Sunday Mar 08, 2009

Survival and Growth

I just started reading Arie de Geus' book The Living Company, and found in the first few pages a clear echo of Chester Barnard's The Functions of the Executive. Both emphasize the centrality of survival and growth ("thriving"). Here is Arie de Geus writing about the topic: 

Like all organisms, the living company exists primarily for its own survival and improvement: to fulfill its potential and to become as great as it can be. It does not exist solely to provide customers with goods, or to return investment to shareholders, any more than you, the reader, exist solely for the sake of your job or your career. After all, you, too, are a living entity. You exist to survive and thrive; working at your job is a means to that end...

If the real purpose of a living company is to survive and thrive in the long run, then the priorities of managing such a company are very different from the values set forth in most of the modern academic business literature. Such a purpose also contradicts the views held by many managers and shareholders. To be sure, many management fashions resonate with the idea of a learning company—for example, the concepts of the "learning organization" and "knowledge as a strategic asset." But there are serious doubts that even the most enthusiastic managers and shareholders have fully explored the ramification of these concepts.   

Before writing all this, Arie de Geus, a long-time Shell employee, had led Shell's Group Planning study on the longevity of companies. The study had concluded that companies live longer depending on their (1) sensitivity to the environment, (2) cohesion and identity, (3) tolerance (and as a corollary, decentralization), and (4) conservative financing, which gives rise to an ability to govern one's own growth and evolution effectively.  

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