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The Missing Link: How Business Week Missed

The August 28th edition of Business Week Magazine contained a special section on "the corporation of the 21st century." While we agreed with much of the information presented, we did not feel that the articles went far enough. Indeed, we felt that all of the articles were missing one very important point: that the nature of business itself must change.

Below is our response to Business Week. We welcome your comments about
both the Business Week articles and about our response.

As organization development practitioners, we read the special section on the 21st Century Corporation in the August 28, 2000, issue with considerable interest. Since organizational change is our specialty, we have spent much time and energy on the very question that your article poses: "which companies will thrive in the coming years?" However, since our client base is primarily service and knowledge work (ideas) organizations, we have been wrestling with this question not only in the future tense, but also in the present tense. Reality for our clients is and has been for most of the last decade, "what will enable us to survive and thrive today and to continue to do so in the future?"

We entirely agree that corporations, indeed most organizations, are at a crossroads. With a steadily decreasing percentage of the economy based on industry, we can reasonably say that the "Creative Economy," has arrived. Our experience bears out, as one of your articles indicates, that those attributes that enabled organizations to be successful during much of the industrial 20th century are not those that will provide for their continued survival and success during the 21st century.

We found the descriptions of the 21st century corporation compelling and in large part reflective of the technical, economic, political, and other ecosystem changes that seem to be emerging, at least in developed countries. We resonate with much of what these articles have to say and find them consistent with our field research and experiences. However, we do not find the articles as reflective of the social and psychological changes that we also see emerging. We believe that this "human ecology" is proving to be the central defining character of the 21st century corporation and certainly central to the creativity required to support a creative economy.

What we mean by this statement is that people are shifting from being a resource that enables a corporation to do its work, to being the work itself and largely synonymous with the corporation. This shift in perspective is not just being fueled by the emerging creative economy, but also by today’s social realities and psychological awarenesses. Who we are as people and the social environment in which we function have become increasingly at odds with our work realities.

In a time of long work hours and limited connections with others in the neighborhoods in which we live, we are finding it more and more difficult to separate our "work lives" from our "real lives" since for many of us, our work community is our most significant. In addition, we are finding it more and more difficult to tolerate treatment at work that we would find intolerable in most other situation in our lives.

Psychologically, we are living in a time when the inherent worth and importance of us as individuals is being preached and supported by most recognized authorities in our culture. In addition, the value of our individual giftedness and of our subsequent contributions to the world around us is being emphasized as never before. Perhaps more importantly, these beliefs about the worth and value of the individual are central to our views about what is right or fair treatment in all areas of our lives, including work.

As is born out in your articles, we seem to recognize that what is being demanded of organizations in the emerging creative economy is significantly different from what was demanded of them in the passing industrial economy. However, as is also born out in your articles, we do not seem to recognize the need for changes in the underlying assumptions upon which the industrial model was built. We want to operate as if most of the industrial "givens" about business and people still apply to corporations today. However, moving away from these outdated assumptions to those more in line with our social and psychological realities as well as our technical, economic, political, and other ecosystem realities is entirely necessary if the corporation is to be successful in the 21st century.

To value ideas above all else means, by default, to value people above all else, and valuing people is not the foundation on which the industrial model for business was built. Attempting to initiate a new order on the old, industrial foundation is a little like trying to install and run a new software package on an old operating system. Even if we are fortunate enough to get the package installed (which we usually are not), it runs slowly, performs poorly, and crashes at every conceivable opportunity. The new software just isn’t compatible with the old operating system.

When ideas are our products, everything and anything that impacts an organization member’s ability to think creatively, to innovate, and to continuously adapt to the environment becomes life-critical to the corporation. Creativity and innovation produced in the quantities, of the caliber, and at the speed required for a business to thrive in the coming years demands a new foundation, a new operating system, new assumptions and ways of thinking about the very nature of business and of organizational life. What must emerge is a foundation vastly different from that upon which the industrial economy and its corporations were built, a foundation that recognizes people and their need to relate and create as the cornerstone of the organization.

Success in the creative economy will require the ultimate degree of creativity and innovation from all of us– the ability to visualize business itself and the organizations that support it in radically new ways. Creativity happens most effectively when people and things in their environment work together well and least effectively when people and things in their environment work together poorly. Business is about relationships, and not just those among organization members. It is people in relationship with clients and customers, with suppliers, with alliances, with technology, with the market and the industry, with the organizational culture, with work process and systems, with the business environment and ecosystem, and ultimately with themselves. Business must become about relationships that foster creativity.

This new foundation of people in relationships that foster creativity is what we believe is required for corporations to produce ideas and thrive in the 21st century. Corporations built on this central belief will, of necessity, look and feel very different. Moving to a new model for business and organizational life will change many of our current "givens" about business and corporations in the 21st century. One such given is the structure of the organization. When how to most effectively and efficiently do the work and encourage relationships become the primary concerns, the hierarchical work structure is usually abandoned in favor of flatter structures. We have found that even with formal and informal networks in place in an organization, if a hierarchy of authority exists, innovative ideas are significantly less likely to be conceived and even less likely to bubble up through the layers of the organization and relationships are often competitive and unhealthy.

We have also found the more traditional assumptions about leadership and management to be of limited use in corporations trying to gear up for the 21st century. Since the complexity of leading and managing an organization has increased dramatically during the past decade, we have found traditional leadership and management practices which assign these responsibilities to a group of individuals in formal authority positions, inadequate to meet the need. However, if we think of leadership and management as functions, as sets of things that must be done for which every member of the organization is responsible, then surviving the complexity of the 21st century environment becomes much more possible.

We agree completely that for any corporation to thrive in the 21st century, it must value ideas and foster creativity. We do not necessarily agree that the 21st century corporation as described in the articles will be able to do so. For valuing ideas and fostering creativity to become something more than lip service, the organization must become a venue for healthy, productive relationships. It is out of these relationships that the creation of ideas, goods, services, or information is possible. People working together in community to put new things in the world will result in the ongoing creation of wealth and, perhaps more importantly, in the ongoing creation of knowledge which is currently the only way for a developed country to grow economically.

With all our technological advances and our visions of space age corporations, we seem to be beginning the 21st century with our economic success dependent on perhaps our two most basic and uniquely human characteristics, our capacity to relate and create in meaningful ways.

Lazarus Consulting Group, Inc.
Cynthia W. House, Elisabeth Cox, Lee Taylor, & Steve Musick, practitioners

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