Wednesday, April 25, 2007

Does sustainability in business mean companies have to die?

I've written about growth and sustainability from both a business and an environmental perspective. Now John O'Leary posted a note on the Tom Peters site that blew me away with a suggestion that was both obvious and unexpected: sustainability means that companies die. It's the sustainability of the economic system, not of the company, that matters.

That's obvious in your garden and in the forest. Older trees eventually die to give way to the younger trees. Last year's tomato plants are pulled and composted, and this year's crop is planted.

As sequoias may last for centuries and tomatoes last a season, different companies have different lifespans. We shouldn't uproot a healthy sequoia seedling after a season, anymore than we should try to keep that tomato plant producing into the next century.

And there are indeed challenges. When companies fold, people have to find new work, and that doesn't always happen at favorable times. When companies fold, we may lose access to products and services that provide part of the support for our businesses or our lives. We have to think well about how to deal with such transitions.

Yet a key factor in enabling births in an environment with finite capacity is deaths. A key factor in enabling growth in companies and opportunity for people may well be to allow companies to die with dignity.

Thoughts?

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8 Comments:

Blogger John O'Leary said...

Thanks for ampflifying my thoughts, Bill. Yes, companies have to die, but more often there are organizations, teams, projects, etc. within the companies that need to be dismantled quickly to adjust to brutally competitive markets. This can often be done without layoffs if the workforce is flexible. But the mindset that needs to be updated - especially in manufacturing (and in mining where I'm doing most of my work right now) - is the protect-my-job-at-all-costs model which can ultimately doom the very enterprise itself.

Hey, we share many of the same influences - I worked for Senge's Innovation Associates in the 90s and love the Senge/Argyris stuff.

25 April, 2007 08:59  
Blogger Bill Harris said...

John, good points. When I was last employed and considering setting up my own company, I wondered why companies didn't make more of an open internal market for work, so that people could move more flexibly and seamlessly from one project to another. Such a scheme might offer the innovation, excitement, and opportunity of a small company or startup with the benefits of division of labor that can exist in a larger company.

I'm guessing that may be something like you're suggesting.

As for the mindset you mention, holding onto last year's tomato plants won't ensure I have great salads this summer. The same seems true of holding onto jobs to try to have a good livelihood.

It's good to meet another person interested in systems thinking and system dynamics as well as action science. I think they can be potent tools for addressing certain common problems we see in organizations. You sound as if you were in the thick of things if you worked in Innovation Associates.

Thanks for stopping by.

25 April, 2007 10:28  
Blogger John F said...

Bill,

I've been thinking about some real doomsday scenarios today with regard to the ecosystem and humanity, so maybe that's why I have this thought: It seems that we so often take a short term view and neglect to acknowledge the level of change that happens historically. (e.g., as seen in Jared Diamond's Collapse) So I would think we could even go a step further and say that eventually whole business models die, and even whole economic systems die, making way for new ones -- and that that's just the way it is.

Lately I've been reading Molly Scott Cato's book in which she advocates things like the co-op model and extensive relocalization as antidotes to unsustainable practices today:

http://gaianeconomics.blogspot.com/

Some see these things as going in perpetual cycles, with old systems dieing and new ones forming in their place, but it's tempting to think the next time we'll get it "right." :)

25 April, 2007 23:06  
Blogger Bill Harris said...

It's always tempting in that way, I sense. Yet to the degree the world exhibits fractal characteristics, then we shouldn't be surprised that birth and death phenomena happen at various scales, including the ones you mention.

Perhaps it's related to the notion I think I read in Dietrich Dörner's work that we deal less well with things spread out in time than with things spread out in space. Death of companies or of business models seems (we hope) so far in the future that we feel safe ignoring it and surprised when our feeling of safety turns up as misplaced.

Any thoughts on how to incorporate such ideas more effectively into our world-views, assuming that's helpful?

Thanks for the comments, John.

26 April, 2007 07:53  
Blogger Terrence said...

Hospice, eh? Interesting metaphor, Bill.

Companies die, that's a fact. And in several cases I know of personally,
I played a part in easing the transition, including...

- facilitating knowledge transfer
- coaching employees
- providing training
- creating channels of communication

Terry

30 April, 2007 16:06  
Blogger Bill Harris said...

Thanks, Terry, for adding that. Those are key aspects of organizational death with dignity, I think.

30 April, 2007 21:54  
Blogger John F said...

Any thoughts on how to incorporate such ideas more effectively into our world-views, assuming that's helpful?

It does seem we should do that, somehow, if only because it should help us know when or if we're facing the tail end of a cycle, with the death of a whole system looming in the near future. Ideally, I suppose, we might also be able sometimes to transform a system (or a company...) before that death occurs, making the necessary changes a lot less painful.

How to incorporate such ideas into our world-views? That's the $64,000 question, isn't it? I suppose it could start in the schools, with kids being taught history in ways that make clear that our current culture is doesn't stand apart from those that came before it in some unique way that makes it invulnerable to the same things that caused those past cultures to fade into history.

Otherwise, I don't know. It seems just developing and maintaining an awareness must have a lot of value. But how do we promote such awareness on a broad scale? If most people continue to go around assuming business as usual can go on forever, we, collectively, will be hit at some point by some pretty bad surprises.

My focus, of course, is mostly on ecological issues. Right now, I think publicity for the climate change issue is to some extent serving as an opening for increased awareness about a lot of other ecological problems. So taking advantage of increased awareness in a particular area to generate awareness in others seems to have a lot of value. Those are my ramblings at this moment anyway... :-/

04 May, 2007 12:23  
Blogger Bill Harris said...

John, I think one of the problems is that we have trouble seeing relationships that play out over time. We tend to emphasize things that are close to us in space and time. Of the two, pictures and maps help us give a fairer weighting of things spread out spatially, but we tend still not to understand how things have happened over time as well as we do things that have happened across space. Dietrich Dörner (The Logic of Failure and other works) has studied that a bit, I think.

Good graphs help. Simulation with transparent simulators helps, I think, for we can see the (spatial) structure of the simulation model and then watch how it plays out over time. Those graphs seem to give us aids in weighting things from decades, centuries, and millennia appropriately with things that happened yesterday. In essence, the simulations and especially the graphs help us turn temporal things into spatial things.

If you search around my blog, you can find examples of system dynamics simulations. For one, see Making musical sense by email as an example of using a simulation to begin to make sense of confusing and scanty data.

Does that make any sense?

04 May, 2007 13:24  

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