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‘The Biology of Corporate Survival’ — How Robust is Your Company?

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Interactive feature via Boston Consulting Group

The Harvard Business Review runs a fascinating piece by Boston Consulting Group’s Martin Reeves and Daichi Ueda, along with Princeton biologist Simon Levin that explores why, as “business environments are more diverse, dynamic, and interconnected than ever—and far less predictable” many firms still conduct strategy, analysis and planning that focuses “on maximizing short-term performance rather than long-term robustness.”

Excerpt: “U.S. public companies are dying at faster and faster rates; in fact, they have a one in three chance of being delisted in the next five years. Why? They are failing to adapt to the growing complexity of their environments, the authors argue–misreading those environments, selecting the wrong approaches to strategy, or failing to support a viable approach with the right behaviors and capabilities.”

“Drawing on their research at the intersection of business strategy, biology, and complex systems, BCG’s Martin Reeves and Daichi Ueda, along with Princeton biologist Simon Levin, describe six principles that confer robustness in what’s known as “complex adaptive systems”–principles that are directly applicable to business.”

“Firms should:

  1. Maintain heterogeneity of people, ideas, and endeavors
  2. Sustain a modular structure of loosely connected components
  3. Preserve redundancy among components
  4. Expect surprise, but reduce uncertainty
  5. Create feedback loops and adaptive mechanisms to ensure the variation, selection, and propagation of innovations
  6. Foster trust and reciprocity in their business ecosystems”

“Rising corporate mortality is an increasing threat, and the forces driving it are likely to remain strong for the foreseeable future. Understanding and implementing the principles that create robustness in complex adaptive systems can mean the difference between survival and extinction.”

As part of the piece, HBR runs an excellent interactive assessment feature that will offer, based on questions readers answer about their firms, an estimate of “How likely is your firm to suffer this fate?”

An interactive feature that addresses “How Robust is your Company?” is also offered via BCB.