How Companies Need to Change to Survive
An interesting title. A bold one, even. One which suggests, perhaps, a quick fix, a simple guide to survival in these turbulent times. What you’re probably not expecting (but is precisely the reason you should read on) is an application of Darwinist principles to the present economy. This is nothing new, of course, but I hope to present it in a somewhat different light.
Much of the political rhetoric we hear stems from precisely this concept; survival of the fittest and so forth. What is sadly lacking is often a deeper analysis of the situation. Rhetoric, by definition, is self-serving, so we cannot expect our politicians to do this for us. However, it might be rewarding to dig slightly deeper than they do, and reach our own conclusions.
The Current Economy as an Environment
The word ‘economy’ has multiple definitions. The one we’re looking for here is:
the management of the resources of a community, country, etc., especially with a view to its productivity
-Definition 4, http://dictionary.reference.com/browse/economy
Or more concisely: the most efficient means of distributing resources to where they’re needed. Clearly, given the amount of waste in our various societies (even including recycling and so forth), this isn’t happening. Effective resource management has very little to do with our economy. So what is it that is being managed?
The only resource that seems to have any kind of impact on our economy is money - a purely arbitrary and imaginary construct which may represent, at the same time, 20 bottles of coke or 20 new pairs of shoes, depending on where you shop. And this resource isn’t being distributed to where it’s needed - it’s being collected by those few who already have truly excessive amounts of it, leaving very many with too little.
This, then, is our environment. One type of resource, collected by large and greedy organisms that have little or no use for so much of it, and sought by a multitude of other organisms which will starve if it is not forthcoming.
The Organism - Actors
I know, I know: this article could very easily turn into a rant on wealthy individuals and wealth redistribution. However, the organisms (or actors) in this environment are much more fascinating than those little bacteria. You see, much like in a natural environment, these small bacteria and cells and what-have-you have coalesced into larger actors in order to survive. These actors are, much like in nature, very varied, and perform a multitude of activities. And, like natural actors, they can be divided into broad categories: companies and corporations.
I won’t go into the differences between the two except to say one thing: one of them’s infested with parasites. The other one usually isn’t - ‘usually’ because it’s not always evident. The parasites are external actors - normally single people, though sometimes other companies, which siphon off the resources of the main company.
Interestingly, this analogy can also be extended to a certain degree of depth. The humans, or cells, which make up these organisms have, through the various mutations of companies, markets, the industrial revolution, and so forth, become very similar to the cells found in nature. They are now highly specialized microorganisms which can be replaced essentially at will; after a training period, any given human will be able to do the task that the to-be-replaced human can do. This, of course, is where the problems begin for those cells: humans who perform functions that are easily replicable are seen as less valuable. Once again, it would be very easy to digress, and discuss how each human is valuable, how each one is a goldmine of ideas, practices, and so forth. I won't do so simply because to a company is doesn't matter, much like individual cellular contributions don't matter to you except as a point of interest.
Applying this model to the modern company or corporation immediately brings to light some of the problems it faces. This isn't the place for a long discussion about it, so I'll focus on the organism itself, and one internal and external problem.
In the framework of the analogy above: an organism can only function optimally when each part of it, each cell, has enough resources to do its job well, and ideally have some in reserve for emergencies. Furthermore, there is little hierarchy; each cell does its job, and is not subservient to any other cell except via local effects. Thus, the brain does not, and indeed cannot, consciously and directly command the skin to grow or the eyeball to turn inside-out. It is assumed that because the cell is of type 'skin' it will have the wherewithal to be able to do its job well, and can draw the resources it needs to do so.
I'm not saying that every upper-management type is a cancer. Far from it - most of them are very good at what they do. However, this does not necessarily entitle them to a large quantity of company profits, nor does it permit them to remove resources where they're needed.
As you've probably figured out, I'm not writing the above because it's irrelevant. In a company, resources are not evenly distributed, with each part having more than enough. Instead, they flow to the top, as pay for the upper echelons, while lowering both the pay and the resources available of the lower echelons. There are some companies which do not follow this model, but by and large, this is the case.
Some might say that since the top is the brain, guiding the company in the right direction, it should be rewarded. While I won't argue this particular point (it's just too easy...), I should point out that the brain is, like the other parts of the human body, a highly optimised organ which only receives the resources it requires.
Regarding the second point: quite often, companies of a certain size suddenly develop a deep love of red tape. At that point, nobody is willing to take responsibility any more, and decisions are passed higher and higher along the chain. A person who was hired into an administrative role on the basis of skills which are suited to that role, and trained up in that role, is now no longer able to perform it. This means that the organism as a whole is progressively slowed down.
The closest natural cousin to this kind of internal predator to an organism is cancer. It subverts cells and diverts massive amounts of resources to itself, thus slowing the host organism down and ultimately killing it.
Another problem, this one external, is what I like to call 'parasites' - organisms which steal resources without offering much in return. As you've probably figured out, these are the stockholders. Yes, the analogy breaks down slightly at this point as stockholders do offer a certain value to the company. However, this value is not very high.
Stockholders buy stock - that is, they offer a company a certain amount of investment in return for a say in company affairs, and a return on their investment. On the surface, this seems like a sound concept - after all, I would want to see that my money is wisely spent. If one looks slightly further, however, it is immediately evident how flawed this model is: The investment is a once-off affair; the control is not. This means that something external to the organism has a say in (or may even be making) all of the decisions it makes, while at the same time siphoning off resources.
Thus, the organism which otherwise would be functioning very well is now required to show growth (even unnatural growth), and to produce unrealistic profits, while at the same time paying dividends to those making these demands. In nature, this kind of external organism is normally referred to as a parasite.
While cancer usually has very serious consequences in humans, and parasites can cause many deaths, the situation is somewhat less severe in companies. Excision is called for, as well as a form of radiation therapy, at least for the internal issues. For the external issues, only one thing will do, and that's either very difficult or impossible to do.
Regarding the 'cancer' that infects most large companies and corporations: the solution is rather simple, but also radical. The upper echelons must reduce their own pay, and think very carefully before removing resources elsewhere. Essentially, like the human brain, the upper echelons must evolve to become much more efficient at what they do while consuming the minimum necessary resources.
Likewise, decisions must be allowed to occur lower down in any given hierarchy, with a guarantee of resources should they be required. Any given company's effectiveness and productivity will be increased if this is the case - the people they spent so much time hiring and training will be allowed to do what they do best, and do so without the cancer sucking what they need away from them.
In the case of the external parasites, there is really only one thing an organism can do: free itself of them. A company must regain control of as much of its stock as possible. Only this will allow them to make their own decisions, and to effectively utilize the resources they are creating or obtaining.