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The Journal

In Turbulent Times, Companies Can Look to Cities For Survival Strategies

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6 minute read

Organizations have long been engineered like fine-tuned machines: They allocate processes and resources (sometimes human) into specializations, each churning and passing their output to the next group. This efficiency has allowed companies to scale, prevent competitors from entering the market, and dominate their industries.

But in organizations wired for efficiency, it can be difficult to quickly adapt—a potentially fatal shortcoming in a world where disruption and technological change are constant. We often see these organizations unravel and reassemble abruptly, resulting in jarring employee experiences and decreased productivity; or change course entirely, building something new that causes more damage than value. As a result, companies are dying more quickly than ever: Today, the average age of an S&P 500 company is less than 20 years old; in the 1950s, it was nearly 60.

Given all the factors threatening the vitality of companies, what factors can instead contribute to their longevity? One source of inspiration comes from cities—and the planning and development that underpin their resilience. While the best cities do seem to function like fine-tuned machines, their systems are in fact much more adaptable, flexible, and resilient—more like a living organism than a machine. In his book Scale, theoretical physicist Geoffrey West asks, “if cities are indeed some sort of superorganism, then why do almost none of them ever die?“

The reason is that they learn to evolve in response to changing conditions—a quality that is equally critical to companies. Every business leader stands to glean some adaptive tools by taking a page from urban leaders who’ve deployed adaptive responses to their local challenges.

The “just enough” strategy

After the massive 2010 earthquake destroyed 80 percent of buildings in Iquique, Chile, architect Alejandro Aravena was tasked with developing a new city plan for Iquique. His solution was unexpected: he designed a replicable house that would be half-complete when handed over to the inhabitants. On one side, the home would be move-in ready, sufficient to meet the legal requirements for low-income housing; on the other side, a vacant frame would give residents agency in determining how their own home would ultimately be. Concrete foundations, plumbing, insulation, and electricity were all provided for inhabitants, who could expand on the basic design by taking workshops and buying building materials through the city. This design gave residents a starting point to design their future, rather than a mandate. In the end, they each owned their homes.

This kind of “just enough” strategy could help businesses adapt, too. In times of change, organizations tend to set new visions in multi-year timeframes — forecasting three, five, or even 10 years ahead. Leaders develop detailed road maps explaining how every part of the organization must change in order to reach these goals. But these macro-level and long-term mandates often don’t feel tangible or attainable to employees, especially when they’re asked to report on progress every three months. This results in a lack of momentum, support, and internal innovation.

Instead, organizations can think about creating a “minimum viable organization” (MVO)—the basic foundation and tools needed in order for talent to step in to help create and shape the company’s future innovation and growth.

Zalando, Europe’s largest fashion retailer, is one of the companies that has successfully employed this approach. To more quickly adapt to industry changes, and carry out their new vision to reimagine fashion for the good of all, IDEO designers and Zalando employees established a dedicated product innovation team and lab. Rather than devoting months to strategizing or establishing an entirely new innovation department, the lab offered the MVO conditions to yield faster, more tangible progress on a long-term vision that the company could internally rally around and take to the market. In the three years since its launch, the lab has built and sent to market multiple new products like Seen At, a mobile app that allows members to upload street-style photos; and Collabary, a digital tool that connects online fashion influencers with brands.

A nimble plan for scaling

Curitiba, Brazil, is considered one of the best examples of urban planning in the world. When the city’s population exploded in the 1960s, residents worried that overcrowding and traffic congestion would threaten the city’s history and character. To address the issue, architect Jaime Lerner rolled out the Curitiba Master Plan. The plan introduced a public bus system, and required all new development to be concentrated along the bus routes to maximize use. He also introduced the Trinary Road System, which features dedicated bus lanes at the center of the thoroughfare, with parallel streets on either side for private vehicle traffic.

Rather than primarily investing in new infrastructures, Lerner focused on innovating within existing conditions, focusing on roads, public spaces, and downtown areas. As a result, he designed a system that facilitated the city’s scale while still preserving its culture.

What can businesses learn from Lerner’s approach? When organizations scale, many companies rely on structural reorganization to address challenges with stakeholders, process, and other complexities. But while that approach adjusts the high-level org chart and shifts reporting lines, it does not change informal human dynamics, relationships, and emotions, which largely influence workplace culture, engagement, and productivity.

In his TED talk, designer Alastair Parvin tells the story of an architecture firm that was working with a school to help address narrow hallways in light of a growing student population. In between classes, the corridors became congested, resulting in difficulty monitoring student behavior and bullying. But rather than expanding the hallways or building a new space for the school, the firm redesigned the school bell system. “Instead of having one school bell that goes off once, have several smaller school bells that go off in different places at different times, and distribute the traffic through the corridors,” says Parvin. “It solves the same problem.”

Like Curitiba, organizations can shift the way they operate while maintaining existing structures, rather than creating entirely new ones, which often disrupt workplace culture.

Taking a “regional” approach

Cities also offer guidance for how to work with partners—and even competitors—to achieve a big, important goal. As a part of the Helsinki City Planning Department’s 2009 Strategic Spatial Plan, the city decided to think about serving the needs of the whole region, rather than those only within the city’s boundaries. This meant that Helsinki had to redefine its existing economic, social, and environmental relationships, changing who it served. The city also formed new principles and policies for key issues like business activities, housing, and the city landscape, enabling development beyond Helsinki’s boundaries.

Most companies intentionally define clear boundaries and relationships between themselves and the outside world. To a certain extent, this is expected: Nearly every business school student is introduced to Porter’s Five Forces, a popular model used to inform corporate strategy. As part of the framework, future managers learn that by reducing the number of competitors in the market, a business can ensure long-term dominance. But as a result of adopting traditional business frameworks like Porter’s Five Forces, organizations naturally view their relationship to other industry players as competitive or transactional. This creates boundaries between a company and those outside its walls.

Like Helsinki, organizations are rethinking the boundaries of their responsibility by working to address big issues like climate change. Despite being considered industry competitors, leaders from Danone, Rabobank, Nature’s Path, McDonald’s, and Starbucks recently joined forces through CoLab, IDEO’s platform for collaborative impact. During a week-long design sprint, they worked side-by-side to develop solutions, emerging with one concept that helped food companies access better ingredients; and another that used a circular model to offer food delivery to apartment dwellers.

These companies recognize that there’s an opportunity to both stay ahead of the market and generate broader impact by looking beyond their organization’s own walls and intellectual property. This requires companies to form new collaborative relationships to push industries forward together.

While companies can still benefit from using Porter’s Five Forces—and even sometimes from structural reorgs—fresh, innovative thinking is required to address the complex challenges businesses face today. To that end, cities can serve as inspiration for organizations navigating change, helping them to rethink the efficiency-driven approaches that once enabled success, and orient instead toward nimble, flexible, human solutions.

Illustrations by Ryan Johnson

  • Nazlican Goksu

    Principal Designer, IDEO San Francisco
    Nazlican is a Design Researcher particularly interested in systemic challenges, especially those that involve urban design. She finds inspiration from cities and public randomness. Born and raised in Turkey, she now calls 4 different cities “home.”
  • Mathew Chow

    IDEO ALUM, IDEO San Francisco
    Mathew is based in San Francisco. Throughout his career in real estate development and organizational transformation, he has worked on understanding and transforming complex human networks at scale.
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