With great power comes great responsibility. Famously said by Spider-Man’s uncle, but dated to ancient times, this motto, in my opinion, should be part of every corporation guideline. Reflecting upon the idea that, as organizations grow and become large, the crux of the navigating challenge is practicing considerate majesty, I first think of the complexities of our times and the challenges we must face every day. I believe everyone should always be considerate of others and the environment. On the other hand, I wonder how feasible and to what extent it is possible to be tactical and strategical with so many uncertainties. Aren’t we, as individuals, most of the time reacting to the changes around us? When we speak of companies with their internal complexities, can a group of people consistently respond in unison to the changing environment according to a strategy in the best possible way? So, if I were to rewrite this statement in my own words, I would say that organizations must follow their north star and pave their own way, respecting their surroundings and reacting to the turbulences that arise.

In my last reflection, once again comparing organizations to living organisms, I went beyond Darwin’s dualism observations and proposed that the environment has as much influence on the organizations as the organizations have on the environment. As individuals control organizations, there are three distinct interactions: individuals and organizations, organizations and environment, and environment and individuals. Although I focus my reflection on the relationship between organizations and environments, we cannot disregard the fact that individuals are the essence of organizations and the institutions that compose the environment. To reuse my previous analogies, we can say that all living organisms that constitute the environment, be it market or non-market, have souls.

Usually, when we think of the relationship between the environment and organizations, we think of companies trying to defend themselves from the government or other powerful non-market institutions, or even catastrophic changes such as the great depression, wars, or the pandemic. When looking at stable environments, new companies and smaller organizations are forced, due to their size, to use three out of five strategies Christine Oliver describes in her paper, acquiesce, compromise, and avoidance. When they defy, they are often dismissive, whereas their size makes efforts to challenge or attack often useless. Unfortunately, the power relationship is not favorable to smaller organizations unless a significant change in the environment creates imbalances that permit rapid growth. In such a case, when we think of a changing environment, if organizations are in such a position that the only choice is to react, this organization is in danger of narrowing its strategic view. As prepared as an organization could be, it would be challenging to maintain a strategic plan as there is a limit to what we know and to what we know we don’t know (uncertainties). I believe the difficulty arises from what we don’t know we don’t know. Or, as the former secretary of state Donald Rumsfeld once put it, the unknown unknowns. A strategic company, in my opinion, must expand its view of the environment and be aware of the signs that preempt change. Only in this condition, does the organization have the opportunity to position itself and manipulate the environment, if necessary, to its advantage as other forces are still weak or nonexistent. We can find in history examples of companies that were in a position to influence or control the environment to their advantage. Whether GE helps set the standards of electricity distribution, Nokia created the digital cellphone infrastructure in Europe, or as Oliver exemplifies, accounting firms self-regulating to avoid being regulated by the SEC. In these cases, organizations were able to grow and maintain a competitive advantage for an extended period while being protected from non-market threats. 

I started this essay with the quote: “With great powers come great responsibility.” When reflecting on the growth process and the powers that may arise from it, I start to look at organizations, not from the view of an organism threatened by the environment but on how this growing organism starts affecting the environment and the consequences powershift might generate. If we revert to ecology, we are all well aware of the repercussions of altering the population of a predator or even introducing a new species to a balanced ecosystem. The difference is that natural ecosystems tend to maintain equilibrium unless an external force acts upon them. In the case of market ecosystems, according to Fleck, organizations must create or perceive imbalances in order to grow. Organizations that can continually generate imbalances tend to develop a sustainable competitive advantage and, as a result, continue on a growth trajectory. Although it is natural to seek growth, organizations should be aware of their environment. Companies must understand that by seeking growth without regard to their surroundings, they can break the ecosystem, which can cause long-term harm even if the organization has short-term benefits. From Fleck’s chapter 5, “The Navigating Into The Environment Challenge,” I find interesting the paradox created by growing and controlling the environment. We tend to think that total control of the environment can cause harm to competition, and this, in turn, will affect the market, the customers, and even our natural environment. What some tend to disregard, and Fleck points out that called my attention, is that total control of the environment and lack of competition can create a forgiving environment which in turn may cause this same organization to stop innovating as there is no market or environmental pressure. A great example can be drawn from GE’s relationship to labor unions. With its size and power, GE did not need to consider its relationship with workers. Only after a massive strike, was GE forced to change its approach and establish a stronger relationship with labor unions. In other words, without the pressure to innovate and change, an organization may decline and deteriorate, creating opportunities for disruption from a different organization. One could counterpoint this argument by saying that individuals within organizations will always desire to grow, and even if there is no competition in the environment, there will always be competition within the organization. In addition, people’s entrepreneurial spirit will create this internal imbalance to foster growth. I argue that this wouldn’t be the moment an organization stops value creation to focus only on value capture, as most of the time, economic gain is the measurement for growth. In disregard to the possible longevity of a company, people are primarily interested in short-term results that reflect directly on their actions. If so, is this organization further harming the environment and its ability to sustain a long-term healthy existence?

To conclude, I go back to my rewritten statement: “Organizations must follow their north star and pave their own way, respecting their surroundings and reacting to the turbulences that arise.” A strategic company looking for a long-term healthy existence must understand where it is heading and that challenges arise as they are part of the journey. These challenges can come in many shapes and forms, and to those, it must react without losing focus of its goals and objectives. The further an organization can see, the earlier it can adjust its course and avoid harm. An organization that respects its environment and moderates how it exerts force to gain sustained competitive advantage will maintain its legitimacy. In other words, it will genuinely be Majestical!

Credit: The original work for this article was done for ADM730 – Fundamentals of Strategic Thinking @ COPPEAD – Universidade Federal do Rio de Janeiro in June 2022

References:

• Oliver, C. (1991) Strategic Responses to Institutional Processes. Academy of Management
• Review, 16(1): 145-179. Fleck, D. (2021) The Navigating into the Environment Challenge. Book Chapter 05 (draft).