Growing from change

Traditionally, corporations, even very powerful ones, do not last longer than one or two hundred years. For example, the Dutch East India Company which for a while was more powerful than some European governments, was founded in 1602 and became bankrupt in the late 1700’s.

As the BBC pointed out in 2012

The past few years have seen previously unthinkable corporate behemoths – from financial firms such as Lehman Brothers to iconic car manufacturers such as Saab – felled by economic turmoil or by unforgiving customers and tough rivals.

Can a company live forever? – BBC News
www.bbc.com/news/business-16611040

Is there a fundamental reason that corporations cannot last forever, or will we see a future that contains 1000 year old Microsoft’s and Oracle’s that are indelibly entrenched in the world’s economy and work-style?

Self-contained universe

The larger and more successful a company is, the more likely it is to develop its own way of thinking, its own way of doing things and its own internal world of values and emotions.

…individual companies have their own respective corporate culture and values, and at the same time each company also has its own view of leadership, which is influenced by different organizational contexts embedded within the company.

The sharing of organizational culture and values gives rise to unique corporate systems, rules, and customs, and establishes the company’s own way of thinking and ways of viewing things in general, as well as [inducing] thought and behavior patterns… into employees.

Developing Holistic Leadership: A Source of Business Innovation, Section 9.3.1.1 Synchronization of Leadership, by Mitsuru Kodama
https://books.google.com/books?isbn=1787144224

By developing its own way of doing things, it is possible for a company to gain predictability and to enhance process quality. By developing its own culture and inner emotional environment, it is possible for a company to get employee buy-in, increase employee longevity and become known as a good place to work.

There is danger, however, in a company developing its own inner world of values and emotions. The happy self-contained corporate world may eventually become self-justifying and so lose touch with the external market reality. If this happens, the company can become uncompetitive, unresponsive to changing market conditions, and lose market share.

Is there a way to ensure that the internal corporate world will be used as a position of strength from which to respond to market challenges, rather than as an easy refuge from a market that relentlessly demands change and improvement?

Expecting the unexpected

Generally speaking, people want to hear things that will make them happy, and not things that they may find upsetting. For example, if someone thinks that they have their life worked out, the last thing they want you to tell them is something that challenges their plans. If you do tell them something that poses a challenge to their life plan, they may ignore you or forcibly reject your ideas. Having a clear life-plan gives people a feeling of safe predictability; demonstrating that this plan is impractical can make them feel threatened and anxious.

Similarly, when a company builds a cosy self-contained working environment, employees develop a feeling of security and predictability which is based on the ongoing viability of the corporate business plan. Subsequently, executives can be resistant to hearing anything that could cause them to have to rethink the business plan that forms the basis for the work environment in which they live, because this would make them feel anxious and worried.

A classic case of such short-sightedness was Kodak’s reluctance to recognise the imminent demise of photographic film, till it was too late.

In 1975, Kodak engineer Steve Sasson invented the world’s first digital camera… After taking your photos with the camera, you could … display the images on a standard TV. He and his colleagues demonstrated this “filmless technology” to Kodak executives throughout 1976.

But Kodak had a blind spot when it came to anything that might disrupt the company’s profitable film business. Sasson reports the executive reation: “Why would anyone want to view his or her pictures on a TV? How would you store these images? What does an electronic photo album look like? When would this type of approach be available to the consumer?”

Sasson and his team did not have the answers. But by applying Moore’s law, the team came up with an estimate: In 15 to 20 years, the devices would be available to consumers…In January 2012, Kodak filed for bankruptcy.

When a company is large and successful, its size can be its worst enemy, especially when it is so dominant that it lacks serious competition. A company culture that drove success in the early days can become overly codified, rigid and ritualistic… Slowly, great companies can lose touch with reality.

The Connected Company, pg. 46 – 47
https://books.google.com/books?isbn=1491919434

The Kodak executives did not want to hear about digital photography because this challenged the cosy world they lived in, within the world’s top photographic film company.

Awareness

The ability to grow from a challenge relies on having an attitude of continual growth and freshness. If every day is new, you can use your previous accomplishments as a base from which to meet new challenges. On the other hand, if you expect not to have your daily routine disturbed, then even when warning signs appear that change is required, you will probably carry on doing the same thing as yesterday.

Staying alert and being ready to meet life head on, will position you to surf the waves of change.