• +44 (0)20 3701 6000

Dancing in the Rain

12 November 2013

‘The Digital Revolution.’ We talk about it as if it’s happened, as if we’re close to finding a period of calm at last: but even in a period of exponential change such as we live in now, why should we imagine we have seen more than just the start?

The Industrial Revolution lasted for 50 years, even by the most conservative of estimates: most economic historians see the term covering a longer period – and that is without considering the Second Industrial Revolution later in the 19th century.

Even the Agrarian Revolution seemed at the time like the end of the world as they knew it – but by comparison with the Industrial Revolution it was, well, chicken feed. What we’ve seen so far is just Cookie crumbs of what will be seen by future historians as The Digital Revolution. It has the potential not just to change the way we think about commerce but also about currencies, a political system dating back a thousand years, and even the concept of sovereignty.

It is very hard for most of us to recognise the need for change until it is bludgeoned into us, preferring to keep the status quo than risk everything through leaping into the unknown. Being a Luddite is not an unnatural tendency.

The survival of the fittest

Whether we see the implications of this impending change as a frightening prospect or an exciting opportunity, the business community cannot ignore it. ‘Life is not about waiting for the storms to pass, it’s about learning to dance in the rain’. For people in business that has never been more true.

The implications are dramatic. Arie de Geus in his prescient book, The Living Company, writes ‘There is a considerable difference between companies that stared blindly at threat and opportunities and those that reacted and changed.’ This was based upon a study he led for Shell of the world’s most successful companies in the 1980s.

Central to his argument is that successful businesses are not machines but living organisms that feel, think, adapt and learn. Like people, ‘the living company exists primarily…to fulfil its potential and to become as great as it can be.’

This evolution is more essential than ever for businesses that want to thrive. It’s easy to be a flash in the pan, making good money along the way but disappearing as fast as you rose – invent an App or a social network for example – but even established companies like Samsung and Apple now have to adapt faster than ever to survive. See Nokia for evidence of what happens if you don’t. Or Motorola, HMV, Woolworths, Austin, Morris…

Ambition at the heart of growth

Much of de Geus’s book is about cohesion around a vision. Not the financial roadmap, the path to growth, but ‘what this company stands for’. This is what allows it to adapt, survive and thrive.

If we try to plot our growth in too much detail, we will derail ourselves because we cannot know the future: we need to just hone our senses to help us to achieve our dreams. Human nature is such that even when we know something to be likely, we are still reluctant to act on the information. ‘The future cannot be predicted. But even if it could, we would not dare act upon the prediction.’

So despite the human desire for certainty, it is futile trying to find it: instead we need cohesion around ‘what this company stands for’ and we need to be open to change: feeling our way, listening to what is happening, and adapting accordingly.

It means being a community: a group of people with shared values and open communication – an evolving organism. This depends upon members of the company trusting each other to put the common good – the long term ‘survival and improvement’ of the company – above their own individual likes, dislikes, sensitivities and fears.

Constant evolution

We have observed this – negatively and positively – in many companies with which we’ve worked. Fortnum & Mason is an especially good example in the context of digital revolution: approaching its 300th anniversary, the Chairman had observed the need to ‘react and change’ in the face of threat and opportunity. We distilled what had made Fortnum’s a great enough business to thrive for much of its 300 years and from it, set the vision for how we’d thrive for the next hundred years. Our engagement was based on shared values, so that everyone knew what we were trying to be: the financial targets were based on this, not driving it. Fortnum’s has gone from making losses to returning profits again and has embraced the digital age in a way that might not have been expected of this venerable business.

In all cases the culture and values have been crucial, as they always are in businesses that want to endure: and now, more than ever before, the need to move away from Command & Control management and from a ‘Bricks & Mortar’ mentality is essential. To thrive, businesses need to be fleet, to be changing ahead of having that need forced on them: to behave like living organisms, sensing, adapting and learning all the time. This is, according to Charles Handy, a fundamental trait of successful businesses: reinventing of your own volition. (The cliché ‘If it ain’t broke don’t fix it!’ is our bête noire, responsible for so many businesses – and individuals – finding themselves becoming complacent, and unfit.)

For every problem there’s a solution that is quick, easy, and wrong

Perhaps the biggest new imperative is the need for authenticity in businesses. The speed and reach of social media means that we have nowhere to hide. Pretence will be exposed very quickly and very noisily. This must be a force for good, helping to drive out both lazy thinking and bad practice. Look at Unilever and how the enlightened CEO Paul Polman has recognised this, resulting in an organisation that has the long-term, and social good, at its heart. It has managed to stand up to strong self-interested resistance from the City and media. This took vision, but more, it took bravery: it would have been far easier to follow convention.

Bravery is especially important if businesses are to go deliberately backwards in order to go forwards. That same Shell research concluded that ‘The profitability of a company was a symptom of corporate health, not a predictor or determinant of corporate health.’ In other words, just because you’re doing well now doesn’t mean you will be next year.

Corporate health is like the health of an organism: you have to nurture it, to keep pushing yourself, to try new things, to learn and adapt in order to go faster or higher…or whatever your particular purpose is. It’s not enough to know what that purpose is, and for it to be authentic to you: to thrive, you have to make sure all parts of your body corporate feel part of that purpose, and are actively engaged in striving for it.

That requires one more vital ingredient, trust. Judgmental or reactionary behaviour – still prevalent in so many businesses – destroys trust and undermines ambition. Trust is only engendered by openness – and that has to be based on authenticity.