Why cities continue to thrive but companies die sooner? Answer lies in Agile!



While recently reading interesting work on Cities and Organizations by Geoffrey West (a distinguished professor of theoretical physics and biology at the prestigious Santa Fe Institute) I learned that cities and organizations draw lots of in parallel but still cities thrive thousands of years and companies cease to exist only in few years

  • Both cities and companies, ultimately, aim to accomplish the same objective: to maximize the value for their stakeholders, whether they are city dwellers or corporate shareholders.

  • Average age of Fortune 500 companies is decreasing from 60 years in 1958 to around 15 years today

  • Almost 1/10th of public companies fail every year four fold increase from 1965 - accordingly Boston Consulting Group Study

  • Cities continue to grow in-spite of all geo political challenges, turmoils and natural disasters, every week 1 million people are being added to cities

  • Companies are typically managed through a top-down, controlled structure where leaders mandate what is to be done and the general manner in which it should be done.

  • Cities, by contrast, are governed through a loose sphere of influence, in which leaders rarely control (yet greatly influence) citizens’ behaviors through policies, incentives, and boundary constraints.

  • As cities grow, their productivity grows in a superlinear fashion. The productivity curve of companies is in fact sublinear, where productivity decreases per employee in areas such as innovation (measured in patents per employee), profitability (measured by revenue per employee), and productivity (measured in output per employee).

  • By creating boundaries within which people can work together toward a common goal, the cities’ leaders can influence—rather than control—an outcome, while allowing for creativity, collaboration, and serendipity to naturally happen.

Reference: Unlocking Agility by Jorgen Hesselberg

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