LOOKING AHEAD. Designing for the future

All organisations are confronted with two inevitable choices sooner or later: prepare for their own obsolescence by innovating, or becoming obsolete due to changes in the external environment. Over time, increasing competition makes an industry approach what economics calls ‘perfect competition’, where margins eventually get eroded, and survival is threatened. Additionally, new innovative players may completely disrupt an industry, thus further accelerating the demise of old players.

Can organizations strive for an eternal existence? While eternal existence may be an illusion, constant evolution can be a conscious choice. Given that obsolescence is a matter of when, and not if, it pays to be the one planning constructively for one’s own obsolescence rather than wait for things to happen from outside. In this context, it may help to view the organisation as an evolving system around three concurrent streams of activity.

A useful framework to think about these streams is the Indian conceptual triumvirate of creation, preservation and destruction. This cyclical perspective of the universe applies quite well even at the microcosmic level of an organisation. Value creation has an inherent cyclical and impermanent nature. For an organisation desiring long-term sustainable existence, it is important to play effectively and simultaneously in all three.

An attempt is made here to outline the streams, and the key design features in each.

This stream refers to mature lines of activity in the organisation. A line of activity may refer to a product line, and indeed a whole host of processes across the board. In this stream the main focus is achieving growth and efficiency. What needs to be done is well known and well established. All that remains is to continuously improve efficiencies while growing. In designing the preservation stream, the most important design element would be the setting up of a rigorous analytic framework that can correctly diagnose progress, and recommend course corrections quickly. This is because it is in this stream that the highest complacency creeps in.

This stream refers to those activities in the firm that are at the beginning of a potentially declining phase. Organisations find it hard to decide on the destiny of such streams. This is usually due to a number of reasons. The first is of course inertia, and the false sense of hope that things may turn around. Additionally, there is a strong sense of identity that organisations develop around legacy activities that may serve no purpose in the present. This sticky sense of identity can become the biggest barrier to change in an ever evolving system that is inherently impermanent. The main design element needed in this stream of activity is really a set of well-defined destruction protocols.

This refers to those activities that involve exploration of new value creating opportunities. Successful experiments in this stream may well assume mainstream significance and become part of the preservation stream. From the point of view of long-term survival, this stream is highly critical, yet receives lesser attention than it deserves. The key design feature required for this stream is a culture of experimentation that is supported by organisational infrastructure around rapidly incubating ideas on a small scale, and scaling up the successful ones.

An important consideration to think about is that each of the above streams requires equal prioritisation regardless of the current economic value created (or destroyed) by them. For instance, the creative stream will feature many initiatives that produce no immediate value in the short run. Similarly, the destruction stream will feature many activities that may not yet be harming the system significantly as yet. The preservation stream in contrast may feature activities that are creating disproportionate economic value at present, but may be on the verge of entering the destruction stream. Effective orchestration of these streams of activity is key.

The ideal of an eternally existing organisation will, of course, not be achieved. However, even contemplating that possibility through the perspective of preservation, destruction and creation is a useful exercise to enable us to think about ways in which we can design organisations that last.

The writer is a corporate strategy professional