3 (Evergreen) Ways to Foster Enterprise Evolution

How can enterprises evolve and thrive?

Addressing this question has always been a recurring theme for our evolutionary research group at the EURAM Annual Conference. Relatedly, this has been central to me in many discussions with students.

In the past, I’ve conducted a couple of literature reviews on the topic. Through standing on the shoulders of giants, a possible, conceptual synthesis of these reviews might flow as follows. Firm’s evolution, conceived as progress, should not be considered as driven solely by environmental (e.g. industrial) or strategic factors. Rather, it should be considered as a combination of the two. We know that, in the past, some strategic management, or industrial organization, scholars were more extreme in advocating for one side or the other.

In terms of entrepreneurial, managerial, and policy making implications, three takeaways from the above can seemingly merit further discussion.

1. From evolution to co-evolution

It can be important for managers to understand how the co-evolution between environmental forces and strategic proactivity impacts the firm’s survival.

Take our current COVID-19 crisis disruptions. This was an unexpected shock. Firms seem more likely to survive over the long-term if they adapt their capabilities to this shock. For example, well-known auto manufacturers can maintain profitability if they can flexibly convert their manufacturing in a way that counters the disruptions from COVID-19 (e.g. producing masks). The same can be true for all those restaurants able to convert their traditional value chain operations to provide pick-up and delivery services.

2. Board building

I have to say that the term above has been gradually emerging, in my mind, also thanks to the classroom discussions with different audiences. From a leadership perspective, the term would mean that a key component for long term survival is defining a corporate board with specific sociodemographic and/or personality variables.

This reflects the massive corpus of studies evolving around the upper echelons theory. For instance, there are numerous studies that demonstrate the benefits of having gender diversity on boards. Or, we may consider that, from some aspects, company boards with a lower seniority rate seem more likely to survive a crisis.

3. Solve societal problems

Of course, I agree that the two above need to be combined with creating solutions that STILL solve societal problems. Goods or services that help humans with their basic needs, while serving as a source of employment, also appear more likely to create “too big to fail” conditions, thus potentially benefitting from outside intervention if needed. For example, this seems what differentiated the US Government reaction to the General Motors and Enron crises occurring at the end of the past century. The former received support, because considered as essential to the well-being of the country-system; the second did not, because, to say it with Charles Darwin, (appropriately) considered as injurious.

What do you think about the 3 highlights introduced above? More in general, is the COVID pandemic eliciting major rethinking about how firms can survive and thrive in turbulent times?

I would love to hear your thoughts.

Thank you!

Gianpaolo

Relatedly, if interested, you can also read the research article Research in Organizational Evolution. What Comes Next?, published in the European Management Journal, or the research article Organizational Adaptation. An Update, published in the International Journal of Organizational Analysis.