CO.CREATE: What do you think are the most common creative roadblocks in corporate America?
Where to begin? I think the typical failures of corporate innovation are nicely illuminated by the work of Geoffrey West, a theoretical physicist at the Santa Fe Institute. He likes to compare cities to corporations. At first glance, urban areas and companies look very similar. They’re both large agglomerations of people, interacting in a well-defined physical space. They contain infrastructure and human capital; the mayor is like a CEO.
But it turns out that cities and companies differ in one very fundamental regard: Cities almost never die, while companies are extremely ephemeral. As West notes, a cataclysmic hurricane couldn’t wipe out New Orleans, and a massive nuclear bomb failed to erase Hiroshima from the map. In contrast, the modern corporation has an average lifespan of only 45 years. This fragility doesn’t just apply to small companies: Only two of the original 12 companies in the Dow Jones Index are still in business, while 20% of the companies listed in the Fortune 500 disappear every decade.
This raises the obvious question: Why are corporations so fleeting? According to West, the main cause is that per-capita innovation and productivity shrink as companies get bigger. In other words, as the number of employees grows, the amount of profit and number of patents per employee is diminished. Cities, in contrast, exhibit the opposite trend: As cities get better, everyone in that city becomes more productive and creative, which is why big cities generate more income and patents per resident. According to West, this decrease in per capita production, at least in big companies, stems from the fact that most big companies inhibit our natural creativity. Instead of imitating the freewheeling city, overflowing with knowledge spillovers, these businesses minimize the very interactions that lead to new ideas. They erect walls and establish hierarchies and tell people to practice brainstorming, even though that doesn’t work. They keep people from relaxing and having insights. They stifle conversations, discourage dissent, and suffocate social networks. Rather than maximizing employee creativity, they become obsessed with minor efficiencies.
That’s a long-winded way of saying that corporations have a lot of room to improve. But I think West has a powerful point: When in doubt, imitate the city.
To read the full interview with the author Jonah Lehrer visit Co.CREATE