The Living Company - Learning Organizations

Why Businesses Succeed

The book “Living Company” is a good place to start if you want your business to survive.

Arie de Geus has written an excellent book on change, organizations and survival called the “Living Company”, published in 1997, Harvard Business School. He was the head of corporate strategic planning for Royal Dutch Shell and spent his 38 year career with the Company. He wrote this book after his retirement and it is the culmination of his life’s lessons in business as well as involving considerable research.

In 1983 Royal Dutch Shell, one of the largest companies in the world launched an extensive study. The Study defined the commonalities of 27 major companies that survived one hundred years.

The average Fortune 500 Company survives 40 to 50 years. Several studies in the United States and Europe have found the average lifespan of companies is 12.5 years. Royal Dutch Shell had been around for a century and desired to know why some companies survive and most do not. The 27 companies were from all over the globe. One Swedish company traced its roots back 800 years. Several companies lasted 400 years. To have survived one hundred years in 1983 when the study was done a company had to survive two world wars, the great depression, multiple recessions, plagues, financial crisis, energy crisis and myriad market changes.

The Lessons

The study found four common characteristics of the 27 companies who prospered and survived the centuries:

1) They were sensitive to their environment. They had their feelers out constantly gathering information about the world they lived in. This gave them the ability to react and change in a timely manner and to stay in harmony with the world they functioned in.

2) They had a strong sense of identity; were cohesive; had strong culture and internal advancement was a shared feature.

3) They were tolerant of outliers, experiments and did not squelch creativity with the company.

4) They were all conservatively financially managed, had an aversion to debt and valued cash. This gave them flexibility, financial freedom, the ability to change, ability to weather storms and the position to seize upon opportunities.

Other Resources

• Downloadable article - The Living Company:A Recipe for Success in the New Economy, by Arie de Geus, published in The Washington Quarterly, Winter 1998

• Living Company website with more information, books and articles by Arie de Geus.

• "The Living Company: Habits for Survival in a Turbulent Business Environment", by Arie de Geus, Harvard Business School, 1997.

Related Best Practices

• Changing Your Organization
• After Action Review

Article Author

Arie de Geus spent 38 years on three continents as a line manager at Royal Dutch Shell, and finished his career as the Corporate Planning Director in charge of business and scenario planning. Since his retirement de Geus has advised organisations of all kinds, has been published in many countries in several different languages, and continues to be a sought-after speaker. His 1988 Harvard Business Review article, "Planning as Learning", established him as a leading expert in organisational learning. Arie de Geus has been a Visiting Fellow at London Business School and adviser to many governments and private institutions.

In 1997 he published a book entitled "The Living Company: Habits for Survival in a Turbulent Business Environment", which has been translated into more than twenty languages, has been widely praised and has received a number of awards. The most prestigious of these awards was the 1997 Financial Times/Booz-Allen & Hamilton Global Business Book Award for "The most insightful, innovative management book of the year".