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ARTICLE NOVEMBER / DECEMBER 2014
 
Markus Anschober on ...
 

COMPANY DNA:

AN OVERRATED SUPERSTAR?

Or: Why we need to understand the effect of the corporate membrane and why this helps in transforming a business model into a coherent, unique and sustainable business logic
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The strategic direction of companies is increasingly focused on the significance of DNA as the central element of success. What they are referring to is the intrinsic logic that makes a company unique and expresses the specific architecture of the business model. Yet this "determinist" model – borrowed from biology – could imply that companies are only open to a narrow gauntlet of strategic options. So is business making the same mistake as "Darwin's heirs", who put too much emphasis on DNA, with its presumably "rigid" hereditary disposition? And all of this despite the fact that epigenetics – a young, specialized field of biology – has made some increasingly intelligent findings? At this point we know that, in addition to hereditary information, there is another, higher-ranking force involved in defining character, and thus in influencing the overall development of a cell's makeup. A "core analysis" for better strategy work...
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Darwin's heirs: on the trail of hereditary influence…


In his book, "On the Origin of Species", Darwin wrote that the factors of heredity are passed on from generation to generation and that they determine the characteristics of their descendants. Darwin's influence was so massive that science charged headlong into the discovery of these hereditary forces – the material that presumably single-handedly controls our very development. In 1944, when it was revealed that our hereditary information is indeed contained in a molecule called DNA, it didn't take long before it became science's little superstar.

In the meantime, however, the most recent findings in epigenetics have shown us that there is another, superordinate power that can either activate or deactivate hereditary information within a gene, strengthen it or suppress it, and thus dramatically influence the development of a cell. This leads us to the question:


Is the DNA of a company an overrated superstar?


Like in a cell, company DNA provides a guideline for "building" products, services and processes that are based on a certain logic. After all, these things shouldn't be left to chance. They should follow some sort of higher plan. "Production downtime" would therefore be paramount to death not only for a cell but also for a company. In the end, we could say that company DNA performs a basic function.

Yet it appears to be overrated, especially considering that another element plays a vital role in cell development: the cell membrane. In particular it is the protein of the membrane that has enormous influence on the definition of features within DNA. Should we therefore ALSO put the cell membrane under the microscope?


The cell membrane: interface with the outside world


Every cell is contained within a membrane. It is like a skin that both PROTECTS it from the world outside as well as OPENS it to the exchange of materials and nutrients.

The latest discoveries in epigenetics show that it is precisely this interplay between boundary and portal that is so vital to the way in which a cell reconciles itself with the various factors of heredity. The amazing thing about the cell membrane is that while it closes itself off to inconsequential information it also opens itself up to relevant impulses for which it selects appropriate behavioral responses from within. We could therefore say that, on the one hand, this systematic opening to the outside world combined with the ability to recognize and accept relevant external influences is a requirement for survival, and on the other hand the internal processing of this information remains the primary secret for (continued) development.

The membrane-protein group plays a decisive role in this mechanism. On a fundamental level we can distinguish between two functional groups of membrane-proteins:

  • receptor proteins, which are responsible for recognition
  • and effector proteins, which are responsible for responses


Receptor proteins can be compared to a smoothly operating trend and market research department!


Some of these receptors are directed inward in order to monitor the inner workings of the cell. Others are tuned outward in order to receive signals from external sources. They work like perfectly trained "nano antennas".

How many companies could claim to have such a superbly effective group of specialists like this? Indeed, which companies have specialists working with precision tools (trend radar, visions of the future, etc.) that can identify sustainable changes that are necessary for the company as well as communicate them in an understandable way to the internal logic of the organization?

These receptor proteins are of course striking in their capabilities, but on their own they are unable to exercise influence on the behavior of the cell. The receptors only allow the cell to perceive signals from the outside. What is missing is the appropriate response. This is where the effector proteins come into play.


