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The Firm of The Future – A Business Inspired By Nature
August 19th, 2011 Atos Blog Tags: Biomimicry, Business Models, Business Transformation, Firm of The Future, New ways of working, Sustainability, Transformation
Posted in Firm of the Future |
The volatility now facing business (economic, social and environmental) means organisations need to operate in a dynamically transforming business landscape.
The nature of change itself is transforming. Organisations are now increasingly exposed to dynamic change: change upon change upon change – whilst 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 in dealing with these increasingly challenging times as we transform our organisations from Firms of The Past to Firms of The Future.
Paradoxically, inspiration for the current pressing challenges is all around us in Nature. Nature has been dealing with dynamic change for over 3.8bn years, and 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 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. The more we grapple with the challenges our businesses now face in these volatile times, the more we realise that nature’s patterns and qualities inspire approaches and qualities for our own evolutionary success in business and beyond.
Biomimicry for Creative Innovation (BCI), a collaborative of business transformation specialists and a partner of Atos, has developed a set of Business Principles for The Firm of The Future (originating from the Life Principles developed by the Biomimicry Institute in the US). Such Business Principles are aimed at creating conditions in business 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 which 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. Organisations inspired by nature are resilient, optimising, adaptive, systems-based, values-based, and life-supporting; these are the six Business Principles for The Firm of The Future, A Business Inspired by Nature. Let us explore these Business Principles:
Resilient: The more resilient an organisation 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.
Decentralisation, distribution and diversity within the people, process and product aspects of a business help develop resilience. The more diverse, decentralised and distributed a business ecosystem, the more able it is to seek out opportunities and capitalise upon a changing business landscape.
By way of example, Adnams (a UK Brewery) recently shifted their focus from a few product lines and customers to increasing the diversity of products and their customer base. The shift towards a greater variety of products and customers led to investment in adjacent markets. During this business transformation Adnams also invested in its employees, ensuring they became more empowered to make decisions locally, hence reducing the need for overly burdensome centralised management. These changes have significantly increased Adnams resilience, leaving them far better equipped to deal with market volatility and seek out new opportunities.
In nature, we find resilience in almost all flourishing ecosystems. Take a forest which maintains different development stages within its ecosystem. Some parts of the forest are in a state of rapid growth or re-growth, while other parts are maturing, and yet others are fully mature and ageing. There is continual cycling through these stages, with disturbances (such as fire, flood or storm damage) driving release of resources which, in turn, lead to re-organisation and re-growth (akin to new products being launched and new ways of working being introduced). By maintaining constant cycling at different time and space scales, the forest is able to flourish during short term disturbances as well as long term change. Diversity is key to nature’s success.
Optimising: Whilst maximisation brings benefit of economies of scale through lower unit cost of production, in nature we find optimisation through economies of scope brings different benefits through improved cross-fertilisation and species interaction (akin to improved interactivity across traditional department and organisational boundaries). Maximisation is driven through homogenising, scaling up, atomising, industrialising and reducing complexities within a specific business function, system or process; optimisation is driven through enhanced connections, interactivity and interdependencies across different business functions, systems or processes.
Economies of scale rely on mass production which can reduce the potential for synergies in an organisation; reducing the variety of products, curtails creativity and innovation, can lower staff engagement levels and ultimately weakening the company’s overall resilience. Economies of scope realise benefits by unlocking synergistic win-win relationships and positive virtuous cycles, increasing co-creation through increased interconnections across the wider business ecosystem. This increases the system’s overall resilience and improves the ability to optimise. It is not that maximising or economies of scale are not good, it is more that a harmony of the two approaches of maximisation and optimisation needs to be found, where the benefit from scale is balanced by the benefit of scope, thus ensuring the best delivery of services or products in any given market at any given time.
In nature, we see that the ability for organisms to co-operate, optimise and synergise within their environment is fundamental to their successful evolution. In fact, the more we explore nature the more we realise that life is not a competitive struggle but an interwoven interplay of co-operative partnerships. 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.
Adaptive:
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 business environment within which it now operates. General Electric is another good example of a company that is adapting and transforming its business strategy towards products and services that enhance the sustainability and long term value of its customers and wider stakeholder community.
