Natural EnterpriseSixth part of a series, and an eventual book, on Natural Enterprise

When 9/11 happened, an entrepreneur in my community near Toronto, who makes modular portable buildings, knew what he had to do. He phoned up a couple of small trucking colleagues — not the big multinational truckers, but guys who, like himself, could turn their businesses on a dime. Within a few hours several truckloads of portable building components, with an assembly crew riding shotgun, were on their way to Ground Zero. Much of the paperwork was written by hand as they were driving. The truckers contacted their customs brokers at the border to tell them what they were doing. Not only were they not stopped at the border like everyone else, they had a personal two-country police escort to hustle them past the traffic jams and across into New York State. When they got to Ground Zero somehow the rescue workers knew they were coming, cleared them space, gave them masks and let them get to work. The buildings were constructed before any of the larger, local competitors had a chance to even react, and they were used intensively for makeshift housing, medical and supply depots for weeks. The company received a special citation from the City of New York. They got a ton of free publicity and their business continues to boom several years later.

Part altruism, part instinct, all improvisation. When interviewed, the president of the small company said “We didn’t even think about it. We just acted. We just kind of made it up as we went along.”

Traditional “strategic” business planning is a cumbersome process that large enterprises do because, if you’re steering a giant unmanoeverable oil tanker, you need to know hours, even days in advance precisely when and how much to turn the wheel or you’ll end up catastrophically off course. Natural enterprise needs to plan, of course, but it has the opportunity, and the strategic advantage, of being able to do so quickly, even spontaneously. The traditional business plan has these elements:

  • explanation of the business and its unique competencies and competitive differentiators
  • exhaustive “five forces” analysis of the market and opportunity for each product of the company
  • the strategic plan: how and why the company expects to ‘win’ in the marketplace
  • the sales and marketing plan: how the demand for the product is to be ‘created’ and met
  • the logistics plan: premises, layout, equipment, set-up and start-up programs
  • the HR plan: how many people will be needed with what skills and where they will be found
  • the management team: who will be the pivotal decision-makers and what their experience and competencies are
  • the operating plan: how the various business processes will intermesh: R&D, purchasing, sales, production, service etc.
  • the capitalization plan: how much money will be needed, when, for what, and how it will be raised and repaid
  • the financial plan and forecast: capital acquisition, working capital and cash flow management, and proof of financial viability

When you want to use someone else’s money, and there’s considerable risk that the product either won’t get made or won’t sell, you need to jump through all these hoops. There is, after all, no such thing as risk capital. In natural enterprise, you’re not, except in rare cases for a very brief period of time, using other people’s money, and the process of Filling an Unmet Need eliminates almost all the risk of failure, provided you remain extremely agile and alert, draw collaboratively on the skills and judgement of your partners and advisors, and respond quickly and intelligently to changes affecting the business. That’s what improvisational planning is all about.

There has not been a great deal written about this subject, certainly not anything near as much as has been written on traditional business and strategic planning. I first learned about this concept by reading Real Time Strategy by Lee Tom Perry et al in the mid-90s. More recently, Rosabeth Moss Kanter has written several articles about it. But I have seen it practiced by many successful entrepreneurs who haven’t read anything about it, they just ‘naturally’ planned their business improvisationally. In fact, they were bemused when I told them it even had a name. They told me it’s “the entrepreneur’s instinct”. But spend some time studying it and you’ll find it’s much more than that. It’s not serendipitous or arbitrary. It’s actually quite rigorous and self-disciplined. Here’s what it’s all about:

