Enterprise stability machines

The centre of every business ecosystem I have been working on recently, is the enterprise itself.

So why do enterprises exist? What value does to they create for our economy and society? What value do they create for their own stakeholder groups?

Now, when I ask this question of executives, they either tell me that their enterprises exist to make profits, or for growth. However, the profits go to shareholders, and main reason growing is important to managers is to ensure their enterprises continue to provide better career paths.

My opinion is that, when reduced to fundamentals, enterprises exist to create stability.

They are machines that swallow money, resources and labour and manufacture stability. They do so because all stakeholder groups values this stability, although for very different reasons.

The way each stakeholder group benefits from enterprise stability is summarised below:

So what use is this model? I think it can be used  to predict what forces push and pull enterprises, and so can be used to help understand how stakeholder groups will react.

An enterprises shareholders will do their utmost to protect their investments. Suppliers who do not get a stable market, will raise prices and diversify their channels. Faced with a relative loss of service quality, customers will reconsider their buying habits, or agitate for lower prices. Threaten any manager’s career path and things will get nasty. Give employees insecure employment and watch their loyalty disappear.

As stability machines, a well-functioning enterprise will react to try to stop all of the above happening.

Instability in Australian enterprises

So how are Australia’s enterprises functioning? On balance pretty well, but I find they are consistently facing challenges in two areas.

Firstly, as I have written elsewhere, the entire customer interface is evolving, and as you would expect from ‘stability machines’ enterprises are struggling to keep up.

Secondly, Australian enterprises have failed to keep their compact with staff; who expect their livelihood to be sacrificed to either technological progress, or cheaper international labour.

Stability and innovation

Most enterprises have embraced the cult of innovation. Don’t believe me? Take a cruise though a dozen enterprise homepages and see how many describe themselves as ‘innovative’.

It occurs to me that innovation and stability are contradictory goals. So which of these goals, being innovative or being stable wins out. Given the vested interests in stability I have outlined above, it is no surprise that 'stability' fears 'innovation' above all else, and will go to great lengths to stamp it out.

Most enterprises are investing in innovation departments, labs and quasi-independent start-up incubators. It will be interesting to see if these can produce real enterprise shattering innovations, or will be co-opted as part of the stability machine.

Hang on while I get some pop-corn.

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