Are you a tit or a robin?

Put your company to the milk bottle challenge, suggests Roger Trapp

Companies, we are constantly told, do not really exist as proper entities. They are just collections of people.

Whether such a view is a recognition of the growing importance of knowledge over tangible assets or an excuse for companies to have no responsibilities is essentially by the by. A new book already being touted as the most important management read of the year turns such thinking on its head, and suggests that clues to the great mystery of what makes for sustainable corporate success lie in biology.

In The Living Company (Nicholas Brealey Publishing, pounds 16.99), Arie de Geus claims that we can learn important lessons about the life and death of organisations, not just from those that have endured through the ages, but from nature.

For example, there are insights to be had into how companies learn through studying the contrasting experiences of blue tits and robins with milk bottles. In the early years of this century, the bottles did not have tops and both types of songbird learned to use their beaks to siphon off this source of nourishment. But when the dairy industry closed access to it by placing aluminium seals on the bottles, the blue tits - but not the robins - learned to pierce the tops.

The explanation - according to Allan Wilson, a prize-winning US biologist consulted by the Shell planning group of which de Geus was once a member - is that the blue tits are more sociable than the robins. Although an occasional robin has cottoned on to the technique, there is no method for transferring this knowledge through the species as a whole because robins are territorial birds. While tits group together from an early age, male robins will not let other males anywhere near their patch.

Similarly, in any sizeable organisation there are bound to be a few innovators. But it is no good just having them around; that alone will not lead to the development of good, marketable ideas.

Organisations, says de Geus, must leave space for the innovators and ensure that they are not squashed and left with too little time to develop ideas. And even if there is a good system of innovation, "you will still not have institutional learning until you develop the ability to flock". This, in turn, depends on mobility of people and an effective means of social propagation, as possessed by the blue tits.

Then there is the example of rose pruning. Gardeners in temperate climates looking for splendid blooms in the summer are encouraged to prune hard, so that there are only a few stems remaining on each plant. However, points out de Geus, this can be a high-risk strategy in an area prone to sudden frosts, say, or to attacks by deer or greenfly. In short, adds de Geus, a tolerant pruning policy achieves two ends: it makes it easier to cope with unexpected environmental changes and it leads to a continuous, gradual restructuring of the plant.

Appropriately enough, tolerance was one of the characteristics identified by Shell, when many years ago it carried out a study of corporate survivors. The other characteristics were:

p Longlived companies were sensitive to their environment. Whether built on knowledge like DuPont - renowned for technological innovations ranging from dynamite to Lycra ; on natural resources like the Hudson's Bay Company - known for its access to the furs of the frozen north - they remained in harmony with their surroundings. Though Shell itself could be regarded as slipping in this area as a result of Brent Spar and the problems in Nigeria, it could also be argued that its foresight in the 1970s enabled it to deal with the oil shock better than some of its rivals.

p Longlived companies were cohesive, with a strong sense of identity. No matter how widely diversified they were, they managed to create a sense among employees that they were all part of one entity.

p Longlived companies were conservative in financing. Many companies that have appeared in the upper ranks of the list of Britain's fastest- growing compiled by the Independent on Sunday in association with accountants Price Waterhouse attribute much of their success to funding growth from retained profits rather than relying on outside help. But larger, more established organisations such as the US electronics group Hewlett-Packard have also pointed out that such an approach has not only given them the freedom to pursue opportunities without having to convince third-party financiers but kept their organisations lean and hence competitive.

The Shell study was always regarded as of limited value - even inside the organisation - because of its small sample. But the appearance a few years ago of the best-selling business book Built to Last, which came up with much the same conclusions, has given de Geus added confidence that he and his former colleagues might be on to something.