The Future of Everything

August 1, 2008

Business apoptosis

Filed under: Uncategorized — David @ 9:26 am

Interesting meeting last week with people from the Strategy Institute, a kind of thinktank run by Boston Consulting Group. We talked about the difficulty in predicting complex systems like the economy, and the biggest problems faced by managers. A surprising candidate was that companies are good at growing, but they don’t know how to die. There’s an analogy with biology. In the body, when cells are damaged or no longer viable, they usually undergo a process known as apoptosis, where the cell is taken apart in an orderly fashion and its constituents recycled for use by other cells. A less favorable outcome, which often happens for example in the core of solid tumours, is that cells become necrotic, and burst open to release toxic substances that damage nearby cells.

In business, companies are naturally focussed on growth, so when a particular product loses market share the emphasis is always on finding a way to boost its presence or find a replacement. This is fine and healthy up to a point, but if it leads to denial about unpalatable realities, the business or one of its divisions can implode in a disorderly fashion that is toxic for everyone from employees to shareholders to customers.

One of the benefits of capitalism is that bad ideas will eventually fail, but it seems that the process could be improved. Maybe we need to develop a business version of apoptosis. After all, if there’s one thing in business that can be predicted, it’s that nothing lasts forever.

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