Are All Organizations Destined to Die?

Where does value come from? What is its source?

Value is the unique contribution a company is capable of making in the marketplace.

Ever since the beginning of the industrial revolution, companies have worked to “create value” by designing ever-more sophisticated business processes aimed at achieving high levels of efficiency, thereby minimizing costs and maximizing output. Assembly line economics, Six Sigma, robotics and other management approaches all have this end in mind, as does the propensity for organizing companies as if they are intricate machines made up of divisions, groups and business units; i.e., pieces and parts.The intended goal has been to be able to better manage the business.

The unintended result of machine-based management, however, is that like any machine, the organization will inevitably run down, wear out, and even worse, become outmoded, superseded by the inevitable, superior machine certain to arrive.

Where does value come from? At its foundation, value comes from what human beings create for one another and what they do for one another. When human beings work together to “create value,” organizations often arise with the intent of sustaining value creation.

Beyond the machine model

The new vision of management in the machine age reached a pinnacle with the work of Frederick Winslow Taylor who, by 1893, was, operating as one of the first business consultants, explaining scientific management and proposing the most efficient ways to optimally blend man and machine.

Eventually, the machine model reached its limitations. Increasingly, value creation was going to come not from machines, but from human capital and the productive changes people were capable of producing through creativity, imagination, and innovation. Trying to manage humans mechanistically was increasingly not working. There had to be a better way.

The shift in perception from company-as-inert to company-as-living-system was first alluded to in Peter Drucker’s book Landmarks of Tomorrow (1959) in which he coined the term “knowledge workers,” envisioning that they would eventually outnumber laborers and would require a completely different kind of management – one that recognized a more complex set of human factors. In his The Effective Executive Drucker observed that the human element brings the essential ‘heart and brain’ to the enterprise. In 1990, Peter Senge asserted in his

 pivotal book, The Fifth Discipline, that companies needed to become ‘learning organizations,’ in response to his belief that they are organic systems, which called for constant nurturing if they were to remain healthy and thrive. In the late 1990s, Ari de Geus, head of strategy at Shell, wrote convincingly about what he perceived as the ‘living company.’ In his view, the natural average lifespan of a corporation should be as long as two or three centuries, but most died within 40-50 years of inception.

Search for a new model

If organizations were metaphorically ‘alive’ or indeed actually alive, a new management model was called for. And that model, if there was one to be found, would most likely exist in some kind of dynamic, living organism.

It turns out that the model was there, in front of us, all along. It was to be found in the creators of these organizations, the human beings that devised these complex systems that harnessed human and machine energy and enabled them to work together.

With this new model in mind, it would now be necessary to take a fresh look at human beings and to understand what it takes for them to succeed.

How do living organisms thrive?

There are myriad explanations for what make human beings tick, and they’ve been put forth over centuries by numerous thinkers. In the twentieth century, Erik Erikson, the German-born psychologist, helped clarify the nature of human consciousness and awareness. He also articulated the roots of human identity and its impact on how we mature as individuals. In his seminal book, Identity and the Life Cycle, Erikson describes identity as the blending of two forces: an individual’s ties with the particular values of his or her family, history and heritage, and the natural-born traits that simply make each of us unique beings. From Erikson’s perspective, our identity is a governing force that is with us always.

Building on Erikson’s work, Abraham Maslow offered his now widely-accepted Hierarchy of Needs, explaining that until humans had attained certain basics such as food and shelter, they would be unable to reach their potential. Further, he gave us a clear picture of what it would be like to reach our full potential: he defined that state as being ‘self-actualized.’ Once Maslow had given language to what we humans were capable of becoming, tens of millions of individuals were in a position to see more clearly what they might achieve in life. Twenty years ago, on the strength of Erikson’s and Maslow’s