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A long and prosperous life is one of humankind's most cherished
ideals. Since the dawn of time, we have sought the elixir of longevity for ourselves,
but what about for our organizations? How can we ensure that companies -- the
very legacy of our social and economic endeavors -- thrive across the centuries?
Most companies do not survive the upheavals of change and competition
over the long haul: the average life expectancy of a multinational company --
in the Fortune 500 or its equivalent -- is between 40 and 50 years. But there
are a few remarkable examples of firms that have withstood the test of several
centuries. What hidden lessons do they hold for the rest of us? In The Living
Company, the man who introduced the revolutionary concept of the learning
organization has turned his attention to identifying the critical characteristics
of organizational longevity. Arie de Geus reveals the
keys to managing for a long and prosperous organizational life. He draws a sharp
distinction between "living companies," the purpose of which is to fulfill
their potential and perpetuate themselves as ongoing communities, and "economic
companies," which are in business solely to produce wealth for a small group
of individuals. He shows clearly that living companies manage for survival; economic
companies manage for profit. With nearly 40 years of
experience at Royal Dutch /Shell, where he was involved firsthand with implementing
the renowned scenario planning technique, de Geus describes how he came to explore
and understand the special qualities of living companies. Among a wide array of
important factors, long-lived companies have four essential traits in common.
At a minimum, these firms are:
- Sensitive to
their environment in order to learn and adapt
- Cohesive,
with a strong sense of identity
- Tolerant of unconventional
thinking and experimentation
- Conservative in financial
policy to retain the resources that allow for flexibility
The Living Company speaks not just to senior executives and aspiring leaders
but to everyone trying to adapt to a turbulent business environment. Only those
steeped in the habits of a living company will survive. Arie
de Geus worked for Royal Dutch/Shell for 38 years. Widely credited with organizing
the concept of the learning organization, he is a visiting fellow at the London
Business School and a board member of the MIT Center for Organizational Learning.
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