How to Discover Your Company's DNA

 

First published in Harvard Business Review by Mark Bonchek

 

The term “company DNA” is sometimes used as a shorthand for an organization’s culture and strategy — a metaphor for what makes it unique.  But there may be more to the metaphor. Understanding your company’s DNA can help you know what you can and can’t do, and how to achieve agility and authenticity in a changing world.

We know from biology that DNA contains the instructions an organism needs to develop, function, and reproduce. It is formed at conception and does not change. However, the same DNA can express itself in different ways based on one’s environment. It’s the reason identical twins have different fingerprints. In this process, called “expression,” the instructions in the DNA are turned into proteins and other cellular products.

Does biology inform business? It’s happened before. The language of ecosystems redefined our understanding of competition by viewing markets has habitats. Our understanding of organisms might lead to similar insights about organizations.

  • For example, DNA is formed at conception. Is that the case for companies too? Is a company’s uniqueness set by the founders’ vision and values?
  • Second, DNA does not change over the life of an organism. Is that true for a company? If so, does it limit the degree to which it can adapt and evolve?
  • Third, DNA expresses itself differently based on its environment. Might a company have the same DNA for its lifetime, but be able to innovate by expressing that DNA into new business models, organizational designs, and offerings?

These questions will clearly take a lot more research than this article. But the following stories suggest further exploration is warranted.

Consider Pokemon Go, the viral sensation of Summer 2016 and the most popular smartphone game in history. You probably know about the millions of people who gathered in public spaces trying to “catch” Pokemon characters with their phones. What you may not know is the origin of Pokemon.

The founder of Pokemon, Satoshi Tajiri, grew up outside Tokyo. His childhood hobby was collecting insects. The other children even called him “Dr. Bug.” As urban expansion paved over fields and forests, Satoshi’s insects disappeared. When Satoshi later developed an interest in video games, he saw a way to recreate his childhood experience of catching and collecting elusive creatures. For many years, this vision was played out on desktop computers. With Pokemon Go, Satoshi’s original vision remarkably came to life in the outdoor environments where it was first conceived. One might say that the company DNA of Pokemon is “collecting creatures.”

Interestingly, Pokemon Go was produced by a company called Niantic, whose founder, John Hanke, created the company that became Google Earth. The DNA of Niantic might be described as “mapping places.” Put “collecting creatures” and “mapping places” together, and you have Pokemon Go. Conversely, it would be hard to imagine 

Mojang (creators of Minecraft) or LEGO, both of whom have a DNA of “building worlds,” having created Pokemon Go.

If we continue with the idea that DNA is set at the conception of the company, does it actually create a limit on the ability to adapt and evolve?  The examples below seem to suggest that a company must stay true to its DNA, but has a lot of room to express that DNA in new ways whether in external strategy or internal management.

To illustrate this, consider the paths of two competitors: IBM and HP. Both struggled in the 1990s, but one re-embraced its founder’s vision and values while the other rejected them.

The leader who defined IBM as we know it was Thomas J. Watson. It was his vision to move beyond “office appliances” and create the International Business Machines Corporation. His mantra was THINK. It was more than a slogan. It was a way of doing business and a credo for the company. Watson’s vision was to use thinking to create machines, and to use machines to enable thinking.

IBM had a near death experience in the early 1990s due a series of bad business decisions. But in the wake of that crisis, IBM returned to its DNA of “think.” IBM’s game-changing laptop was the ThinkPad. One of its most successful marketing campaigns was “Let’s Build a Smarter Planet.” And its current focus is on Cognitive Business, led by the machine learning technology called Watson.

IBM’s competitor, HP, was founded in 1939 by Bill Hewlett and Dave Packard in a one-car garage in Palo Alto. The “HP Garage” is recognized by many as the birthplace of Silicon Valley. (The garage is such a symbol of the entrepreneurial spirit that other tech companies have invented stories about how they too were started in a garage.)

As they outgrew the garage, Hewlett and Packard sought to maintain that entrepreneurial spirit on a larger scale. This became the “HP Way,” one of the first examples of empowering employees, decentralizing the organization, and tying pay to performance. Jim Collins has written of Hewlett and Packard that “their greatest product was the Hewlett-Packard Company and their greatest idea was The HP Way.”

Starting in the late 1990s, a series of CEOs saw the HP Way as a liability rather than an asset. They abandoned the HP Way and replaced decentralized entrepreneurship with centralized control. The mindset of the garage was not only abandoned, it was destroyed. When HP merged with Compaq in 2002, Bill Hewlett’s son Walter protested that “the fundamental mistake … was the perceived need to do something with scale instead of succeeding the way HP has in the past.” Only recently with CEO Meg Whitman, has HP begun to re-embrace the HP way.  In 2012 she announced to all the employees a re-expression as “The HP Way Now.”

This story suggests that there may be a limit on corporate malleability. Strategy must be aligned to the company’s own DNA as well as the marketplace.  Transplanted organs are rejected if there isn’t a genetic compatibility between donor and recipient. Similarly, one can’t simply transplant a best practice from another company. It needs to be consistent with the DNA of the company.

At first glance, this seems to pose a problem. In today’s markets, it’s more important than ever to adapt and evolve.  If companies are limited by their DNA, is it possible to change in a way that keeps them competitive?

In biology, there is a difference between genotype and phenotype.  The genotype is the underlying DNA or instruction set for a physical trait, also called a phenotype.  Sometimes the genotype determines the phenotype regardless of the environment, as in the case of hair color. But sometimes there is a range of how the DNA can be expressed, what’s called “phenotypic plasticity.” For example, when baby newts sense the presence of predators as they are growing, they develop bigger heads and tails, which increase their chance of survival.

In business, some companies display this same type of plasticity, finding ways of responding to new environments by expressing their DNA in new ways. Pokemon Go is an example of expressing the underlying DNA of “collecting” in a new environment on the smartphone. Similarly, IBM has gone through multiple iterations of taking the underlying DNA of “thinking machines” and expressing it across mainframes, PCs, cloud, and now artificial intelligence.

Today, GE is looking to make a similar transformation, re-expressing Edison’s DNA of “invention” into the new market for the Industrial Internet, less focused on manufacturing and finance and more on software and analytics.

How do you discover your own company’s DNA? Start digging around in the company archives, talking to early employees and reading the corporate history. Look to the original vision and values of the founders. How did they see the world? What problem were they out to solve? What was their core insight about human behavior and the creation of value?

Once you’ve found the DNA, map it to the company’s past and current business.  Where is there stronger or weaker alignment? Finally, as you consider future strategies, how can you increase your “competitive plasticity” — the ability to express your DNA in new ways that create unique value and sustainable advantage.

It’s not a coincidence that the origin of the word company is “companion”, corporation is “body”, and organization is “organ.” Just as we talk about human development as a combination of nature and nature, perhaps the growth of organizations follows a similar path.  As leaders we spend most of our time thinking about how to nurture and shape our companies.  It’s time we also paid attention to their intrinsic nature and how we can cultivate their full expression.