Lessons From the Environment Help Firms Evolve
Organizations are increasingly exposed to dynamic change: change upon change upon change. This dynamic change upsets the traditional business paradigm.
Paradoxically, inspiration to overcome the current challenges is all around us. Nature has been dealing with dynamic change for more than 3.8 billion years, and the more we explore nature's ways the more we find inspiration for operating in a dynamically changing business environment.
Our understanding of nature has evolved over the last few decades. We once viewed it as a battleground of competition to one of dynamic non-equilibrium, where an order within chaos prevails due to unwritten natural patterns, feedback loops, behavioural qualities, interdependencies and collaboration within and throughout ecosystems. But the more we grapple with the challenges our businesses now face, the more we realize that nature's patterns and qualities inspire approaches and qualities for our own evolutionary success in business and beyond.
Case in point: Biomimicry for Creative Innovation (BCI), a collaboration of business transformation specialists which I helped co-found, has developed a set of business principles for the firm of the future originating from the life principles developed by the Biomimicry Institute in the US. The principles are aimed at creating conditions in business conducive to collaboration, adaptability, creativity, local attunement, multifunctionality and responsiveness; hence, enhancing the evolution of organizations from rigid, tightly managed hierarchies to dynamic living organizations which thrive and flourish within ever-changing business, socio-economic and environmental conditions.
Organizations that understand how to embed these principles from nature into their products, processes, policies and practices create greater abundance for themselves and their business ecosystems in times of rapid change; flourishing rather than perishing in volatile conditions. Organizations inspired by nature are resilient, optimizing, adaptive, systems-based, values-based and life-supporting. Let us explore these principles.
In nature, we find resilience in almost all flourishing ecosystems. A forest, for instance, maintains different development stages within its ecosystem. Some parts of the forest are in a state of rapid growth or re-growth, while other parts are maturing, and yet others are fully mature and ageing. There is continual cycling through these stages, with disturbances (such as fire, flood or storm damage) driving release of resources that, in turn, lead to reorganization and regrowth, akin to new products being launched and new ways of working being introduced. By maintaining constant cycling at different time and space scales, the forest is able to flourish during short-term disturbances as well as long-term change. Diversity is key to nature's success.
Similarly, the more resilient an organization is, the more able it is to successfully deal with disturbances and volatility. Hence, business resilience is fast becoming the Holy Grail for businesses in these volatile times. The more diverse, decentralized and distributed a business ecosystem, the more able it is to seek out opportunities and capitalize upon a changing business landscape.
Example: UK brewery Adnams recently shifted their focus from a few product lines and customers to increasing the diversity of products and their customer base. The shift towards a greater variety of products and customers led to investment in adjacent markets. During this business transformation, Adnams also invested in its employees, ensuring they became more empowered to make decisions locally, reducing the need for overly burdensome centralized management. These changes have significantly increased Adnams’ resilience, leaving them far better equipped to deal with market volatility and seek out new opportunities.
In nature, optimization through economies of scope achieves improved cross-fertilization and species interaction (akin to improved interactivity across traditional department and organizational boundaries). Maximization is driven through homogenizing, scaling up, atomizing, industrializing and reducing complexities within a specific business function, system or process; optimization is driven through enhanced connections, interactivity and interdependencies across different business functions, systems or processes.
Economies of scale rely on mass production which can reduce the potential for synergies in an organization; reducing the variety of products curtails creativity and innovation, can lower staff engagement levels and ultimately weaken the company's overall resilience. Economies of scope realize benefits by unlocking synergistic win-win relationships and positive virtuous cycles, increasing co-creation through increased interconnections across the wider business ecosystem. This increases the system's overall resilience and improves the ability to optimize. It is not that maximizing or economies of scale are not good, it is more that a harmony of the two approaches needs to be found, thus ensuring the best delivery of services or products in any given market at any given time.
In the words of Charles Darwin "it is not the strongest species that survive, nor the most intelligent, but the ones most able to adapt to change". Adaptation is enhanced when the organization (individuals and communities of stakeholders) finds it easier to let go of the old and embrace the new. For example, geese when they fly in a V-formation rotate leadership to ensure that at any given point in the journey, it is always fit for purpose.
Unilever is undertaking significant adaptation across its business not just in the way it sources, produces and distributes products but also in the way it engages stakeholders across its entire business ecosystem. It is adapting its approach to business to become fit for purpose for the environment that it operates in.
General Electric is another company that is adapting and transforming its business strategy towards products and services that enhance the sustainability and long-term value of its customers and wider stakeholder community.
Fungi provide an interconnected web of life in the soil beneath our feet, breaking down plant waste and stones into food for plants, and in so doing, feeding the plants while also gaining food from them. The fungi distribute and share nutrients between different parts of the ecosystem as the health of the overall ecosystem benefits the whole, the parts and in turn the fungi. It is in the fungi's interest to be part of a healthy, resilient ecosystem, just as it is in the organization’s interest to be in a healthy, vibrant business ecosystem and social community.
Reducing complex business problems, projects or production lines into small, manageable chunks has the advantage of simplifying management and control. But, it can reduce the interconnections and interdependencies between activities that give rise to synergistic value enhancement.
Business, like nature, is lit up by interconnections and relationships that find success by being both system-focused and self-focused. Whatever the organization (or organism) does to benefit itself should also benefit the system; in benefiting the system it also benefits itself.
As businesses are being called upon to continuously change, let go of old ways, seek out opportunities and embrace the new, values become the core of good business behaviour. Hierarchies of management and control slow down the ability for organizations to adapt. Rather than controlling the workforce, a firm of the future empowers the stakeholder community to take decisions locally, based on the core business behaviours set down by the values and culture of the organization. Hence values-based leadership becomes a differentiator for those organizations best able to transform towards a firm of the future.
Sustainability is fast becoming embedded into business best practice. Life supporting goes beyond traditional sustainability and corporate responsibility – measuring, monitoring and reducing the negative effects of the business. It is about creating the conditions conductive for life; encouraging behaviours, products and services that seek to enhance the wellbeing of those within the business ecosystem. Some organizations are already transforming towards zero emissions (for example, Puma and InterfaceFLOR), yet there is neither rhyme nor reason why business should be limited to a zero goal. Reaching for net positive value creation where business relationships, products and services are mutually beneficial for the stakeholders, society and environment within which they operate is the true ambition for the firm of the future.
Of course that transformation is a journey not a destination. These business principles help shape the direction of the journey, yet there is no ideal business model or perfect way of operating; it is about finding the right way at the right time for the market conditions. The future is bright for those organizations and individuals bold enough to embark on a journey of dynamic transformation in the face of increasingly perilous market conditions.
Giles Hutchins is a business change agent with over 15 years of business and IT transformation experience with KPMG and Atos International. His passion is exploring ways of applying nature's inspiration to sustainable business transformation. His work draws on a range of theories and practices (such as biomimicry, cradle-to-cradle & industrial ecology) applying them to the challenges businesses face today, providing practical insight and guidance to help businesses redesign for resilience in these volatile times. He is the co-founder of BCI: Biomimicry for Creative Innovation. Giles regularly guest lectures at leading universities, presents at global conferences and blogs for a number of sustainable business sites. His book on "The Nature of Business" can be found here.