Adaptation is enhanced when the organisation (individuals and communities of stakeholders) finds it easier to ‘let go’ of the old and embrace the new. For example, geese fly in a v-formation rotate leadership to ensure that at any given point in the journey, leadership is always fit for purpose. Leadership that empowers and encourages adaptation will help ensure success in Firms of The Future.
Systems-based:
Whilst 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 inter-dependencies 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 organisation (or organism) does to benefit itself should also benefit the system; in benefiting the system it also benefits itself.
Fungi provide an interconnected web of life in the soil beneath our feet, breaking down plant waste and stones into food for plants, in so doing, feeding the plants whilst also gaining food from them (completing the circle of life). Scientists have often been baffled by how certain species grow in certain conditions within their natural habitat (say a forest) but when put in same conditions within a laboratory fail to survive. Recently, through radioactive tracing of nutrient flows, scientists have worked out that in the soil, through fungi (mycelium networks), nutrients from one part of the forest (where perhaps there is more sunlight, for example) are fed to plants in another part of the forest. The fungi distribute and share nutrients between different parts of the ecosystem as the health of the overall ecosystem benefits the whole, the parts and in turn the fungi. It is in the fungi’s interest to be part of a healthy, resilient ecosystem, just as it is in the organisation’s interest to be in a healthy, vibrant business ecosystem and social community.
Values-based:
As the need increases to continuously change, ‘let go’ of old ways, seek out opportunities and embrace the new, values become the core from which consistent good business behaviour is rooted. Hierarchies of management and control slow down the ability for organisations to adapt. Rather than controlling the workforce, a Firm of The Future empowers the stakeholder community to take decisions locally based on the core business behaviours set down by the values and culture of the organisation. Hence values-based leadership becomes a differentiator for those organisations best able to transform towards a Firm of The Future.
Life Supporting:
Sustainability is fast becoming embedded into business best practice. ‘Life supporting’ goes beyond traditional sustainability and corporate responsibility (measuring, monitoring and reducing the negative impacts the business). It is about creating the conditions conductive for life; encouraging behaviours, products and services that seek to enhance the wellbeing of those within the business ecosystem. Some organisations are already transforming towards zero emissions (for example, Puma and InterfaceFLOR), yet there is neither rhyme nor reason why business should be limited to the goal of ‘reaching 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 the transformation towards the Firm of The Future 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, more it is about finding the right way at the right time for the market conditions. The future is bright for those organisations and individuals bold enough to embark on a journey of dynamic transformation in the face of increasingly perilous market conditions.
Atos and The Firm of the Future
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Thank you for this insightful comment, and apologies for the delayed response having just read the comment upon going through previous blogs. It is great to receive such a comment as through sharing of views we can gain deeper understanding.
Naturally, I agree with you – up to a point.
Your points on genes and memes are well made and aid thinking on how concepts, behaviours and cultural norms can evolve. The Origin of Species and The Selfish Gene provide excellent insight into natural selection, yet a number of world class scientists are now recognizing the limitations such insights have in explaining the full breadth and depth of natural evolution. For example, the importance of the environment in sensing and ‘switching-on’ certain genetics. A reading of works by Fritjof Capra (a leading professor from Berkeley) and Bruce Lipton (a world leading stem cell biologist), for instance, can help in understanding how current thinking in this space is evolving.
However, as interesting as natural selection is, the Firm of The Future ‘A Business Inspired By Nature’ as a concept is not about applying the ‘rules of evolution’ (whatever we may interpret them to be) from nature to business.
It is more about recognizing that:
1) In turbulent times like these, organisations need to become more resilient
2) In a finite world with stressed natural resources, organisations need to become more sustainable
3) In an increasingly transparent, interconnected world organisations need to become more responsible and ethical
4) Nature provides immense inspiration to aid the organisational transformation needed for businesses wishing to survive and thrive in the coming years
The concept of The Firm of The Future: ‘A Business Inspired By Nature’ is simply that, those businesses that are fit for purpose for the environment they now operate in are ones that are: resilient, optimizing, adaptive, systems-based, values-led, life supporting.
Yes, most current business models are not fit-for-purpose for the world we are now living in. Many forward-thinking business leaders know this, hence radically transforming their businesses – Unilever a case in point: seeking to decouple economic growth from environmental and social degradation and using nature-inspired approaches such as industrial ecology and closed-looping.
