How Can Companies Copy Cities Successfully?
Jonah Lehrer was an entertaining presenter at the 99% Conference, and he flagged some particularly fascinating research, from Geoffrey West, of the Santa Fe Institute. A theoretical physicist, West’s interest in “general scaling phenomena” led him to study cities. Lehrer then outlined the difference between cities and companies, which might seem rather dull but was actually quite thought-provoking. For instance, Lehrer described, while the two might look somewhat similar on the surface, there’s one critical difference: cities never die. “They’re immortal. You can nuke a city and it’ll come back. You can burn it to the ground and we still have San Francisco.”
Companies, in contrast, die all the time. Lehrer cited a fact we’re all too quick to forget (or fail to remember) when we’re bemoaning the death of another industry icon: the average lifespan of a Fortune 100 firm is only 40 years; 25% of Fortune 100 companies die every decade. And when they’re gone, they’re gone.
According to West, the reason for this is that as cities get bigger, everyone within its confines becomes more productive. “That’s why urbanization is the great theme of the 21st century,” said Lehrer. “We cram ourselves together; we have more ideas.” The design of the city keeps us all on our toes.
Companies enjoy the opposite effect. As a company gets bigger, everyone becomes less productive. Bureaucracy happens; meetings happen; management happens. There’s less profit per employee; they’re no longer able to innovate at the same rate; people get in the way of creativity and innovation.
"The magic of cities is that they’re freewheeling and chaotic," concluded Lehrer. "It’s a bunch of strangers bumping into each other. Cities don’t try to maximize creativity which is precisely why they do. Companies on the other hand micromanage, we chain ourselves to desk, we don’t drink beer in the afternoon, we brainstorm when we don’t want to brainstorm."
I love this insight. Now the question becomes: how can companies better imitate cities?
[Photo: Julian Mackler]