The economic, social and environmental volatility now facing business means organizations have to operate in a dynamically transforming landscape.
By Giles Hutchins
Order Within Chaos
The nature of change itself is transforming. Organizations are now 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 mechanistic business paradigm we have been working to over the last few decades.
Paradoxically, inspiration for our pressing challenges is all around us in nature. Nature has been dealing with dynamic change for over 3.8 billion years; the more we explore 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 it as a battleground of competition to one of dynamic non-equilibrium, where an order within chaos prevails due to unwritten natural patterns, feedback loops, behavioral qualities, interdependencies and collaboration within and throughout ecosystems. The more we grapple with the challenges our businesses now face, the more we realize that nature's patterns and qualities inspire approaches and qualities for our own evolutionary success in business and beyond.
Organizations inspired by nature are resilient, optimizing, adaptive, systems-based, values-based, and life-supporting. Let's explore these principles.
The more resilient an organization is, the more able it is to successfully deal with disturbances and volatility. Hence, business resilience is fast becoming the Holy Grail for businesses in these volatile times. The more diverse, decentralized and distributed a business ecosystem, the more able it is to seek out opportunities and capitalize upon a changing business landscape.
By way of example, U.K. brewery Adnams recently shifted its focus from a few product lines and customers to increasing the diversity of products and their customer base. The shift toward a greater variety of products and customers led to investments in adjacent markets.
During this business transformation, Adnams also invested in its employees, ensuring they became more empowered to make decisions locally, reducing the need for overly burdensome centralized management. These changes have significantly increased Adnams resilience, leaving them far better equipped to deal with market volatility and seek out new opportunities.
While maximization brings benefit of economies of scale through lower unit cost of production, in nature we find optimization through economies of scope brings different benefits through improved cross-fertilization and species interaction (akin to improved interactivity across traditional department and organizational boundaries).
Maximization is driven through homogenizing, scaling up, atomizing, industrializing and reducing complexities within a specific business function, system or process; optimization is driven through enhanced connections, interactivity and interdependencies across different business functions, systems or processes.
In nature, economies of scope are fundamental for adaptation and survival, as it is species that have multiple synergistic interconnections within their ecosystem that co-create resilient ecosystems more able to survive dynamic change.
In the words of Charles Darwin, “it is not the strongest species that survive, nor the most intelligent, but the ones most able to adapt to change.”
Unilever is undertaking significant adaptation across its business not just in the way it sources, produces and distributes products but also in the way it engages stakeholders across its entire business ecosystem. It is adapting its approach to business to become fit for purpose for the environment that it operates in.
General Electric is another example of a company that is adapting and transforming its business strategy toward products and services that enhance the sustainability and long-term value of its customers and wider stakeholder community.
While reducing complex problems, projects or production lines into small, manageable chunks has the advantage of simplifying management and control, it can reduce the interconnections and interdependencies between activities that give rise to synergistic value enhancement.
Business, like nature, is lit up by interconnections and relationships that find success by being both system-focused and self-focused. Whatever the organization (or organism) does to benefit itself should also benefit the system; in benefiting the system it also benefits itself.
As the need to continuously change, let go of old ways, seek out opportunities and embrace the new increases, values become the core in which consistent good business behavior is rooted. Hierarchies of management and control slow down organizations' ability to adapt.
Rather than controlling the workforce, a firm of the future empowers the stakeholder community to take decisions locally, based on core business behaviors set down by the values and culture of the organization. Hence, values-based leadership becomes a differentiator for these organizations.
Sustainability is fast becoming embedded into business best practice. Life supporting goes beyond traditional sustainability and corporate responsibility – measuring, monitoring and reducing the negative effects of the business. It is about creating the conditions conductive for life; encouraging behaviors, products and services that seek to enhance the wellbeing of those within the business ecosystem.
Some organizations are already transforming toward zero emissions (for example, Puma and Interface), yet there is neither rhyme nor reason why business should be limited to that goal of zero. Reaching for net positive value creation where business relationships, products and services are mutually beneficial for the stakeholders, society and environment within which they operate is the true ambition for the firm of the future.
Of course that transformation is a journey, not a destination.
These business principles help shape the direction of the journey, yet there is no ideal business model or perfect way of operating; it is about finding the right way at the right time for the market conditions.