  • Experimentation: While mistakes are too expensive and take too long to correct in big business, they are the very essence of natural enterprise. We all learn from our mistakes. Successful entrepreneurs learn fast and learn a lot from making mistakes and learn by trying out a lot of different things. This really is instinctive, and while most large corporations distrust and discourage intuition, entrepreneurs recognize its value. I recently watched my dog, the hypothyroid and arthritic Chelsea, sitting in the shade with my visiting daughter’s small dog Laker. Chelsea always enjoys canine company but after introductions they don’t really ‘play’ together, they just sit around outside (kind of like their humans do), watching the world go by. Suddenly as I was watching, Laker spotted a chipmunk and raised her head suddenly. Within 15 seconds, Laker and Chelsea, who had never ‘collaborated’ on anything to my knowledge, and who certainly had never individually caught any of the abundant wildlife in our area, had, together, outflanked, flushed out, cornered and trapped the chipmunk, which simply gave up, lay down and closed its eyes. In that fifteen seconds there had been at least 50 moves made by each of the three ‘players’ in the drama, a sophisticated chess game of trial and error, signalling and tactical adjustment. It was absolutely stunning to watch. When we pulled the dogs away and rescued the poor chipmunk, the look of triumph and joy on the dogs’ faces was unmistakable. They sat close together panting for several minutes, looking at each other, their expressions a canine ‘high five’. This is exactly how entrepreneurs learn and succeed. Their small size and agility, their ability to pay intense attention and adjust instantly to the consequences of every action, every conversation, every decision, to self-correct very quickly and inexpensively, and to try out, often simultaneously and very creatively, several different things knowing that many or most of them are bound to fail, and learn from those failures, is what makes them so sharp and so successful.
  • Respecting and Trusting One’s Partners: The partners in a natural enterprise not only need to have ‘mutually exclusive and collectively exhaustive’ skills and competencies (covering all critical aspects of their business without significant overlap), they need to trust each other implicitly and unreservedly. A jazz combo improvising during a jam session, or an acting troupe improvising spontaneously on suggestions from the crowd, must rely totally on the other members to perform excellently and mesh together perfectly. If the players are competing with each other, or doubt the ability of others to do their part, the result is disastrous. That is why ‘Assembling the Team’ of a small enterprise is so critical. There has to be trust. If there is, the team together can accomplish remarkable things. They literally ‘feed off’ each other and hum like a well-tuned machine. That’s perhaps why family businesses are often the best entrepreneurships — the trust bond is longer and stronger. Natural enterprise is inherently and necessarily collegial, collaborative, and profoundly mutually respectful — no one person or elite committee has what it takes to lead or succeed.
  • Continuous Adaptation and Change Resiliency: My neighbour recently expressed great concern about when each spring to stop putting birdseed into her feeders, so the birds wouldn’t get ‘dependent’ on human-provided food and starve when she went on vacation. I assured her that there was no risk of this happening, because birds, like most creatures, are extremely adaptable to changing conditions. Not only do most birds use a constantly-changing and varied set of food sources all year round, they can also quickly decide to migrate or hibernate if there’s a sudden catastrophic food shortage — death by starvation or freezing is very rare. Evolution has enabled them to thrive as part of the self-managing complex adaptive ecosystem. Our bodies function likewise, responding and adapting constantly and continuously to complex change to restore health and equilibrium. The marketplace, a human invention, is a complex system, but much less adaptive, and that lack of adaptability gives rise to economic phenomena like stock market crashes, depressions, spectacular business failures and famines. This lack of adaptability is a function of the system’s inflexibility, homogeneity, and sheer size. Natural enterprise can usually adapt well and quickly to market changes because it’s not hampered by its size and because it’s non-hierarchical, as long as there is sufficient open-mindedness and diversity of thinking among its members. Groupthink, often a trademark of large homogeneous organizations, is deadly.
  • Creativity: Improvisation is an inherently creative process. If the improv actors or musicians weren’t inventing as they went, and instead just performed what they’d already rehearsed or played the night before, the result would be bland, and any player going off in a different direction would ‘crash’ the production. Creativity is a learnable skill, and it, too, is somewhat intuitive. It is a process of simultaneously opening yourself to awareness of the need and awareness of the possibilities, of freeing yourself from thinking about what has been, and instead imagining what could be. We are inherently creative and imaginative creatures, and despite the attempts of education and business to crush it, our creativity, as De Bono has shown, is not that difficult to reawaken. Bach, that most scientific of composers, was a brilliant improviser. Successful entrepreneurs bring creative, practical ideas to every situation, every customer, every problem, and they bring them to bear quickly.
  • Emotional Intelligence: For some reason, large businesses tend to be impersonal businesses, without passion and without either much skill at, or care for, the emotional nature of the people working there. Great teams in every arena of life have passion that carries them beyond their talent, and people who fail to ‘live up to expectations’ are often emotionally crippled or damaged. Most big business almost prides itself on their indifference to this messy emotional stuff — counselling was one of the first aspects of large corporate operations to be outsourced, when it was dealt with at all. Most successful entrepreneurs, though, perhaps because their businesses are smaller and their work environments more intimate, have developed remarkable ’emotional intelligence’: Ability to recognize and bring out the passion and joy in those they work with, and to recognize and discharge negative emotions in those people that are getting in the way. The most successful entrepreneurs I know treat everyone with love and care, not the emotional detachment we usually see in big corporations. Their workplaces are happy and fun and casual and friendly.
  • Trusting One’s Instincts, Attentive Listening, and Learning from Nature: We have three million years of instinct coded in our DNA, and until relatively recently we relied on it to tell us how to live and what to do. Very often our first instincts still give us more reliable and successful answers than second thought. That doesn’t mean always following your gut feeling, or making decisions that are highly emotional, but it does mean not discounting your intuition, and learning when and to what degree to trust your instincts to guide you in making decisions. This is especially true in assessing customer reaction to products, and other interpersonal events: Our instincts pick up on telling body language and eye movements that our minds often miss. The value of instinct can be accentuated by attentive listening, a skill many of us are very poor at. Listening isn’t passive, either: It requires restatement and rearticulation (to ensure you understand), and creative probing and encouragement (‘what if’ type questions to ‘think your customers ahead’ and unearth new ideas). And recently we have started hearing a lot about business ‘ecosystems’ and ‘organic’ business processes. We have finally started learning that nature is the perfect model of a healthy, resilient, collaborative, innovative and adaptive economy, one we have a great deal to learn from.

