Corporate Ageing

There is a revolution happening at GE. And Jeff Immelt is at the helm of it. Why is this important? It will be evident as we discuss “Corporate Ageing” (Don’t look up the term up on google yet. I coined it a few years back). Whats corporate ageing? Well, the concept is simple. When you start a company aka Startup; VC’s ask you if your core team members have worked with each other before, that’s the first stage ‘Ignorance’, no one knows each other or how things will work out, what to do and what not to do, or how to do things. The company grows through it to a stage where its ‘Innocent’ where leaders in the company usually throw the dice and keep their fingers crossed hoping that things would work out well, so much so for their corporate strategy. Then the company becomes ‘Calculative’ where some best practices are documented, they know their business and stick to things that work and they can predict outcomes to a certain extent. The last stage is ‘Innovative’ where the company takes risks and innovates. The only point to note here is that the transition from Calculative to Innovative is primarily by crossing a monetary threshold.

In big companies you can say that the Corporate Division is Calculative but the Engineering is Innocent. You can place different verticals, sister companies, divisions on different points on the timeline. This also lets you understand why divisions between companies don’t gel together. Because their placing on the Corporate Ageing timeline is different, which shows their thought process and behavioral traits. But that’s the matter for a different article.

Lets see what happened with Google as an example. When Larry Page and Sergey Brin started writing their search engine and trying to raise capital. They were Ignorant about everything. They were Innocent till the stage when they tried out Adsense. And after it worked out they became Calculative. Then they Head Hunted Eric Schmidt from Novell who pushed Google to Innovative which also came about with $14bn per annum influx of money from Adsense. Now Google is an Innovative company. (Please don’t read this by comparing number of patents filed by Google over the years, this is on the Corporate Ageing timeline, in terms of corporate culture)

Lets see whats happening at GE. When Edison started work on the light bulb he was Ignorant. GE evolved through that becoming Innocent and staying Calculative with their Six Sigma methodology for the most part of the century. That way GE is the slowest Ageing company. Jeff Immelt is pushing GE through Innovation. They have long crossed the monetary threshold but GE is a slow growth company (In terms of Corporate Ageing).

There are a few reasons for that Leaders cannot be calculative and innovative at the same time. I say that and Jeff agrees with that from what I know. When a company becomes a company of immigrants and learns to work with that and has the money it suddenly becomes Innovative. Think of it this way when the company has accurate measures to measure everything from a pin moving on the production floor to quality and inventory. It is suddenly over measuring for its own good. It is a bottleneck that prevents leaders from risking anything to avoid going out of bounds of the Organizational Metric Boundaries. This blocks innovation. Suddenly when you have enough money and corporate immigrants they break through the threshold barrier and kick start innovation and risk taking.

More on Corporate Ageing in a later article.