STICK TO YOUR knitting guidance offers many benefits, but also snares many into stagnate thinking. Developing a strong core is vital to both you’re in business and personal health. However, strict adherence to a core-only mentality often leads to narrow thinking, which can result in undue reinforcement of existing patterns, squelching innovation and avoiding diversification.
Organizations face a dynamic and complex environment so steadfastly following past success recipes can thwart organizational reinvention, obstruct the exploration of new opportunities and stifle innovative thinking. While the quests for increased market share and organizational expansion remain universally accepted practices, they cannot guarantee sustainability. It merely increases the wager on current practices when the chances for continuous stability are extremely low. As Mark Twain quipped;
“even if you are on the right track, if you sit there you will get run over.”
Recent research by Geoffrey West in his article on The Mortality of Companies (J. R. Soc. Interface 2015 12 20150120; DOI: 10.1098/rsif.2015.0120. April 2015) found that current organizational lifespan is 18 years. After that most succumb to acquisition, merger or collapse. Compare West’s finding with that of Arie deGeus’ (The Living Company, 1997) who found that an organization’s lifespan was 40 – 50 years. The new research reflects a significant drop. West concluded that embracing core competencies and strategies exclusively equated to voluntarily wearing a straightjacket and blinders. Companies like Tandem, Wang, and Compaq illustrate the cost of becoming wedded to a once-promising core.
Leaders must embrace continuous renewal, support cross-functional thinking encourages strategic thinking and develops mechanisms for growth to survive. They must rethink their hiring and reward practices. Simply trying to clone the current workforce may appear safe but it a precarious recipe that encourages hazardous groupthink. Reward practices that merely target meeting current performance metrics squash critical thinking and creativity. Leadership training that replicates existing competency models chain an organization to its past rather than a launching it toward the future.
Royal Dutch Shell is 300 years old and is just one of the 5,586 firms worldwide that the Bank of Korea identified as having a history of 200 years or more. It’s interesting that the vast majority of these (3,146) are in Japan. The remaining firms are in German (837), the Netherlands (222) and France (196). Just as fascinating is that the vast majority of these long-lived firms had fewer than 300 employees This historic perspective runs counter to the contemporary behemoth strategy employed by many firms.
Competencies, strategies, and leadership must evolve and encourage dynamic responses. The assumption that size and market dominance ensures longevity needs rethinking as does the unwavering allegiance that many firms have on their core. As the financial industry asserts “past success is no guarantee of future outcomes.”
Sustainability stems from organizational renewal, reasonable risk taking and innovative thinking. Leaders must continue to learn and grow rather than blindly perpetuating outdated formulas and strategies. What if our allegiance to our core is our central problem? This concept deserves fuller examination.