An 8 point organisational vitality health check

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I’ve previously argued that organisations must behave more like living organisms if they are to thrive in an increasingly disruptive world. In this edition, I want to take that idea further and in a manner that can serve as a practical vitality checklist.

Biologists, who know a thing or two about living systems, have a living systems checklist comprising eight characteristics. Let’s see how well organisations in general, ie those embracing industrial era principles, match the criteria.

Well done!

Traditional organisations score well in three areas:

• Metabolism - Living organisms consume resources to grow, repair and stay in play

Organisational metabolism takes the form of turning resources into market pleasing value. Traditional organisations are metabolically well-tuned. Perhaps overly so.

Efficiency is an industrial god – zero waste is the creed.

Such leanness is a problem when unexpected challenges or opportunities occur. Nature may value efficiency, but it prizes survival above all else. Traditional organisations, however, rarely treat survival as a core imperative—an approach that is anything but intelligent.

• Waste management- Living organisms expel waste

Again, organisations generally do this well. Though sometimes there are environmental consequences. Successful organisations shed obsolete practices. People who are not pulling their weight or willing to develop new skills are typically jettisoned.

In some sectors it is difficult to move such people. This may be considered a form of corporate constipation. Some organisations jettison capable people because of age, gender, colour etc. This might be considered the extreme opposite of constipation.

Neither are healthy.

• Growth - Living organisms grow and mature

Organisations typically follow a path that evolves from immaturity (start-up) and, if all goes well, after a period of growth they will settle into a mature state – a value stock, if publicly quoted. The extent to which they can navigate their environment in old age, survive the setbacks and provide value will determine for how long they can delay the inevitable.

Not bad

Traditional organisations are okay in these two areas:

• Structure – Living organisms are not just a random collection of molecules

Nature promotes a cellular structure. Living systems, particularly mammals, have billions of cells, the building blocks of life, all coordinating in real-time. Traditional organisations generally get the idea of modularity - functions, geographies, product lines, client sectors and so on.

But these units are often clunkily pieced together in inflexible hierarchies, managed by a very centralised leadership approach. A more genuinely cellular approach requires significant decentralisation of governance. Thus enabling cells (people, teams, departments etc) to respond to threats and opportunities without delay.

• Reproduction - Living organisms self-reproduce

Smart organisations encourage spin offs. They anticipate staff who have entrepreneurial tendencies and provide them with the ecosystem to do their own thing with the organisation’s support.

Sometimes the organisation will decouple a business unit because its growth is hampered by organisational constrictions.

I believe that organisations will increasingly need to behave like venture capital / private equity firms in order to maintain a suitable level of business model diversity. This guards against a single point of existential business model failure.

A reproduction variant for some organisations is the alumni network. This is not about the generation of offspring but the creation of new clients and suppliers. Perhaps this is more akin to livestock farming than reproduction.

Oh dear

Traditional organisations generally struggle in these three areas:

• Homeostasis – Living organisms maintain internal stability despite external changes

Leaders today will readily admit that they do not know how to cope with the increasing levels of disruption. They hope a playbook or a strategy paper with an action list from a top tier consulting firm will lead them out of what feels like a war zone. But these are likely to be ineffective.

One of the reasons being that the culture and organisational design are optimised for a steady state environment. Thus the organisation simply (over) reacts to environmental anomalies and then quickly returns to its steady state posture. A good example is – AI is here. Let’s fire lots of people. AI is not all its cracked up to be. Let’s rehire those people.

• Responsiveness – Living organisms are sensitive to their environment

We need organisations to respond intelligently, ie. dance with disruption, rather than reacting arthritically. Such organisations need to be able to sense, decide and act in real-time. Traditional organisations respond well to changes in the steady state – the market wants more / less cars, etc. But they are less sensitive to novel situations, including the foreshocks that herald a forthcoming tsunami.

• Adaptiveness – Living organisms sustain long-term homeostasis with the environment

Adaptiveness is the organisation’s ability to stay aligned with its environment on an ongoing basis. This is less about ‘crossing the chasm’ every decade or so and more about transformation as an operating model. 

Today. many organisations are running transformation projects. They realise that where they are today (A) is a problem and so they are working towards getting to an ideal state (B). Unfortunately thanks to increasing disruption B is now hyperactive. It just won’t sit still. The problem word here is ‘project’. The problem issue is that leaders do not understand that patching the old model / sprinkling it with tech is not enough.

In fairness, Covid showed the latent capacity of businesses and governments to act quickly. But this ran counter to their operating model and so they have quietly reverted to the ‘steady as she goes’ sausage machine. So what we witnessed in reality was less adaptation and more ‘organisational convulsion’.

School report summary

A mean-spirited summary might score traditional organisations three out of eight.

Pollyanna might score five out of eight (63%, a ‘B’) and conclude that traditional organisations have sufficiently embraced living systems. Thus allowing their leaders to channel their limited resources towards day-to-day operational headaches.

Unfortunately, the three areas where traditional organisations struggle are the three characteristics critical to surviving in an increasingly chaotic world. 

This article also appeared in the Intelligent Organisation newsletter on LinkedIn.