“The Living Company” by Arie De Geus Harvard Business Review (March 1997)

1. “The Living Company”by Arie De GeusHarvard Business Review (March 1997) Presented By:Takbir Ahmed BiswasLynn BlankensteinLexi GrayNorawit (Travis) VirunkitkosonYixiong (Kyle) Zou

2. What is a corporation? • Defined as: “a large company or group of companies, recognized by law as a single unit.” ~Oxford Dictionary

3. What is a living company? • Described as: An organization that is viewed as a “community of human beings that is in business – any business – to stay alive.” ~De Geus

4. Life Expectancy of a corporation • Average life span is less than 20 years • Examples that show that a corporation can be in business for as long as several hundred years

5. Why is there such a discrepancy? • “Living companies produce goods and services to earn their keep in the same way that individuals have jobs in order to live” ~De Geus

6. Living Companies • Very good at managing for change in the marketplace • Understand: • Who they are • How they fit into the world • The value of new ideas and people

7. Conservatism in Financing • Why do they survive so long? • Concern about “Safety” of Capital • Avoidance of unnecessary expenses • Belief in the Value of money in Old fashioned way • Tendency of saving extra cash as back-up to avoid investors

8. Sensitivity to the World Around Them • Adaptable to changes • Forecasting of future • Comparison of Past, Present and Future • Reaction to “Whatever was going on”.

9. Awareness of Their Identity • Employees felt like Parts of a Whole • “Fleet of Ships” • Managers in the Living Companies were chosen mostly from within • The First Priority: To maintain the company’s health

10. Tolerance of New Ideas • The Manager must: • Understand the values and traditions of the company • Keep the company alive • Let people grow within the community • Place commitment to people before assets

11. Valuing People, Not Assets • 27 long lived companies changed business at least once • Scuttle assets to survive • Assets and Profits are necessary, but not purpose of life

12. Valuing People, Not Assets (2) • Companies with different model • Scuttle people to survive • Purpose: to make profits for shareholders • If in trouble, get rid of people

13. Loosening Steering and Control Managers must: • Heed opinions and practices of other people • Give people space to develop ideas • Take risks with people

14. Loosening Steering and Control (2) Metaphor of Rose Gardening • Prune roses: hard or long ? • Hard: have the biggest roses in neighbourhood in June (high risk) • Long: have roses in every June

15. Why learning is essential Organizing for Learning • Circumstances change • Living companies also change

16. Conditions of organizational learning Organizing for Learning (2) • Numerous individuals • Some of whom are innovative • System supports

17. How living organizations learn Organizing for Learning (3) • Birds that flock learn faster • Developing programs

18. The Human Element • It is a choice • Focus on going from one generation to the next • Level of involvement and a sense of belonging are important

19. Puddles or Rivers? • A company must focus on smooth transitions between generations • People need to enter and exit the company with the right understanding • Need to be able to let go and understand ‘fit’

20. Passing the Baton • Strict exit rules • Stewardship is important as one person exits and another comes in • Important to understand the nature of the company

21. Conclusion • Mobilizing the disposable intelligence • High levels of tolerance are important • Important to brain-rich and asset-rich companies • Corporate death causes many to feel a loss

22. Questions?