Effector proteins are the agents of change who drive the necessary transformations in the cell.

Effector proteins are the perfect partners for the receptor proteins. They use sophisticated mechanisms to steer the cell in the right direction based on incoming information. These are the real experts!

Transforming important signals and impulses into valuable behavioral changes is also vital to any company. At the very latest, once discrepancies have been found between the outside world and the inner logic – the business model – it will be high time to react. Ideally, however, the change will be introduced far earlier. Yet many companies stick with their existing business model – their "activated" DNA segments.

In phases of outward or inward "changes of milieu", the more specific goal is to find the mechanism of recognition and reaction, which acts like a switch that translates the signals from outside into the corresponding behavior. The purpose is to examine what potential for success (company "genetics") needs to be turned on or off in order to make the "business model" more attractive again.


An example to illustrate it more effectively…

We recognize a passionate automobile manufacturer on the "genes" of its corporate DNA. Its active genes, i.e. its potential for success, have been reacting for decades to the requirements of the market: more demand for cars (second and third cars) and untapped markets to address, especially in developing countries. All of its genes are designed to produce increasingly clever automobiles en masse. The organization is perfectly tuned for that objective, from its market positioning and portfolio of products to its sales and profit concepts and value added logic. And everything runs smoothly until the outside world changes: dwindling raw materials, shifting customer needs, changing environmental requirements and an evolving sense of mobility.


At this point it is vital for a company to determine whether it thinks and works in terms of business models or business logic.

Every company has its own fundamental business model that it attempts to assert on the market. Yet not every company has its own business logic. Having a business logic means having a certain company architecture that is constantly developing in alignment with the outside world and in the direction of UNIQUENESS, COHERENCE and SUSTAINABILITY – it even makes radical changes to do so.
That means: "determining" the fate of all participants for the long term. So the question is as follows: How does the company react to input that has already been received and filtered from the outside? Which outside signals will ultimately become "switches" in order to change the behavior of the company?

The signs of the times want to be seen, understood and then correctly interpreted and implemented in the context of company activities.

Automobile manufacturers that have no "intelligent cell membranes" with receptor and effector proteins will face problems sooner or later. At the very latest when they ignore the fact that their environment is changing around them. However, when a company is able to recognize that changes are taking place, the "receptor proteins" begin initiating a movement to allow the received impulses to enter the company. The next step involves the "effector proteins". A reaction begins; perhaps an innovation of some sort in the automobile industry. It could be an evolutionary one, a radical one or a disruptive one such as a car sharing model or e-mobility. To express it in epigenetic terms: Certain impulses could release a new strand of DNA that no longer says, "I am an automobile manufacturer", but instead "I am a provider of mobility".

The perception, interpretation and reaction should produce a mechanism, a switch inside the company that translates the signs of the times (and of the future) into action and inspires the corresponding changes. Here it is vital that existing potential is switched on or off in time. The emphasis here is IN TIME. Because…


The future reveals itself in many ways – often years ahead of its arrival.

Still, we have to be ready to see it and think in advance for the company. Companies that are not ready will have difficulty finding the path to a successful future. They will continue to optimize existing business models until they are squeezed out of the market – until the cells die. Thinking in terms of business logic can provide guidance and inspire hidden potential to emerge and create something NEW. It sounds simple, but it requires intelligent, company-specific strategy work. In addition to the DNA, it requires the appropriate awareness and, in particular, a company membrane that acts as a relevant interface with the outside world that is positive for "inner" development. //

Markus Anschober, IMP

 

 
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ARTICLE 11-12/2014
Company DNA:
An overrated
superstar?

 

 

 

 

 

 

 

 

 

 

Markus Anschober
Innovative Management
Partner


IMP Managing Partner
Director IMP Austria

CONTACT
Angelika Moser
a.moser@imp.at
+43 (0) 512 580010


 

 

 

 

 

 

 

 

 

 

 

 

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