Joe Gerstandt | keynote speaker, freedom fighter, freak-flag flier

We all know that an organization has a culture.  We know that it would feel differently to work at Google than it would to work at the Federal Reserve…even in the exact same type of job.  We all have some appreciation for this idea of culture and that it makes a difference…but how much of a difference?

Arie de Geus worked for Royal Dutch / Shell for thirty-eight years, has advised numerous government and private institutions and wrote a wonderful book called The Living Company.  Much of his message in this book is connected to some research he conducted wthile at Royal Dutch / Shell after becoming interested in why some organizations were able to survive and thrive much, much longer than most.

Organizational life expectancy might not be what you think it is.

“The average life expectancy of a multinational corporation – Fortune 500 or its equivalent – is between 40 and 50 years.  A full one-third of the companies listed in the 1970 Fortune 500, for instance, had vanished by 1983 – acquired, merged or broken to pieces.  Human beings have learned to survive, on average, for 75 years or more, but there are very few companies that are that old and flourishing.”

So, de Geus decided to examine the behavior of organizations that had been around for 100 years or more and maintained their core identity.  Once he had found some organizations that this was true of (there are not many of these), and he looked for what was unique about them…what were the key factors that contributed to their ability to outlive some many of their competitors?  Well…for starters, profit was not one of them.

“It did not take us long to notice the factors that did not appear on the list.  The ability to return investment to shareholders seemd to have nothing to do with longevity.  The profitability of a company was a symptom of corporate health, but not a predictor or determinant of corporate health.” 

What were the factors that did contribute to longevity?

1. Long-lived companies were sensitive to their environment.  Whether they had built their fortunes on knowledge or on natural resources, they remained in harmony with the world around them, noticed and were able to understand far-reaching changes as they happened.
   
2. Long-lived companies were cohesive, with a strong sense of identity.  No matter how diversified they were, their employees felt they were all part of one entity.
3. Long-lived companies welcome new ideas and difference.  These companies were particularly tolerant of activities on the margin: outliers, experiments,  and eccentricities within the boundaries of the cohesive firm, which kept stretching their understanding of possibilities.
4. Long-lived companies were conservative in financing.  They were frugal and did not risk capital gratuitously.

The thing that sticks out to me about these four factors is that they are largely cultural in nature.  #2 and #3 are certainly dependent on the culture, #1 and #4 can be driven by policy, but are also to some degree cultural attributes. 

So.

How long will your organization be around?

The answer to that question is primarily about the culture that you are able to build and support.

Are you as an organization connected to your environment / community? Do you have a strong sense of cohesion…playing on the same team?  Do you value and welcome difference and experimentation? 

For an organization, these are matters of life and death.

-be good to each other