Organisms and organizations Rethinking R&D, networking, and corporate boundaries

For 20 years now, there has been chatter about the end of the traditional organization. From Mark Granovetter’s 1970s work on the sociology of networks to 1997’s The Differentiated Network by Nitin Nohria and Sumantra Ghoshal, the general notion is that boundaries are not nearly as important as we thought. Not only is no man, and no organization, an island, the linkages to a broader community, or network, define us rather than our own individual substance. These ideas have of late been amped up and expanded to the point that we’re told the concept of the individual person is almost an anachronism.

In the corporate sphere, this has reduced the legal boundaries between organizations to administrative overhead. What happens within the company is secondary; the key to success is to embrace broader networks of suppliers, to cocreate value with customers, to capture the wisdom of crowds, and so on. Companies are simultaneously contributors to and beneficiaries of the hive mind, and have no meaning separate from this larger context, any more than a bee means anything apart from its swarm.

For example, when Lewis Lehr set the goal for 3M that 25 percent of the company’s earnings should come from products that didn’t exist five years ago, he set the bar for corporate innovation. Today’s gold standard is sufficiently quantitatively larger that it seems qualitatively different: The most ambitious large companies out there aim to bring in half of all innovations from outside. Even the pundits agree: When the breathless enthusiasm of Don Tapscott’s Wikinomics and the sober reflection of C.K. Prahalad’s The New Age of Innovation point in the same direction, clearly something meaningful is going on.

So is the corporation of the future really just a nexus of constantly changing relationships? Perhaps. But there’s another possibility: that the organizational forms we see today are not our ultimate destination, and might not even resemble our destination.

We might be on our way to something very different (rather than having already arrived there) because rarely do successful complex organisms start out especially complex. In nature, for example, they typically evolve from much simpler building blocks, and only with the passage of enough time does complexity emerge, typically in one of two ways.

First, successive generations of individual creatures compete for resources and reproductive success, and those individuals best adapted to the prevailing environment dominate the available ecological niches—for example, fish mutated to mud-skippers, mud-skippers to amphibians, amphibians to reptiles, and so on.

But the much earlier qualitative change, from single-celled organisms to multicellular organisms, likely required a very different mechanism. The fundamental three-stage process of variation, selection, and retention is still at work, but selection pressures play out at the group level rather than exclusively at the level of individuals. The groups best able to cooperate end up dominating ecological niches. Single-celled animals began cooperating in order to advance their own self-interest, but continued cooperation led naturally enough to specialization. When specialization became so advanced that “core capability” activities like predation, eating, digestion, and even reproduction were “outsourced” to other parts of the cooperative, it no longer made sense to speak of a cooperative network: The group morphed into a new “individual.”

Seen in this light, all the talk that treats the unbundling of the corporation and the power of open innovation as an end-state might be wide of the mark, for it tends to apply the metaphors and frameworks of outsourcing to a phenomenon that goes far beyond simply focusing on what you do best. For instance, InnoCentive connects those who know what questions to ask with those who have, or can find, the answers. Its “Solver” community of 100,000-plus experts from around the world is populated largely by industrial chemists and life sciences researchers. Its “Seekers”—companies looking for answers to specific questions—are leading research-intensive firms and pharmaceutical, agribusiness, and consumer products organizations.

These are firms for which R&D is not a distraction—it’s the lifeblood of their success—yet they are doing less of it themselves than ever before. Are they in danger of giving away the goose that lays the golden eggs? Not likely. InnoCentive has connected Seekers and Solvers in a way that makes each dependent on the other not just for value but for survival. When individuals, whether in biology or the corporate sector, become mutually indispensable, they are no more cooperating than were the digestive and reproductive organs of the first multicellular organisms.

We need new metaphors to help us think about what’s going on. Firms are redrawing, reconceptualizing, and perhaps even redefining the very notion of corporate boundaries. The emerging organizational forms promise to be more than a network of focused but separate companies in the same way that an ant colony is more than a group of cooperating but otherwise independent ants. Changes of the last 20 years are significant not for what they are but for what they signal we may become. Seeing fundamental change in the displacement of the existing corporate edifice by “open forms” and “networked structures” may mistake the chrysalis for the butterfly.