BY GLORIA GARVEY – In his 1997 book, The Living Company, long time Dutch Shell employee Arie de Geus wrote about what he called “Living Companies” — those companies which have a life of their own regardless of their current management. Over his years at Royal Ducth Shell, deGeus had done research on 45 companies which managed to stay in business more than 150 years: what made them different from most Fortune 500 companies, for whom a long life is 50 years.
Aomng other things, de Geus conclued that living companies worked with a long term versus a short term (or next quarter view), that they were community based and sensitive to the needs of their communities (including giants like Royal Dutch Shell which behaved differently depending on which community they were located in) and that they put their faith in “employee capital” versus “money capital.” DeGeus named four key qualities: sensitivity to the environment, a cohesive identity, tolerance of experimentation and eccentricity, and a frugal financial approach.
As noted in a “Thought Leader” article on Booz Allen Hamilton’s site: “Arie de Geus starts from a very different premise: that a company’s first loyalty is not to any individual stakeholder, but to itself. Companies that focus single-mindedly on profits don’t learn, and therefore, they don’t thrive — or even survive…His premise about corporate purpose had become much more radical: Companies should be seen essentially as biological organisms, thriving, like any other living entity, on growth with an organic pace — evolutionary and relatively stable growth, in other words, but with lots of experimentation and offshoots at the margins.”
Regrettably, very few companies in America today are examples of deGeus’ “Living Company.” Ours is a country focused on short term thinking, and corporate profits rule. Hence a Jamie Dimon can survive and thrive and even serve on the New York FED — a huge conflict of interest — as long as his shareholders profit. In the meantime, JP Morgan Chase is at risk, as well as other “banks too big to fail” and therefore our country is at risk.
In the dot.com economy, which should be knowledge (and therefore people) based we should have seen potential for new companies that could live long. Alas, this is not true. DeGeus opines: “Many New Economy companies seemed to be based on the idea that they are primarily economic entities. When I first realized this, it surprised me, because it seemed to contradict the essence of these companies’ business plans: the deployment of creative capability. These companies desperately needed high learning and innovation. Yet they organized themselves as limited liability companies, which is the legal setup of 19th-century industrial enterprises. Their executives managed the companies for the maximum profits at the shortest possible notice. Then, because the continued input of human talent was the only source of the company’s success, they had no choice but to give their key employees stock and involve them in the game of quick returns.”
You can find examples of “Living” institutions in America, including the great non-profits like The Salvation Army and different educational institutions. What they all have in common is their interest in promoting livelihoods versus destroying them and the fact that they are people-not profit driven. Hawai`i’s Punahou School is a great example of such an institution. Living institutions but very few living companies.
I am one of those who believes that the Supreme Courts decision in Citizens United will be the bain of America’s future. (isn’t it interesting, I am just thinking, that Romney’s company was called “Bain”). Corporations are decidedly not people: if people lived their lives the way corporations do, we would all be dead. I accept deGeus’ argument that some companies do have lives of their own — not as people per se, but like biological organisms that learn and evolve.
The Supreme Court’s decision in Citizens United was and will be catastrophic for our country. Most corporations do not even care about people: they are most certainly not part of the human race — however imperfect we humans are.