Tag Archives: organizational decline

Organizational exhaustion… and internal exile

I wrote earlier about the loss of creative ability of the firm. This loss and the growing reliance on a command and control management style are obviously not without impact for an organization. In his political essay “The Power of the Powerless”, Vàclav Havel writes about a simple everyday experience he had in Czechoslovakia in the 1980s. In the window of a local grocery store, he observed a poster of the Communist party that read: “Workers of the world, unite!” Havel asked himself,  “Why does the grocery manager do it? What is he trying to communicate to the world?” Obviously, the greengrocer was not a communist militant (in that era there were not so many around).

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The loss of creative capacity as a cause of organizational decline

I was recently invited to give a keynote speech at the 3rd Journées Georges Doriot, an annual academic and practitioners’ conference organized to honor the great inventor of venture capital, and it seemed to me that the topic of this year – Intrapreneurship- was ideal to test an idea that I had had for some time, that of applying the thesis of Arnold Toynbee on the decline of civilizations to the world of organizations.

Toynbee is the author of “A study in history“, the landmark book on the history of civilizations. The book comprises 6,000 pages, no less. Fortunately, a professor decided to write an abridged version, which allows normal people like you and me to grasp the virtuosity and knowledge of Toynbee for only… 1,200 pages in two volumes. What does Toynbee write? According to him, a civilization grows when its elite is creative enough to attract inside and outside constituents. The civilization breaks down when the elite gives way to, or transforms itself into, a dominant minority. When this happens, the driver of the civilization becomes control, not attraction, and its unity ends.

Interestingly, Toynbee observes that the consequences of the breakdown are not felt immediately. The civilization can continue to exist and keep a momentum if only because the logic of control brings an overall efficiency in its working. To summarize, the three key points of Toynbee’s thesis are:

  1. The source of breakdown is the loss of the creative capacity of the elite;
  2. The consequences of the breakdown are not felt immediately;
  3. When losing its creative capacity, the elite gives way to a dominant minority working on a logic of control.

It is tempting to try to apply Toynbee’s thesis to the corporate environment. In doing so, we can define the creative capacity as the ability to successfully create and introduce new products and services (renew its engine of growth). We can define growth in terms of overall economic performance.

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