The Living Company: Growth, Learning and Longevity in Business Paperback – 8 Apr 1999
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The average life span of a Fortune 500 company is less than half a century, yet there also are corporations around the world that have been in business for 200, 500, even 700 years. Arie de Geus, a retired Royal Dutch/Shell Group executive, maintains after studying both extremes that the most enduring treat their businesses as "living work communities" rather than pure economic machines. The Living Company: Growth, Learning and Longevity in Business persuasively outlines his resultant prescription for organisational longevity. --Amazon.com
The Living Company is eminently readable. The style is conversational and jargon-free. While it is reflective and thoughtful, it is always relevant, meaningful and deals with issues of central significance to organisations today. For those interested in the bigger picture, this book provides a wonderful landscape. (Doron Gunzburg Monash Business Review)
This is a thoughtful, reflective and philosophical book. It does not prescribe quick fixes. The author draws on rich imagery from agriculture, horticulture, psychology and nature. For example, he explores how the blue tit learned to pierce aluminium milk bottle tops, while the robin didn’t. The organizational issue from this is how learning is distributed and passed on. The author’s experience and reflection as articulated in this book provide a valuable resource for further insight and understand- ing of how organisations survive, learn and flourish. (David Coughlan Leadership & Organisation Development Journal)
Arie de Geus is an international figure who has not only been a key influence on scenario planning, but is also credited with originating the concept of the learning organisation. The world, or at least part of it, is ready to hear the message that profits are only a symptom of success and not an end in themselves. Many people want to believe in the wisdom of power-sharing in organisations. Others long for a move away from individualism to a greater emphasis on the importance of community. But the book also sells because it is based on experience and is incredibly well written by a man whose con- versation and manner are compelling. (Jane Pickard People Management)
Reading The Living Company is a refreshing experience in a period when conventional wisdom emphasises short-term returns on capital; it should be read by all those who think that there is more to business than that. (Russell Sparkes RSA Journal)
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Arie de Geus was a long-time senior executive of Royal Dutch/Shell and retired as Head of Corporate Planning. While at Shell, he was asked by the then CEO to study long-lived companies and report on what--if anything--accounted for the longevity and success of these companies. De Geus and his team found out that the average life expectancy of a multinational company was 40-50 years. In his view, this lifespan was premature, and represented a loss of commercial potential.
In all, they studied 27 corporations; thereafter, the results of the study formed the basis for The Living Company. All the studied long-lived (and successful) companies had four key factors in common:
- LEARNING. Long-lived companies are extra sensitive to their external environment, despite the ups and downs of politics and wars. These companies always remained attuned to their external environment--as opposed to internal navel-gazing;
- PERSONA. Long-lived companies have a very strong sense of identity. They have a clear idea of what they stand for, who's `in' and who's `out';
- ECOLOGY. Long-lived companies are tolerant of `mistakes' and `experiments'; and
- EVOLUTION. All the long-lived companies had `conservative' financing structures.
Using the results of the study, Arie de Geus posits that there are two types of companies: economic companies, for whom profit--and only profit--is the driver of the corporate machine; and living companies, for whom profit is only a means to an end: the maximisation of the potential of the company. Arie de Geus then compares companies to living systems using ideas from the biological sciences.
De Geus does a good job of exploring the evolution of corporations, and how traditional measures of corporate performance, such as return on capital employed, shareholder value etc, are getting outdated in the modern knowledge-based economy. He argues that the `value' of a company in a knowledge economy is in the heads of employees, and not in the machinery, capital or physical infrastructure; therefore, in the future, successful companies will have to build learning organisations that take advantage of `human capital'.
In the concluding chapter, de Geus posits that successful companies in a knowledge-based economy, like the long-lived companies in the Royal Dutch/Shell study, will not just be economic entities, but social communities whose members "subscribe to common values and who believe that the goal of the company will allow them to achieve their individual goals". As one who has worked for both `economic' and `living' companies, de Geus's insight into `living' companies hit home; however, a lot of the material is based on de Geus' experience at Shell. While his experience is valid (he worked in Shell his entire career), his insight is not much different from Jim Collins' in Good to Great; the Living Company deserves four stars.
Unlike so many business writers this book is rooted in practical experience as the author spent 38 years in Shell. He describes how his thoughts developed and the main influences. I have since purchased and read the key texts he used and have benefitted grately from it.
Among other things De Geus describes his thinking behind his decision for Shell to remain in troubled African nations when all other companies were pulling out (organisms can only ever be changed from the inside). I was not a fan of their decision to stay in nations but his rationale was compelling and persuaded me that they made an extremely tough decision and had the courage to stick with it. Because of his deeply moral commitment, both he and other colleagues from Shell played a key role in helping South Africa become a democratic society - I understand de Geus has recently returned to help SA through its current growing pains.
The ideas of this contemplative man keep coming back to me over and over again as I work with organisations to help them change (learn). Well worth the investment of 2-3 readings as this book is one of the best in its field and has the power to impact you in a way few business books can. It is in my mind far more readable and helpful than Senge's Fifth Discipline.