DNA and Lean Mass: new business concepts ?

Umair just got his new spot at HBSP and started off with a great post on companies DNA.His DNA term and examples have been met with various reactions, judging by the comment. I’ll propose something: complement the DNA concept with the “lean (body) mass” one. Let me explain:DNA is a great concept but has its limitations, specifically:

• Leaves leadership (at all levels) out of the equation - leadership matters and can change radically a company
• Seems to ignore the —admittedly few— successful turnarounds of slowly decaying companies (lots of this actually happens with small and midsize organizations)
• Focuses on competitive advantages but leaving out the past, and the market dynamics - while I do agree with Umair that DNA focuses on the crucial part of strategy, we still benefit from looking at the whole picture

So let me push the DNA metaphor further and propose to characterize companies not only along their DNA but also along their lean body mass (I’ll use the term lean mass (LM) for companies), which can be very roughly described as a ratio of muscle mass/fat mass. Two interesting facts about LM:

• It is one of the best indicator to predict mortality: the more you have lean mass the better it is, the less fat also the better of course
• It’s very difficult to gain: no matter what your DNA and physical qualities, you have to train and exercise in the right ways to gain LM

We can then push the biological metaphor further and use LM to describe the sum of the past strategic decisions made by a company. You made a good of good strategic moves that created rents for you, you gained muscles; you made lots of bad moves, you built fat.The first key characteristic of this concept is that it is dynamic: you can very significantly change your LM over time. Your DNA is what will determine the timeframe, but you can always improve by training and lose when eating at McGarbage everyday.

The second key element of it is that leadership greatly influences how hard and how frequent you train. Sure, each leader still has to do with the DNA he finds at his organization, but he can impulse a great deal of change too.

The third element actually links back to the MSFT example taken by Umair in both his post and video answer to a reader (that feature is cool!). When looked only from its DNA perspective, MSFT is dead. But, hey said Rao “its business apps, server apps are growing nicely, and its desktop dominance is inplace for next few years. Microsoft in decay seems like a broadbrush to me.” That’s right, MSFT built a lot of Lean Mass over the years, and that’s what explains its position. However, like the dinosaurs, it’s condemned by its DNA. The sum of its strategic moves (YHOO deal, fat or muscle ?) will now determine how quickly it’ll die.So, at a framework level we get:

• DNA: intrinsic capacity to innovate, perceive competitive advantage in the edge economy, and execute on them
• Lean Mass: sum of all the past strategic decisions, along with their consequences, a company made
• DNA Engineering: replace some parts of the company’s DNA to improve its intrinsic capacity
• DNA materialization: create new organization, with new DNA (but some heredity from the parents - all the stakeholders)

The last 2 points of this framework refer to the nature and composition of DNA. I suspect it will be difficult to go from a subjective feeling of evidence to a rigorous academic-like framework. We can also take a shortcut and take the macro principles approach: develop a coherent set of MP and see which companies understand and master them (useful distinction for growth-mode companies). That should be a good proxy for DNA quality… Do you think so or not ?

| PRINT