Number 35: Summer 2006
The Company: Living Entity or Machine?
by Tom FitzGerald
Editor's comment: Changing a company, turning it around or even changing its character is a very difficult operation. However, corporate change may be made easier by treating it as a living organism and not as a machine.
How You Treat It Determines Its Performance
People have always known instinctively that a human enterprise is a living, breathing entity that grows and ages, sickens and heals, flourishes and fails. It is something that is organic in nature. It has personality and the ability to learn and to reproduce. It has personhood. It is something that is much greater than the sum of its functions. It is much different than the sum of its people.
This personhood is most easily recognized at both ends of the spectrum of corporate success. World-class companies exhibit a character of focus, power, and oneness that is palpable even to a casual visitor. Companies in deep distress show a personality that is equally vivid but fragmented, fearful, and impotent.
All companies have this personhood, whether it is strong or weak, potent or ineffective, motivating or destructive. These corporate personae have inner lives at least as complex and as richly tapestried as people do. Not only do these inner lives coexist with the external results of corporate success and failure, but also actually precede and cause them. In our work, we find about 150 attributes of corporate personality that can cause, effect or predict bottom-line performance.
Entrepreneurial and charismatic leaders have always known this quite intuitively and use it to lead, motivate and transform their companies. They use their organizations' living energies to magnify their leadership and their ambition for their companies. They alter elements of their companies' inner lives to force changes in the externals. They may not talk about it for many would be too embarrassed, but they think about their companies as persons.
For more than eighty years, definitely since the advent of "scientific management", the company-as-machine paradigm has become the model most used. It is used particularly when growing, changing or improving organizations is attempted.
Unquestionably, such a model has its uses. Certainly it is easy to teach and understand. Undoubtedly it lends itself to ready analysis. It also has profound limitations. It is as limited as the model of a human body without its life, without its spirit.
Changing the inert, spiritless human body can only be done mechanically. The results can be no more than was done to it. The body without its life can offer no response, no help. It has no ability to further what has been done to it. Decay is the only possible result.
Trying to change a company in any significant way using the company-as-machine model is like that. Business Process Reengineering is a prime example. It is successful only about 30% of the time, a percentage comparable to that of a placebo effect. Trying to change it by coaching one person at a time is even less successful.
However, so pervasive has the company-as-machine model become that many managers and consultants act as if it is the only one available. When asked, they may speak about the company as a living entity. But even then they are thinking of it as its culture or the sum of its people.
This machine approach to corporate change is most often seen in the more established and more bureaucratic companies. In entrepreneurial organizations it appears more rarely. When the machine approach does appear, the company ceases to be entrepreneurial.
But an alternative to this company-as-machine model exists. The company can be dealt with as a person possessing life, body, and soul. Treating the company this way allows it (actually, forces it) to respond as a thinking, competing organism to its leadership, its people, and its marketplace. Treating the company as a person evokes its personhood and simultaneously evokes attributes only living creatures have. These attributes include the ability to adapt and heal, to grow and flourish, to change and even transform.
It takes a leader, as opposed to an administrator, to evoke this living response. While it would be nice for all companies to have leaders who have the instinct and charisma to do this, it is not needed. A body of knowledge and practice exists that allows any CEO to address the organization as an entity and mobilize it, cause it to change, cause it to heal. The process works quickly and almost without effort because this approach draws upon the company's innate instinct to heal and to succeed.
As with all fundamental techniques of leadership the process is profoundly simple like walking or riding a bicycle. Like walking and cycling it is almost impossible to analyze. It is difficult to explain in words. But the knowledge that it can be done coupled with a little help and practice makes it so easy to learn.
As a CEO there are just three major steps, constantly repeated, that you need to take. Perfection is not needed and the steps become more effective with practice.
The first step makes the others easy and natural. Visualize the company as a person. See it. Hear it. Feel it as an entity. Personify it. Give it form, shape, and color within your mind. Identify its personality both as it is and as it should be. The more vividly you do this the more effective the other steps will be.
The second step is to evoke the company. The most successful technique to do this is to call the management team together. Whenever the management team is knowingly and purposefully making decisions for the business, the company is there too. As you talk with the management team, remain aware that you talk with the company too. As you decide with them for the company's sake, you decide with it too. Saying to the group (and the company), "We are the company", is a powerful, empowering evocation. Also, whenever you talk to your workers about the company, which should be often, speak to the company through them and listen to the company through them.
The third step is to increase the company's power, its potency, and its authority. Embolden it. Embolden it enough for it to make known its needs and its potential above and in spite of the prejudices and preferences of individuals on the management team and even the CEO's prejudices and preferences.
Simplifying the politics of the company is the way to do this. The simpler the politics and the clearer the focus, the more powerful becomes the spirit of the company. As the company grows in potency and in clarity, workers at all levels begin to respond to it as a separate entity. Creativity grows. Morale improves. The organization becomes more responsive to leadership. Leadership draws on the inspiration, knowledge, and energy of its workers. The key factors of the inner life of the company come into balance. External changes follow.
Repeatedly, over the last twenty years we have watched managing officers intuitively use these steps to turnaround companies and transform their performance. Frequently, we have used these steps ourselves to enable companies to sharply increase their profits and renew themselves.
The steps may seem a little mystical, but they are as real as riding a bicycle. It will take you just a little time and effort to begin them properly. With practice they will become innate and the results will occur faster. Once started, it takes no time from your day and the results of the normal course of business are magnified.
Treating the company as a living entity, causes it to be so, to become more so. The more definite its personhood becomes, the more it flourishes.
It happens first within the heart and mind of the CEO. No one else need ever know.
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© Tom Fitzgerald / Through the Loop Consulting Ltd 1998-2006