In natural enterprises, this improvisation is continuous and pervasive, and it largely takes the place of more formal, hierarchical planning and decision-making processes. It’s practiced constantly and honed to a fine art. Improvisational, collaborative decision-making, and not edicts from an Executive Committee or formal policies or plans or standard operating procedures, drives most of the key actions and decisions of the enterprise. That’s not to say that more formal planning is never valuable in natural enterprise. But formal plans must be very flexible and are often more useful as milestones, frameworks, creative thinking and consensus-building exercises than as rigorous decision-making and operating guidelines. Plans become mere tools, to be used or not used as the situation dictates moment to moment.

The word improvisation comes from the Latin term improviso, meaning ‘unforeseen’. In contemporary business, it is almost impossible to foresee when or how the complex marketplace and economy are going to change, so the ability to improvise intelligently yet instinctively is increasingly advantageous.

Most importantly, not everything in natural enterprise can or should be made up on the spur of the moment. The need for, and advantage of, improvisation does not obviate the value and importance of the other steps in the enterprise-building process illustrated above — most critically the up-front and continuous research on unmet customer needs, and the assembly of the best possible team for your enterprise.

My book Natural Enterprise will include stories of a dozen or so real-life entrepreneurs who are ‘naturals’ at improvisational planning and decision making. Their spontaneity and change resiliency is a key part of their magic, a wonderful inspiration to those that work with them, and a cornerstone of their success.

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  1. Peter Bailey says:

    There’s a strong parallel between these approaches to making decisions in business and a relatively recent set of practices (Agile methodologies) that have come into vogue for software development. Basically, highly reactive and customer-focused/involved mechanisms for building software that does what a customer wants it to do, without much of the heavy weight processes of the past. There is, as always, a balance to be struck.

  2. Peter, isn’t it remarkable that the way software used to be designed is coming back? Origninally the industry was comprised of companies who had only a few developers; teams of students; and independent programmers, who all used an interlinked, intimate community for support. They valued the traits that Natural Enterprise focusses on, and they were so successful that the business community took note – and took over, in their traditional plodding way. The result is monoliths like Microsoft or failures like Corel.

  3. Ahmed says:

    The main reason why most organisations and startups rely on intense planning is because financiers demand it. Banks, shareholders and moneylenders like seeing intense detailed plans. Which makes sense, to a certain degree, because its their money. Improvisation, as I see it, is a luxury. The only way a startup could really indulge is if they dont use their own money (actually one of Charles Handy’s points from the Existential Enterprise). However, the point Renee makes about the software industry is certainly valid, and also applies to any really creative industry. E.g.,Hollywood used to be an incredibly creative place but for the last 20 years or so has relied on set storylines and plot devices- the artistic nature of improvisation has been stamped out to reduce risk. As you point out, any organistion or individual is only allowed to improvise if there is a degree of trust involved. I think this implies there is a risk/trust tradeoff. Startups, being risky are inherently untrustworthy…so how do you transact trust? how do you get the soil to trust the seed?

  4. Bill Seitz says:

    The improv challenge comes when the 2 dogs try to collaborate on cornering 2 chipmunks at the same time.The challenge I’ve found repeatedly in startups I’ve been in is the tendency to chase so many ideas simultaneously that none of them get executed very well.

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