Why The Survival of Companies Depends on How We See Them
Have you founded your company 20 years ago or do you know someone who did? Well, statistically, this company is moving towards its end. According to Standard’s & Poor 500 Index the average lifespan of a company was just over 21 years in 2020, compared with 32 years in 1965. Tending to decrease more. Let’s face it: most of us will probably live longer than the majority of big companies. This is quite a thing to digest.
The reasons for this development are plenty and technological changes are just one of them. Other, major reasons are resistance to changing conditions and too fast and/or too much growth of the organization. Why so? Let’s start with the last point: the larger the organization becomes, the more energy it has to expend for its own inner stability (see also entropy, a measure of the disorder of a system.). More managers are needed to take care of internal processes and structure. In other words, the larger the organization, the more energy it has to expend on its own survival which also means that less energy goes into the development of new products and/or services. You see, the cat bites its tail.
In my own practice as a consultant, I repeatedly see cases of organizations that foster their resistance to changing conditions. They miss the connection to developments in their environment (e.g. changed needs of customers or work conditions) due to their business model and/or products/services. For a while, it seems, the organization will get by with those external changes quite well, because there are still enough people coming in as customers or plenty of applications bringing in new employees. However, the closer they get to the tipping point, the more energy they expend on the survival of the organization. Indicators for this are e.g. increased marketing measures, more detailed collection of sales processes, successes and data in general, increased amount of meetings to talk about strategy, short-term improvements such as training employees in relation to New Work methods with the hope of a higher innovation rate (which totally misses the point of New Work but they heard it is supposed to be helpful).
Resilience – the ability to thrive
This is the moment when I want to lead your focus on the resilience of an organization. At its core, resilience means being able to deal with challenging situations in such a way that your organization survives them without major damage – in other words: your organization is able to thrive even though the situation is shitty. It is precisely at this point that the mindset of their managers in relation to their organization becomes apparent. Do they see the organization more as a machine or as a living system (see also my article It’s Not a Machine, Darling!)? I know it sounds like semantics, but it isn’t. This distinction determines everyone’s further actions that are intended whether they promote the resilience of an organization or not. In practice, we see over and over again that short-run efficiency is valued over resilience.
Old school managers, who see their organization as a machine, will focus on the short-run efficiency and most likely solve challenging situations more or less that way: they put new heads in their management positions because the old ones just didn’t perform well enough or showed a lack of understanding. They set new, even better, KPIs. They meet more frequently with the board in strategy rounds to come up with a plan for restructuring. They carve out parts of the organization to let them operate as independent organizations – on paper. Well, you got what I’m saying.
The Leading Question
But here is the thing: We are living in a time of increasing uncertainty and most of our data is based on past developments and old knowledge we accumulated under even older conditions. To get our organizations through difficult times, we need leaders who are willing to create and foster conditions for resilience. Therefore they have to change the way how they think, feel, and act in order to bring the right impulses to the organization. The leading question here has to be „What does the organization (aka the system) need in order to unfold vitality/potential/etc.?“. Exposing themselves to this question can be a very mind-blowing moment for most of the managerial castes because they had been socialized in a mechanistic logic for decades when everything circulated around the mindset of „How can we increase profit?“. Answers to this question cannot be found by the management board alone. That’s impossible. Because every employee has a certain experience with the organization, what are the strengths and weaknesses, and what are the crucial points that must be considered so that energy can flow? Finding an answer to „What does the organization (aka the system) need?“ requires the contribution of everyone because it is about the whole (living system approach).
Three Important Habits for Leaders
Leaders with a living system approach understand that they can neither control their organization nor the corresponding environment in which the organization is located. They are aware of the permanent uncertainty and the limitations of their knowledge and skills. They know that the survival of their organization depends on the co-creation of everyone. So they will create the best possible conditions for employees to have as much contact as possible in order to be able to build resilient relationships. Because every organizational change starts with its smallest unit and in the details. In these organizations, it is not about the advantage of an individual, but about togetherness. On a personal, individual level there are three important habits leaders have to make their custom:
Constant Inner Work. We as humans create organizations. If we don’t change our way to think, feeling, and acting how should any organization improve? We can only expect a different future development if we start doing things differently in the present. Our biases, beliefs, and emotions are often our biggest obstacles. They keep us put. In order to move out of there, we need to get right in their midst. That means inner work. Cleaning up, so to speak. Not one time or every other week. I am speaking about the 100 % commitment to ourselves and our own development as humans. Taking breaks for breathing and self-reflection is crucial. The more we take breaks the better we can settle our thoughts and emotions. Only then do new impulses arise. And it is always an impulse that opens the door to new rooms, innovations, etc.
Developing System Awareness. As more as we clean up our inner world and settle our energy, we gain clarity. Not only that it helps us to make better decisions, but it also supports our awareness of what is going on around us. In terms of organizations, it means we are becoming more aware of how this system is changing or struggling. This means we start to recognize patterns in the organization. So we are developing a system awareness. As soon as we understand the patterns we become more aware of their changes. It is about getting into the details. This does not mean micro-management. It is like learning a new language. And in this case, here it is learning how to read your organization’s energy.
Building Relationships. The core of each living system is communication and the relationships between the single units. Building and cultivating relationships means making room for them first. Agendas are deliberately not stuffed with more or less important points to be discussed, but team meetings simply have room for togetherness. If you catch yourself at this point wondering what the outcome of such a meeting is, then you can see how strongly you are conditioned in the logic of efficiency and machine (= fixed mindset) and how much space to grow there still is.
And what is the conclusion of this story?
We all need to realize that it is us who make organizations exactly what and how they are. If we want them to be different, we have to start with ourselves and change. Resilience does not emerge from only thinking differently or setting ambitious goals, but above all from acting differently. Every day, again and again. It’s about getting better or getting back into the flow. And for that, we need to become current. So if your organization has already reached its 20th anniversary, then please don’t worry. As you can see, there is a lot of room for development if you don’t focus solely on the external conditions of the so-called market.