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June 20, 2018
Why a living business is a winning business
By: Josh Bellin

It sounds like the start of a bad management joke: How are companies like biological organisms? (Insert punchline here.) That’s not the kind of question that typically winds up top-of-mind here in Accenture Research—it’s overly broad and not, on its face, readily actionable. I’ll also admit that biological organisms are well beyond my personal area of expertise; I knew I was out of my element when I found myself trudging through scholarly articles about homeostasis and ecological adaptations (citations available, for those who are interested!).

So how did we get here, and why?

Increasingly, the conversations we’re having with our clients about sustainable growth—a perennial concern—are taking on a new tenor. They’re less about “more”—expanding into more markets, reaching more customer segments over more channels, or launching more campaigns. “More” is no longer working. The growth blueprints that have served established businesses so well in the past are looking increasingly prehistoric now.

The reason? Customer expectations have fundamentally shifted. Our consumer research confirms that retaining a customer’s loyalty is much harder than it used to be. The burden is now on the company to constantly adapt and cater to the customer, to be continually relevant in a hyper-personalized way with the right kinds of experiences in the right times and contexts. (See our Harvard Business Review article Marketers Need to Stop Focusing on Loyalty and Start Thinking About Relevance).

Organisms, at times of rapid environmental change, must adapt—or die.

Born-digital companies are often hardwired to adapt with speed and scale to changing customer needs—which is precisely why they’re eating away at the growth of established companies. Seventy-eight percent of consumer say that if household-name technology giants offered insurance and financial services, they would be willing to give them a try (!). Most large companies and industry mainstays don’t have even a fraction of that kind of customer pull.

While studying the companies best positioned for the future, I kept thinking back to a phrase we often kicked around: “From organization to organism.” In our executive survey of over 1,000 companies around the world, we found that successful companies are more likely than their peers to behave like living organisms. They’re increasingly embracing a customer-centric mindset that inspires profoundly different behaviors—what we’ve come to call a Living Business. In our research report, Relevance: The beating heart of a living business, we tease out the capabilities that distinguish Living Businesses—everything from the way they target investments to how they empower their workforce. It’s neither simple nor easy to shift from an organization to an organism; these capabilities span the entirety of a company’s operating model.

But organizations that make the switch will be handsomely rewarded. We found that companies which excel at these capabilities—around the top 10 percent, on average, by industry—are 50 percent more likely than companies who underperform at these capabilities to report a strong readiness to weather business cycles and industry disruption. They are also three times more likely to achieve above-average revenue and profit growth.

How are companies like biological organisms?

Without delving too far into the scientific literature (again—citations available for those who are interested!), suffice it to say that living things make an enormous amount of adaptations to succeed in changing environments. We’re finding that, to win in the new era of hyper-relevance, companies are going to have to join the ranks of the living: continually adapting and evolving around their customers’ ever-changing demands.

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