The 7 Laws of Regenerative Enterprises
Written by Kim C. Korn and B. Joseph Pine II
Managing baffles us with its complexity. Leaders looking to improve managing do not know where to start, much less where to finish. So even though the gales of creative destruction continually threaten their enterprises, they do not necessarily see radically revising their managing as the obvious solution. But that’s exactly what their enterprises need.
In his recent HBR article, Gary Hamel described traditional-enterprise ailments as being inertial, incremental, and insipid. He goes on to point out, “Until we challenge our foundational beliefs, we won’t be able to build organizations that are substantially more capable than the ones we have today.” How true! But it’s hard to challenge current beliefs when managing itself remains a bit of a mystery. For too long now, we have gone without an actionable framework for managing that guides us in shaping enterprises toward specific ends so very needed – such as vitalization rather than optimization, constant regeneration over episodic transformation, and internal creative destruction versus preservation of stability.
The host of stories researchers continue to crank out for business leaders will never tell them what they need to know in order to break out of their management malaise. Management advisors are self-defeating when they extract principles from the practices they study, fooling us by pretending that correlation equals causation. And as readers we are also saps for well-crafted stories, pretending they make sense of it all regardless of their underlying truthfulness.
Until now managing’s design, innovation, and transformation has not been effectively carried out because no framework made sense of it. No wonder business leaders have not charged forth boldly to develop and adopt new and better ways of managing. No wonder the long hard slog through the wilderness of finding a new way of managing continues. No wonder so few companies truly thrive, and rarely for longer than a decade or so.
Leaders today need a better approach. We need first to understand enterprises, along with the humanity and activities that make them up. And this understanding must be developed in light of (1) economic value creation – the primary function of a business enterprise – and (2) accepting the challenge that an enterprise ought to be able to thrive forever, if it chooses to. (For if your enterprise does not plan on thriving forever, expect it to fail eventually.)
Identifying the aspects of value creation from this simple real-world perspective yields the following comprehensive framework, with its clear answer for each major question:
- Who creates value for the enterprise? The workers who choose employment in the work offered by the enterprise.
- Why do people come together to create value within the enterprise? To satisfy personal needs while meeting others’ needs.
- Where does the enterprise create value? In enterprise-filled ecosystems.
- How does the enterprise create value? Through capabilities of people and activities.
- What value does the enterprise create? Economic offerings, bought by customers, which satisfy human needs through the businesses it establishes.
- When does the enterprise create value? In its decisions that operate, form, reform, and perpetuate the enterprise.
- In What Way do these aspects collectively create value? When integrated and unified.
So let’s formulate this collection of questions and answers as seven laws of managing. While we do not have space to develop them here – as we did from first principles, not from anecdotes and stories – you will see their connection to the aspects of value creation outlined above.
- The Law of Potential: Only the enterprise that unleashes potential, through meeting its workers’ innate needs, induces human engagement to its fullest.
- The Law of Meaning: Only the enterprise that infuses meaning, through a shared purpose, effects alignment among fully engaged workers.
- The Law of Creativity: Only the enterprise that liberates creativity, through applying intuition and exercising free will, regularly discovers opportunities for surprising wealth-producing innovations.
- The Law of Learning: Only the enterprise that invigorates learning – through exploring, exploiting, and orchestrating – generates the knowledge necessary to persistently create new value among infinite possibilities.
- The Law of Humanity: Only the enterprise that enriches humanity, through the knowledge embedded in its business activities, creates offerings of unquestionable economic value.
- The Law of Vitality: Only the enterprise that attains vitality, through its incessant destructive recreation, produces the wealth necessary to survive.
- The Law of Coherence: Only the enterprise that sustains coherence in all its aspects, through ongoing orchestration, regenerates itself to thrive indefinitely.
The beauty of this system of laws of managing is that it leaves nothing out. They collectively address leadership, management, and governance. They provide the lens for sorting out the practices that lead to mediocrity from those that leading to thriving. They enable workers to reach their fullest potential as they perform in every aspect of enterprise value creation. Adhering to these laws produces a regenerative enterprise, an enterprise destructively recreating itself in the face of the creative destruction of its ecosystems. In following these laws, meaning & orchestration become the hallmark of managing, finally supplying the replacement for the old command & control that everyone knows doesn’t work, but that so many still practice in one way or another.
Accepting these laws opens the door for executives to challenge and replace the current managing practices holding back the vitality of their enterprises. You now have the framework required to tackle transforming managing with confidence. You can now develop, retain, and eliminate practices in accord with the laws. The regenerative enterprise – one that thrives forever – now becomes a real possibility.
SOURCE: Harvard Business Review