The flood of layoffs we’re seeing at startups is a siren call. Ridiculous hiring sprints & flimsy growth papers over cracks. Cracks become chasms without a strong culture.
As I search for an answer to what's going on now, I’m reminded of the work of Arie de Geus.
I ended my last message with a quote from De Geus, and today we’ll explore what I believe is his most important work.
De Geus was a Dutch business executive (and later business theorist) who headed Royal Dutch Shell's Strategic Planning Group in the 1980s. He and his team wanted to learn from companies older than his (100 years or more).
The average life span of a Fortune 500 company is less than 50 years.
Yet some companies have been in business for up to 700 years, like Dupont, W.R. Grace, Kodak, Sumitomo, Mitsui, and the Hudson Bay Company.
De Geus called these companies, Living Companies.
He and his team studied these extremes and came up with four shared traits that could explain their longevity (and provide a clue for how to set your own company up for success in our current climate of economic depression):
Conservatism in Financing
Sensitivity to the World Around Them
Awareness of Their Identity
Tolerance of New Ideas
Let's explore...
Conservatism in Financing
The first one is a no-brainer. Strong budget responsibility and a sense of seeing the company’s money as your own permeated throughout these organizations.
Money in hand allowed Living Companies to seize opportunities when their competitors could not. This fiscal flexibility allowed them to adapt to the changing economic and market conditions, as almost all reinvented themselves repeatedly.
Sensitivity to the World Around Them
Living Companies were good at learning and adapting, creating a culture where teaching was viewed as leading.
They brought people together to learn from each other, resulting in:
decentralized problem-solving
distributed creativity
bottom-up innovation.
Awareness of Their Identity
Employees at Living Companies felt like parts of a whole. They felt a sense of belonging and shared a common vision for how to company should sense and respond to factors affecting it from outside. This mirrors the observations of Frederic Laloux in what he calls Teal Organizations.
Their approach to career paths was unique too. Managers in Living Companies were chosen mostly from within, and all considered themselves stewards of a long-standing enterprise. Can you imagine the trust and loyalty built up through practices like this?
Tolerance of New Ideas
Finally, Living Companies recognized that new businesses may be entirely unrelated to existing businesses and that starting a business need not be centrally controlled.
A culture of experimentation combined with decentralized decision-making increased agility and adaptability, two characteristics that shine through in all four of these traits.
Do you see any of these traits reflected in your company?
Hit reply and let me know. I’m always on the lookout for great case studies.
Next up, I will explore the concept of stewardship in more detail.
I’ll see you then. ✌️