scenario

Diverse environment
Focus on strategies that focus on short term performance
Shorter life span of business
Research of 30000 public firms at U.S
Public companies have one in three chance

Of being delisted in the next five years.

observation
Nested system

LEVEL

NATURE

BUSINESS

First

THE POPULATION
Individual
organisms of the
same species

THE COMPANY
Individual
employees

Second

THE NATURAL
ECOSYSTEM
Populations of
species that
depend on and
compete with one
another

THE BUSINESS
ECOSYSTEM
Companies
that depend
on and
compete with
one another

Third

THE BROADER
NATURAL
ENVIRONMENT
Neighboring
ecosystems and
nonbiological
elements, such as
the climate

THE BUSINESS
ENVIRONMEN
T
Overlapping
ecosystems
and other
stakeholders,
such as NGOs,
government
entities, and
civil society

solution
Six principles
o Maintain heterogeneity
o Sustain a modular structure
o Preserve redundancy
o Expect surprise but reduce uncertainty
o Create feedback loops and adaptive mechanisms
o Foster trust and reciprocity

structural

managerial

Maintain heterogeneity
Although we regularly develop resistance to the current common strains,
new ones are always emerging
In a business CAS leaders must ensure that the company is sufficiently
diverse along three dimensions: people, ideas, and endeavors.
Hire people with varied personality types, educational backgrounds, and
working styles.
Example: Fujifilm

Sustain a modular structure

Highly modular systems impede the spread of shocks from one
component to the next, making the overall system more robust.
In a business context modularity always brings trade-offs
o tight connections among business units might create effectiveness but it
also amplifies risks

Preserve redundancy
In systems with redundancy, multiple components play overlapping roles
Redundancy is particularly important in highly dynamic environments, in
which adverse shocks are frequent.
Redundant mechanism acts as multiple line of defense
Example: Ericsons single source procurement strategy

Expect surprise but reduce

uncertainty
we can collect signals, detect patterns of change, and imagine plausible
outcomesand take action to minimize undesirable ones.
Steps:
1:Accept that their business models will be outdated at some point
2:Understand that change often comes from an industrys periphery
from start-ups or challengers
3:They collect weak signals from the early-stage entrepreneurial activity
4:They practice contingent thinking
5:Take preemptive action

Create feedback loops and adaptive

mechanisms
Feedback loops ensure that selection takes place and improves the fitness
of the system
It must detect the right signals from across the organization.
o Example : gemba practice in Japanese companies
The organization must translate those signals into action

Foster trust and reciprocity

collective action problems
Trust, along with variables such as the number of users, the presence of
leadership, and the level of knowledge, promotes self-organization for
sustainability
To leverage the power of trust, leaders should consider how their firms
contribute to other stakeholders in their ecosystem.