The Living Company.

• Author: Steingraber, Fred G.

In his thought provoking book, Arie de Geus, former head of strategic planning at Royal Dutch Shell, grapples with the main topic on the minds of senior executives and board members: Ensuring corporate survival in a climate of constant change and complexity. He reminds us that this climate is not new, any more than the global or multinational company is new. Most important, he takes us inside one such "living company," Royal Dutch Shell, to share some secrets of its success.

The result is a book that is deceptively simple on one level but, on another, enormously satisfying in its depth. De Geus bases his discussion on a Shell study of 27 global companies that were each more than 100 years old. The study found these companies succeeded where others failed because they each became a "living company" - managed to motivate the people within the organization to survive and grow - instead of an "economic company" managed solely for profit.

De Geus discusses each of the principal characteristics of the living company in turn: creation of a learning environment; development of a strong sense of identity; tolerance of differences through decentralization; and fiscal conservatism. Joining together the lessons of his own career with readings of prominent sociologists, anthropologists, psychologists, and scholars, de Geus squarely takes aim at what he believes to be the excesses of an analytic or overly academic, technical approach to management.

The power of the de Geus book, I believe, lies in the way it evokes the spirit of managers who see their companies as solid communities of people drawn together with similar values, striving to continually grow and move forward. In my own firm, A. T. Kearney, I recognize the power of the traits of a "living company," especially the importance of a strong sense of identity, and the development of the sensitivity to our environment necessary to learn and adapt to changing circumstances.

I believe all senior-level executives could benefit from his insights into the Shell organization and how it used a range of approaches to create a learning environment. After all, Shell is one of the success stories of the second half of the 20th Century - one of the only companies to correctly anticipate many of the oil shocks of the 1970s and 1980s. De Geus explains how Shell had such foresight through its management's innovative use of a range of techniques, including scenario analysis, system dynamics, war gaming, and...