Businesses can take inspiration from nature, as nature has been dealing with dynamic change for over 3.8bn years. Nature thrives within the limits and conditions of Earth. Business can (and must) work with the grain of nature not against it; operating on Earth as if we intend to stay here.
I agree with your point that organisations need to be able to adapt and evolve far quicker than at a generational pace, and we see that successful businesses are doing just that. To use the Unilever example, Paul Polman (CEO) plans implementing radical transformation within a matter of a few years. Organisations such as Google and Microsoft radically transform their business approaches over a few years in order to adapt to the dynamic environment they operate in; they simply must if they are to be viable. This pace of dynamic change is quickening in many markets, separating those that are able to adapt with those that cannot keep up with the relentless pace of change.
I also agree with your point that organisations need intelligent design which are organic and flexible. And yes, whilst external stimuli is healthy, the change is inevitably rooted from within – the culture, the value-set, the DNA if you will.
I hope this response to your comment helps and does it justice. Once again thank you for your erudite comment.
Inspired by nature – up to a point
In Firms of the future – business inspired by nature, a colleague, Giles Hutchins, compares the way that organisations must adapt to the future to the way that
nature evolves.
In Scoop by Evelyn Waugh, the main protagonist cannot bring himself to disagree with his employer enough to actually say “no”, so instead he agrees “up to a point”. I agree with Giles up to a point.
In nature, the rules are set: constants such as the force of gravity, etc. Indeed, there is the idea of the fine-tuned universe, coupled with the Goldilocks concept, which together state that we would not exist were a number of constants not “just right”. But what then happens within that rule set is
that fundamental rules of evolution cause the development of various attributes.
This effect of natural selection was described by Charles Darwin in The Origin of Species, and the mechanism further clarified by Richard Dawkins in The
Selfish Gene. They both cause some problems to various people, for primarily two reasons:
1. To some, because they want there to be a god who “intelligently designed” the universe and, indeed, ourselves;
2. To others, including initially myself, because we cannot easily grasp that a very small bundle of chemical components, the genes, can actually exhibit “selfish” behaviour; and indeed, we are right.
The evolutionary mechanism and how it works is perhaps easier to grasp, and less contentious, if we apply it to the another clear case, the meme. This is the concept that there are concepts and ideas which have “a life of their own”: It applies to ideas in general, jokes, etc., but the obvious example to use as an example is the urban myth.
The rules, in the case of both genes and memes, are that:
1. Things replicate or reproduce;
2. They do so with some variation;
3. There is a process of natural selection: the better variations survive better that the worse.
In the case of urban myths, this means that:
1. When you hear a good story, you tell other people about it;
2. You emphasise and embellish the bits of the story that make it more interesting;
3. The stories that people like get told onwards to the hearer’s friends and colleagues.
The key point here is that the story itself cannot choose to evolve; it is an abstract concept that appears only in some people’s brains, and occasionally in those annoying emails that are endlessly passed on by your boring cousin.
In nature, a particular bird cannot choose to grow a longer beak so that it can pick out food, nor a butterfly decide to grow a particular pattern on its wings. It has the beak or wings that it was born with. The change just happens, gradually, over several generations: the bird has chicks,
which each have slightly longer or shorter beaks. But the ones that, by chance, are moving in the “right” direction survive better and longer, and make more babies. “Right” is in quotes, because what determines whether it is right is the circumstances in which it appears: where the food is located, or the eyesight and behaviour of a predatory bird.
And this is where the analogy with nature, for firms of the future, breaks down: for the same rules to apply, firms would not themselves adapt, they would simply die off, unchanged, but having spun-off another firm which was itself more suited to the prevailing conditions. And the ones which happened to be badly adapted would just die off, without themselves spinning out newer businesses.
So, for the rules of evolution to apply to a firm, it would have to segment itself into smaller units, which would just survive or not, unchanged, depending on the circumstances in which they found themselves. Too arbitrary and long-term a process, and not so attractive a proposition if you happen to find yourself in one of the badly-adapted units.
So, what do we need to prepare for the future? The answer is that, in contrast with natural selection, we need both intelligent design and creatures (firms) which can change during the course of their lifetimes. The design can originate from outside (gurus from the Harvard Business School, for instance), but has to be understood and applied by the firm itself.