The Changing Behaviour of Organizations

Posted on September 22, 2005 by Dave Pollard
Like people, organizations tend to change slowly, and in response to external forces. In people, changes are more evident from generation to generation (the cause of generation ‘gaps’ and a great deal of family stress). New organizations, likewise, are more likely to manifest behaviours responsive to the needs of their customers, employees, and other stakeholders than those that have been around awhile. We call these behaviours, collectively, culture.

What changes in the needs and wants of stakeholders will precipitate changes in organizational culture in the coming generation? Here are some likely bets:

Today’s Behaviour: Tomorrow’s Behaviour:
Selling aggressively, using researsed persuasive techniques Conversing with customers to discover, and then respond to, articulated customer needs
Advertising to ‘create demand’ Viral marketing
Analyzing the market, using surveys and demographic data Observing customer buying behaviours, using ‘cultural anthropology’ techniques
Standardizing processes and products Improvising processes and products
Collecting and searching for best practices Scanning and probing for emerging patterns
Executive decision-making by managers and experts based on experience and advice from consultants Canvassing the crowd to make decisions based on collective wisdom
Marketing trials to test new products using prototypes Co-developing new products with customers and other partners using multiple parallel experiments
Make huge margins on software and content that has almost no variable cost Give away software and content to attract customers to personalized events and containers
Tell customers how good your product is, using various media Show customers how good your product is, by giving demonstrations and samples
Offer sophisticated, multifunction products Offer simple, elegant products that do a few things really well
Collect and archive large amounts of knowledge just in case Canvass for knowledge just in time
Offer low-cost products that break or become obsolete or unfashionable in a few years Offer durable, upgradable products that never go out of fashion, and do more with less
Use size, acquisitions and vast intellectual property to dominate their market Use innovation, agility and buzz to disrupt their market
Price products at what the market will bear Price products at what customers can really afford

These changes will be driven by:

  • a shift in knowledge and power from suppliers to customers and end-consumers
  • the failure of the ‘blockbuster’ model of product offerings (where all the profit comes from one or two smash hit products, often followed by cheap, mediocre ‘sequels’) as consumers catch on
  • the availability through the Internet of almost infinite choice at modest cost
  • an Internet culture that believes that software and content should be free to all
  • the end of cheap oil, labour and other resources
  • new, innovative competitors in many industries that won’t need to be big to have a huge market impact, and which will be astonishingly prolific and agile (imagine a thousand Googles!)
  • the wide-spread realization (thanks to interest rate spikes and a shrinking economy) that living beyond our needs is reckless and unsustainable
  • a growing lack of trust in corporations, thanks to an ongoing litany of scandals

It’s going to be fascinating to watch this evolution. For the Fortune 500 (and for their shareholders) it’s likely to be bloody, a replay of the transformation that has seen huge organizations crumble and small upstarts soar past them over and over since the start of the Industrial Revolution. What’s likely to be different this time, however, is that the new upstarts will not grow into megaliths, but will instead spin off divisions into hundreds of small, autonomous, ever-agile entrepreneurial companies.

The big corporations just don’t get it. They don’t understand why so many are outraged that we’re sitting on intellectual and financial capital that could end disease and poverty on this planet, but we can’t do so because it would be unacceptable to the handful of staggeringly rich families that control this capital. They don’t understand why Google is giving so many of its brilliant and valuable new tools and content away free. They don’t understand why eBay paid billions to buy Skype. They don’t understand why so many ‘respectable’ people don’t equate file-sharing, the modern equivalent of going to the library, as theft. They are still stuck in the same mentality that predicted the telephone would never catch on, or that the world only needed a handful of computers.

The future of business is a world of ends. If our world lasts that long, of course.
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3 Responses to The Changing Behaviour of Organizations

  1. Derek says:
    September 22, 2005 at 20:00

    while most of us would be perfectly willing for the majority of fortune 500 companies to go away, I wonder where the next MRI machine is going to come from in an age of small backyard companies. Saying that billion dollar companies are going away is one thing, but what if we lose all the million dollar ones too. No more aerospace, trains, diagnostic equipment, electronics; and possibly the end of most long distance transportation as well as general science and research. sounds just as likely and just a tad frightening.

  2. Janene says:
    September 23, 2005 at 08:06

    That’sa common assumption, Derek, but I believe that what we will find is small organizations entering into co-ordinated, rhizomatic arrangements that allow them to tackle the ‘big’ projects without carrying the weight inherant in our modern behemoths.Its a dramatic paradigm shift… but compeltely in keeping with the changes Dave is suggesting. And, in my opinion, a natural and obvious shift once the overall paradigm changes begin to take effect.

  3. Janene says:
    September 23, 2005 at 08:11

    oops… sorry guys…To restate:That’s a common assumption, but I believe that what we will find is small organizations entering into co-ordinated, rhizomatic agreements that allow them to enter into temporal arrangements for specific, defined purposes. It is a dramatic paradigm shift… but the shift that Dave is already suggesting actually makes this the ‘next logical step’.Janene

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