Consider the following seven companies:
– Unilever – a producer of household goods
– Nucor – a global steel producer
– United Technologies – a manufacturer of capital goods
– Novo Nordisk – a player in the global pharmaceutical industry
– Henkel – a world leader in applied chemistry and adhesives technology
– Nike – a manufacturer of athletic wear
– Westpac Banking – a bank
What do those companies have in common? Companies from different industries with different ages. What could it be that links them together? The answer is, that they all belong to the commercially most successful companies of the last 20 years. All of them have outperformed their primary competitors and global benchmark indices. Ok, this is good, but not yet something that’s special. So, what is it that makes them really special? It is their outstanding success which is based on a disruptive approach and implementation of management and leadership. They all consider organizations as living systems, in contrast to the widespread and common organizations-as-machine ideal, which was dominant for hundreds of years. They belong to those companies that are comprised under the umbrella Companies that Mimic Life.
Their success is not just based on gut feeling, but on hard statistically significant facts. In 1995 Joseph H. Bragdon created a learning lab of companies. Companies that place a higher value on living assets (people and Nature) than on nonliving capital assets. These learning lab companies, where the mentioned seven ones are part of, practice something Bragdon calls living asset stewardship (LAS); they nurture people and Nature instead of exploiting them; they maximize the speed of learning and adaptation; they aim to radically lower their global ecological footprint. In addition, these learning lab companies comprise the Global Living Asset Management Performance (LAMP) Index that Bragdon introduced in 1996. As of today this index consists of 60 companies who all adhere to LAS. What makes this index so special is that between 1996 and 2015 the LAMP index has outperformed three of the most commonly used global equity benchmarks, namely the MSCI World Index, the FTSE World Index, and the S&P Global 100 Index. But that’s not the whole story. As good as this sounds, the learnings through the lab go much deeper. For example, one more outcome is that the more a company adheres to LAS the more profitable it becomes.
But what is the powerful secret? What is it that makes up this outstanding performance? Which factors lay behind LAS? It’s something that’s easy to understand but apparently hard to implement. The companies’ extraordinary success is due to the following six critical lifelike qualities, identified by Bragdon, that are present in all life, from single-cell organisms to large ecosystems:
– Decentralized, self-organizing networked structures
– Regenerative life strategies
– Frugal instincts
– Openness to feedback
– Symbiotic behaviors
All of these qualities are in some kind apparent in the LAMP index companies. Now, if we look at the six critical lifelike qualities from a management perspective this sounds very familiar to people who know Management 3.0. Management 3.0 is packed by the systems and complexity theory. From systems and complexity theory we know that the increasing complexity and fast-changing environments cannot be handled or controlled though a complicated model or framework. There are no laws for dealing with change, uncertainty and complexity, only guidelines we can follow. In his famous book Management 3.0 published in 2010, Jurgen Appelo presents a management model of the same name that successfully addresses those challenges. Appelo’s Management 3.0 model recognizes that today’s organizations are living, networked systems; and that management is primarily about people and their relationships. Grounded on the complexity and system theory Appelo identified six areas of management responsibilities and provides guidance on how to deal with them. Those areas are as follows: Energize People; Empower Teams; Align Constraints; Develop Competence; Grow Structure, Improve Everything.
But what’s really impressive with Management 3.0 is that the six critical lifelike qualities defined by Bragdon are inherent in the Management 3.0 model. Let’s look at them one by one.
# Decentralized, self-organizing networked structures
From complexity theory we know that a complex environment cannot be controlled through a central authority. Decisions need to be delegated to the parts of the system. Organizations need to empower their teams and employees, they need to decentralize decision-making to be able to survive in those fast-changing business environments. Self-organizing teams at the frontline ensure the effective treatment with challenging situations. Network structures ensure fast temporary reorganizations necessary to deal effectively with challenges while distributing information from end-to-end effectively. Like a blade of grass in the wind, bending with the wind in a storm, but standing upright again when the storm is gone, network structures will reshape according to challenges and afterwards resume the previous structure. Decentralized, self-organizing networked structures are a central point of the Management 3.0 model.
# Regenerative life strategies
Regenerative life strategies are especially expressed in learning and information gathering in companies. Creating a culture that enables employees to permanently learn and improve strengthens a firm’s survival. Regenerating the lived interactions between people leads to new strategies best addressing the constantly changing business environment companies live in.
# Frugal instincts
Frugal instincts addressed at the point where things happen lead to fast and effective corrective actions undertaken by empowered employees. Frugal instincts are also an ingredient of servant leaders, superiors who act as coach and mentor instead of being bossy.
# Openness to feedback
Openness to feedback is the foundation to improve everything. Without openness and transparency organizations will not be able to find ways to improve. Openness is also key to delegate decisions to the frontline teams, to develop competence, to energize people, to align values and culture, and to grow the organization.
# Symbiotic behaviors
High performance, self-organized teams inherently exhibit symbiotic behavior. Without cooperation and trust in each other they would not achieve their great success. The symbiotic behavior of teams is the DNA that leads to excellent, outperforming results and delivers the flexibility to deal effectively with unforeseen and unexpected challenges.
Consciousness is a fundamental property of all human beings. And people and their relationships is the core principle behind all aspects of the Management 3.0 model. Consciousness is the foundation of a living Management 3.0 organization.
Companies that mimic life, that place a higher value on living assets (people and Nature), inherently apply the Management 3.0 model. Considering Bragdon’s learning lab and Global Living Asset Management Performance Index, we can conclude that Management 3.0 applied leads to higher profits with happier employees while at the same time preserving our earth for and the future of our children.