Leaders have historically taken their learning from the Industrial Revolution and created organisations that operate like machines. But the machine-like organisation is no longer fit for purpose.  Leaders now need to take their learning from nature to create organisations that operate like ecosystems. 

 

Machine Organisations

 

During the Industrial Revolution, we fell in love with machines. They increased productivity, reduced the need for hard labour, and provided more affordable products.  Enamoured, business leaders became hooked on everything working like a machine. They learnt all they could from the operation of machines and applied it to all aspects of leadership.

 

Machine-like organisations are characterised by control.  Different parts are carefully synchronised to produce a standard and predictable output. To maintain control, work is very formalised, bureaucratic procedures are introduced, and decision making is allocated to hierarchical levels of authority.  Tasks are grouped into functional departments, ensuring specialisation and division of labour, with lines of authority going to the top of the organisation to provide centralised control. Further controls are put in place with formal planning processes, budgets and audits. 

 

In stable operating environments, machine-like organisations can be very efficient and generate a competitive advantage through leveraging economies of scale.  However, in turbulent times, the control needed to make a machine-like organisation function efficiently becomes its Achilles heel.  The machine-like organisation’s inherent bureaucracy and decision-making structure inhibit its ability to respond to changes in the operating environment.  Employees aren’t free to be creative problem-solvers. Functional departments become silos hampering co-creation.

 

Despite these short-comings, machine-like organisations are still prevalent. They may have undergone a bit of tweaking such as flattening the hierarchy, empowerment, quality circles and employee engagement, etc. but they are still recognisably machine-like. With their overriding goal of increasing shareholder value, they clunk into action, scouring the land to hoover up the resources within their reach, whether natural, human, or financial, and converting them into profit through the production and sale of goods and services.

 

The era of the machine-like organisation is at an end.  No longer can businesses operate with simply the shareholder in mind.  Instead, business leaders need to integrate all stakeholders’ needs to increase all types of capital, including psychological, social and environmental, alongside financial.  The Covid 19 pandemic has been a painful reminder that we are indeed living in a VUCA (volatile, uncertain, complex and ambiguous) world.  The stable operating environment required for a machine-like organisation to function with reasonable efficiency no longer exists.  Leaders need to look elsewhere for new learning.

 

Ecosystem Organisations

 

A new type of organisation is emerging that can change naturally and foster the growth of all capitals.  Here, the growth of one capital can create an environment that facilitates the growth of the others. These organisations operate more like ecosystems and less like machines. 

 

The British botanist Arthur Tansley first coined the term ‘ecosystem’ in the 1930s to describe a community of organisms interacting with each other and their environment.  To survive, organisms competed and collaborated, they co-evolved and jointly adapted to environmental disruptions. In 1993, in an article in the Harvard Business Review, the business strategist James Moore argued that businesses operate in an increasingly interconnected world, like a community of organisms adapting and evolving to survive. He suggested that a company should be viewed not as a single firm in an industry but as a member of a business ecosystem with participants spanning across multiple industries. In 2014, in his book Reinventing Organisations, Frederick Laloux described the new emerging organisations as being like living organisms.

 

An ecosystem-like business is best seen as a network of stakeholders, such as investors, employees, suppliers, customers, competitors, communities, the environment, etc. Each stakeholder in the ecosystem affects and is affected by the others, creating a constantly evolving relationship. Each must be flexible and adaptable to survive, just as in a biological ecosystem.

 

Rather than seeing things as being fixed, separate and fragmented, ecosystem-like organisations see things as continually flowing, interconnected and whole.  They see change as a continuous natural process that cannot be managed but, instead, needs to be nurtured and cultivated. Ecosystem organisations have multiple and continually evolving purposes. These are related to planet, people and profit, often referred to as the ‘Triple Bottom Line’. To achieve these purposes, they seek to sustain and regenerate the resources they use to create goods and services by ensuring that the resources are returned to the environment in a replenishing form. Profit is realised through society valuing and rewarding the work of the organisation. The ecosystem organisation uses a range of practices such as self-managed teams, personal inquiry, distributed and emergent leadership, organisational democracy, dialogue and listening to the organisation as it naturally unfolds its emerging purpose. All of these practices enable the natural flow of change. Examples of ecosystem businesses include Patagonia, Spotify, Zappos, Buurtzorg, W.L. Gore and many more.

 

Biomimicry

 

So how can leaders learn to create ecosystem businesses?

 

The answer is simple.  Learn from nature.  Over millions of years of evolution, nature has already solved the problems leaders face in developing strategies, processes and structures.  Learning from nature to solve business problems is called biomimicry.  Numerous products have been developed using biomimicry, such as the bullet train designed from observing a kingfisher entering the water. It is an approach to innovation that seeks sustainable solutions to human challenges by learning from nature’s forms, processes and systems. The goal is to create products, processes, and policies that are well-adapted to life on earth over the long haul. Biomimicry involves learning from, rather than about, an aspect of nature in terms of its form (what it looks like), its processes (how it survives and grows) and its ecosystem (how it lives with other aspects of nature).

 

 

If leaders want to create organisations that thrive during the VUCA we are now experiencing, they need to look to, and learn from, nature rather than machines.  In doing so, they can create organisations that will naturally adapt to the changes we are experiencing in the operating environment, balance and integrate all stakeholders’ needs, and regenerate our natural environment.

 

 

Terry Sexton

Business Psychologist

24th March 2021

 

Contact us if you would like to talk with Terry about how your organisation’s leaders can learn from nature.  Take a look at Terry’s profile to find out about his work.

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