Transformation on a continual basis is essential for corporate neoteny, namely, keeping the company youthful and agile. What does history and anthropology tell us about long-life companies? Is there an equivalent of ayurveda or ikigai for companies, representing the secret sauce for a long-life company?
I have had the fortune of working with two companies, both over 100 years old and growing stronger: Unilever and Tata. Over the last five decades of close association with these exceptional companies, I have gathered some experiences and observations on what keeps them youthful. Their attitude and practices are based on neoteny. I have also been inspired by several well-researched and relevant books, which have researched different kinds of companies, from family-managed Japanese companies to American public companies. The observations and lessons alluded to in these books converge to a set of common principles. I derive comfort from the fact that the lessons I have drawn from my experiences resonate with these principles.
Getting philosophical for just a moment, Vedanta teaches human beings three principles for a fulfilling life: Know Yourself—Protect Nature—Serve Others. This ‘vedantic’ formula also works for companies.
A corporation does not work or exist in isolation. It is part of an ecosystem. Its very existence and its fate are linked with that of its stakeholders. It has a much larger role to play for the community than commonly understood and practiced. Lots of research, case studies and consulting assignments on corporate success or failure have focused on what the organisation does, rather than what the organisation is part of.
Applying the nature principle, an organisation must be viewed as part of a bigger ecosystem in line with the very fundamental law of nature which states that survival of a species depends on having a mutually rewarding relationship with its environment. Applying the 212 principle, where water at 211 degrees is still water, but one degree more converts it into steam, employees within organisations need to have just that little extra stretch in their efforts to take the organisation to its true potential.
Creating a purpose and living it consistently through actions and behaviours ensures that over time, it gets deeply ingrained and becomes a part of life for all stakeholders, especially employees. The purpose does not change over long periods of time, although the expression of the purpose may be modernised periodically. In the purpose statement of Tata, for example, four strands stand out: (i) Improving the quality of lives of communities (ii) Leadership in sectors of national economic significance (iii) Returning to society what is earned (iv) Formalising high standards of behaviour.
Tata was a textile company in the beginning, whereas these days, Tata is viewed as a software and digital technology company. The metamorphosis has been continual over a century. The Tata group’s growth over the years is a fitting tribute to the robust business model that it adopts, and which has found favour with all the stakeholders. It creates, develops, and nurtures businesses of national significance. It ensures that any business that it enters will impact all the stakeholders positively, most importantly, society at large, and contribute to nation-building. It believes in value-creation in a manner whereby short-term gains can and are often sacrificed if they conflict with the value-system that defines the group. Creating and living a holistic purpose also instils a focus that encourages employees to shun short-term opportunistic behaviour.
As opposed to a classical organisational structure, derived from the principles of physics, Tata derives inspiration from the principles of botany to make its ecosystem more permeable. Instead of rigid boundaries, this permeability allows easy exchange of views and ideas, leading to a collaborative effort. Apart from some boundary conditions that are central to the group purpose, this structure gives full autonomy to the group companies to experiment and innovate. Tata is a rare case of the holding company being private, while the operating companies are public. Such a species is rare in the world!
The group has always been focused on living in harmony with nature. For instance, Tata Power has an aggressive target to have a substantial share of power coming from renewable sources. Dedicated sustainability cells in the company continually monitor and reduce the negative impact of company activities on people and the environment. In fact, many companies have proactively started generating meaningful products from effluents.
The carbon footprint of the 50 largest Tata companies has been estimated and their carbon management strategy articulated. The remaining smaller Tata companies are being mapped. Early estimates indicate that specific emissions can be brought down by 10–15% if Tata companies adopt abatement measures, instead of going down the business-as-usual growth path. Thus, while the journey began with the intention of doing the right thing as a socially responsible corporate house, it may well turn out that this has been the right thing to do from a business perspective as well. Just like humans need to be careful about their health, what they eat and how much they exercise, a healthy dose of conservatism brings in longevity for companies.
In the words of Arie de Geus, author of The Living Company, “Such companies are frugal and do not risk their capital gratuitously. They understand the meaning of money in an old-fashioned way and know the usefulness of spare cash in the kitty.” Tata surely subscribes to this view and is not perceived as one of those swashbuckling and aggressive corporations that wants to grow at any cost.
In this column, we reviewed long-life companies from an anthropological perspective. In the next column, I propose to review the same subject from an immunological perspective.
(The author was Director, Tata Sons and Vice Chairman, Hindustan Unilever)
(www.themindworks.me)
R Gopalakrishnan
Author and business commentator