan American
Airways. Today it is primarily a
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