Managing for Eternity -
How to Live Long and Prosper
by Tanya Sammut Bonnici
‘The average human life span has risen from 40 years at the beginning of
the century to 75 years at the turn of the millennium … Company life expectancy
may undergo a similar transformation.’
Beating The Clock
Beating aging gracefully is an obsession of the human race. From the ephemeral
fountain of youth, slowing the clock has turned into big business through
health foods, cosmetics and miracle drugs. As the secrets of human longevity
show some signs of being untangled, companies are starting to wonder what
makes an organization survive and outlive its competitors. The debate has
its roots in evolutionary economics which looks, in part, at Darwinism for
answers. Interest in corporate longevity has been renewed by studies from
Shell and Stanford University which aim to unfold the mysterious ingredients
Human and Corporate Survival
The average human life span has risen dramatically, from a life expectancy
of 40 years at the beginning of the century to 75 years at the turn of the
millennium. The human race learned what factors need to be monitored to increase
longevity: a balanced diet, a higher level of hygiene, and a shift from the
war-like ‘survival of the fittest’ concept, to peace-keeping through relationship
building. Identifying the right measures has doubled the human life span in
Company life expectancy may undergo a similar transformation. It will be
a matter of time and an accumulation of collective experience until we master
the optimal performance measurement required to set the course for corporate
The average life span of companies in Europe is 12 years. This may come
as a surprise, considering that an important constituent of the world economy
is largely based on enterprises which die before reaching their teenage years.
A handful of companies will make it to the next century. Most will dissolve,
or maybe their knowledge and assets will evolve into something else.
BPM and Beating the Clock
The current view of business performance measurement focuses on performance
within the boundaries of our experience. The average life expectancy of Fortune
500 firms is from 40 to 50 years, which is equal to the active working life
of an executive. A few corporations such as Shell, Stora and Sumitomo have
survived for much longer. Examples like these suggest that most companies
are not reaching the full potential of their natural life span. Could our
current view of relatively short term performance be limiting corporate longevity?
Business Performance Measurement has evolved from being primarily financial
to being more operation based. An even wider broader view, in terms of evolutionary
science, may be on the horizon. The widening of measurement paradigms may
be necessary to embrace corporate longevity.
Einstein, Darwin and Survival
It would be interesting to research the performance measures adopted by the
older companies, in order to establish whether a shift in the measurement
time frame would encourage longevity. Einstein said "Problems cannot be solved
at the same level of awareness that created them." A paradigm shift in corporate
measurement may be required to push corporate performance beyond our conceptual
Shades of Arie de Geus and Peter Senge, companies are living entities, not
machines with people inside. They act like living organisms. They think, work
and evolve just like the species on our planet. Shades of Darwinism come into
play. Companies that have survived for a long time may have mastered the secrets
of surviving the turbulent business environment. They manage for survival
not profit. Their purpose is to fulfil their potential and perpetuate ongoing
communities. Just like creatures aim for continuity through offspring. The
more intelligent the species, the stronger its survival skills.
The question arises whether or not Performance Measurement Systems are mechanistic
in their approach. Seeing the company as a machine implies that it is created
by someone outside it, that it is owned and that it must be controllable by
its operators. If the company is viewed as a living being it is liberated
to act as an entity which evolves in its own right.
Entrepreneurship as Corporate Mutation
Another basis for the survival debate is Entrepreneurship. Living organisms
require genetic mutation in order to introduce new capabilities for survival.
Could entrepreneurship be a source of corporate regeneration? Does entrepreneurship
assist companies to respond to new challenges, just like innovation in genetic
structure assists living organisms to cope with new environments? If so could
entrepreneurship be used as an indicator for long term survival?
Be Predictable to Survive
Another theory which is creeping in on the survival debate is Predictability.
Be predictable in your actions and you will survive. The concepts balks CEOs
around the globe. In the last couple of decades we were lead to believe that
change, innovation, and the element of surprise are the name of the game.
Stevenson, a Harvard academic, is now telling us that behaving in a predictable,
consistent way enhances survival. Stick to the knitting, do what you do best,
and build on it. Stevenson shows how the need to predict and shape the future
drives most of human behaviour. He sees predictability as a requisite for
survival of the species, and extrapolates the idea to organizations. The company
that embraces predictability enhances its own effectiveness, or so the theory
goes. Unfortunately the concept is backed by conjecture and lacks research.
Secrets of Success as Fuzzy Variables
Another aspect of the research on corporate survival looks at efforts to establish
measurement of subjective performance indicators, such as those present in
complex systems. Complexity theory may pose some challenges to the traditional
performance measures. It implies that some of the more important elements
of evolution, analogous to corporate growth, are attributed to ‘fuzzy’ variables.
An example would be the notion that the whole is greater than the sum of the
parts in a complex system. A flock of birds can achieve more that a bird flying
solo. It is difficult to explain, and even more difficult to measure. Does
this mean that performance measurement is unable to capture the more vital
proponents of success? Complexity theory looks at these components in ways
that are organic, non linear and holistic. It may take a while before the
discipline of performance measurement evolves sufficiently to handle the ambiguity
present in thriving complex systems.
Is longevity a sign of optimal performance or is it merely an indication
of endurance in a sub-optimal state? Are the truly successful organizations
the ones that metamorphose and evolve into new corporate forms, just like
an organism would change to survive in its habitat?
About the author:
Tanya Sammut Bonnici is a Doctoral Researcher on Corporate Performance at
Warwick Business School. She has worked on the implementation of Performance
Measurement Systems at Vodaphone, Mtel, and ST Microelectronics. She is a
Lecturer at the University of Malta. She held the post of Researcher for the
European Parliamentary Assembly in Strasbourg, and served on a number of boards
for Maltacom, the national telecommunication carrier. Professional posts include
Marketing Manager at Vodaphone, United Artist’s cable operation, and VP Business
Development at APS Bank. She has acted as consultant to international companies
such as Royal & SunAlliance, Smith Kleine Beecham and AON among others.
Contact Tanya Sammut Bonnici by e-mail: T.Sammut-Bonnici@warwick.ac.uk.
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