Darwin Applied

One of the key findings in "Built to Last" (Porras, Collins) shows that companies who embrace change outperform their peers.

Once a corporation reaches a certain size, there is a tendency for the company to rest on its laurels and fight to protect the status quo. IBM took one of the biggest risks in business history when it bet the company on the IBM 360 mainframe computer. IBM won its big bet and was able to dominate the computer industry for decades. In the 80's the computer industry was in its formative stages, and IBM was well positioned to dominate. IBM had unmatched sales, operations, distribution and financial strength. The other thing that IBM had was a bloated corporate culture and a sacred cow - the mainframe. IBM survived after Lou Gerstner got Big Blue back on track and focused on transforming IBM into a service-focused organization. The story of the once dynamic company turning into a beauracractic, risk-adverse corporation is familiar. Insert dinosaur or Roman empire analogy here.

In contrast, 3M has instituted some ingenious policies in order to avoid this "big = bloated" trap. 3M allows technical workers to devote 15% of their time to their pet projects. Additionally, 3M has a goal that 30% of revenues come from products and services introduced in the previous 4 years. Profit sharing at 3M was introduced to key employees in 1916 and expanded to almost all employees in 1937. If this sounds a lot like the HP Way, this is not a coincidence. 3M was the company that Bill Hewlett admired most and used as a role model for HP. Even HP fell into the beauracracy trap before CEO Mark Hurd brought the company back in line. Today, the evolutionary-based approach to business is being applied at Google.

The keys to the formula:

- Hire the best and brightest (if only the strong survive, begin with a strong team),

- No sacred cows,

- Stimulate experimentation (reward for innovative solutions),

- Accept mistakes during the evolutionary process, and

- Empower your team.

No matter the size of the organization, this formula can produce amazing results. In a startup, bad hires and micromanagement can be fatal. Resources are typically severly stretched, which means that each team member must produce substantially more than an average corporate employee. The only way this can be acheived is to hire talented self-starters and get out of the way. The same formula used at 3M for over a decade. Hopefully the result will be a highly evolved corporation.

OK, I know - beating a dead horse. If you are starting a company or leading a company, read "Built to Last" if you have not already. A word of caution. There is a chapter on companies targeting BHAG (Big Hairy Audicious Goals). I would argue BHAG are more appropriate for larger stable organizations needing a major initiative to provide purpose and break the company out of an overly cautious growth plan. For a startup, the entire enterprise is a risky proposition, so the goal is to realize a more stable business entity and fast. Experimentation and evolution can serve this goal.