Machine-Age Thinking

MACHINE-AGE THINKING

My appreciation of the importance of living systems for how we think about businesses was catalyzed by Arie de Geus’s book The Living Company. Seeing a business as a living system simply means seeing it as a human community, an idea de Geus makes pointedly through the question, “How do we see a business—as a human community or as a machine for making money?” While almost everyone would decry the latter image, our contemporary language and managerial practices tell a different story.

In fact, machine images pervade management jargon. We have managers who “run” a company, much the way you would run a machine. We have the “owners” of the company, which is perfectly appropriate terminology for a machine but somewhat problematic when applied to a human community. And of course there are leaders who “drive change.” As with these other images, I often wonder if people ever think about what they are saying when using such language. If they did, they might stop and question themselves, even for a moment. After all, most of us “drive” a car. But we also know what happens when we try to “drive” our spouse or teenage children—usually the opposite of our intended outcome! It is interesting how readily we gravitate to such language when talking about what it takes for organizations to change—which, of course, is de Geus’s point: we all tend to think of our organizations as being more like machines than living systems.

De Geus came to appreciate the difference between seeing companies as machines and seeing them as human communities as a result of pursuing a very practical question, “What features characterize long-lived companies?” Shell’s famous study of corporate longevity (see Chapter 2), which de Geus directed, found that the average life expectancy of Fortune 500 firms was less than forty years, but the study also found some twenty companies around the world which had survived two centuries or longer. Looking for common features that transcended differences in history, national culture, industry context, and technology, the study’s authors concluded that the long-lived companies tended to think of themselves more as human communities than as financial institutions. In the words of the original Shell study, they “had a sense of who they were that transcended what they did,” giving them capabilities to evolve and adapt—to learn—not matched by their contemporaries.

Senge illustrates the living-system view with the “secret” story of Visa’s early member network. In his account, its revenues were some ten times those of Wal-Mart and its market value more than double that of General Electric. He describes a network serving one-sixth of the world’s population but attracting far less business-press attention than Microsoft or GE: well over a thousand feature articles on Microsoft, more than three hundred and fifty on GE, and about thirty-five on Visa over the period he discusses. These are the comparisons in the historical account.

The Visa network he describes was owned by its twenty thousand member organizations and had no publicly traded stock. A constitution set out its purpose, operating principles, and the authority of elected governing boards. Rather than a single strategy directed from a conventional headquarters, it had many strategies emerging from autonomous member businesses.

That Visa network differed from a conventional corporation because it was inspired by an image other than a machine. In the midst of the massive overshoot and financial collapse in the early years of the credit card industry, Visa’s founding CEO Dee Hock had a realization. He saw clearly that it was “beyond the power of reason to design an organization” capable of coordinating a global network of financial transactions of the sort that had started to develop.7 Yet, he also knew that nature regularly achieves just that. Why, he wondered, couldn’t “a human organization work like a rain forest?” Why couldn’t it be patterned on biological concepts and methods? “What if we quit arguing about the structure of a new institution and tried to think of it as having some sort of genetic code?” In short, Visa was inspired by abandoning our “old perspective and mechanistic model of reality” and embracing principles of living systems as a basis for organizing. Eventually Hock even coined a term for the type of organizing he envisioned, “chaordic,” because in nature “order continually emerges from seeming chaos, while in management we always try to impose order because we fear that chaos will take over.”

The biologist Gregory Bateson said, “The source of all our problems today comes from the gap between how we think and how nature works.”8 The “DNA” of our dominant institutions is based on machine thinking, for example, “all systems must have someone in control.” We know that in healthy living systems, like the human body or a wetland, control is distributed. But we are so habituated to the “someone must be in control” mindset—what Hock calls “the closet Newtonian” inside us—that we fail to imagine real alternatives. Yet, those alternatives appear all around us if we learn how to see them.