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We live in a world of discontinuity and uncertainty, where norms are rapidly disintegrating and businesses are losing their footing. We live in a time of flux and fluidity, when mandates for growth are driving high-velocity, unrelenting change. We live in a messy world, where boundaries are becoming more porous and unprecedented complexity adds ambiguity and reduces predictability.
Our traditional approach to strategy, based on data and analysis, is at a crossroads in this era of unknown unknowns. The most well-trained AI, built on vast stores of data, information, and knowledge, could not have predicted how the COVID-19 pandemic would affect a world made more open and connected by digital technologies. Can strategy be reframed so that companies can thrive in the face of our current and future challenges?
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We believe not only that strategy can be reconceived, but that it must be. In our 50 years of researching companies both in the U.S. and in Japan, our view of the organization has evolved from information processing machine (as influenced by Herbert Simon) to living organism continually creating new knowledge. We argue that to survive in today’s world, this living organism must be grounded in moral purpose and guided by the goals of offering value to customers, contributing to society, living in harmony with nature, and creating a better future.
The Soul of an Organization
Advances in neuroscience research in recent years have shed light on the biological factors driving humans’ sense of purpose. We now know that the most basic need we are compelled to meet is social connection — it has a stronger motivational pull than even food, water, and shelter.1 Neuroscientists have also found that the human brain exhibits a predisposition to seek the common good via egalitarian and altruistic behavior.2 And it is able to combine data from multiple sources of sensory input to plan future courses of action and to handle unexpected and novel situations.3
These findings suggest that our purpose as human beings is rooted in our universal tendencies to relate to and care for one another, that we share the ability to rapidly adapt to changing circumstances, and that we can imagine together how we might create a better world.
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1. M. Lieberman, “Social: Why Our Brains Are Wired to Connect” (New York: Crown, 2013), 43.
2. For more on recent findings in neuroscience, see I. Nonaka and H. Takeuchi, “The Foundations of Knowledge Practice,” chap. 2 in “The Wise Company: How Companies Create Continuous Innovation” (New York: Oxford University Press, 2019); and I. Nonaka and H. Takeuchi, “Humanizing Strategy,” Long Range Planning 54, no. 4 (August 2021).
3. C. Koch, “Consciousness: Confessions of a Romantic Reductionist” (Cambridge, Massachusetts: MIT Press, 2012), 129-130.
4. M. Rother, “Toyota Kata: Managing People for Improvement, Adaptiveness, and Superior Results” (New York: McGraw Hill, 2010), 16.
5. As of late May 2021, Microsoft’s market capitalization exceeded that of its two biggest rivals in cloud, Google and Amazon.
6. R. Waters, “Satya Nadella Brought Microsoft Back From the Brink of Irrelevance,” Los Angeles Times, Dec. 21, 2019, www.latimes.com.
7. S. Nadella, “Satya Nadella Email to Employees on First Day as CEO,” Microsoft, Feb. 4, 2014, https://news.microsoft.com.
8. E. Osono, N. Shimizu, and H. Takeuchi, “Extreme Toyota: Radical Contradictions That Drive Success at the World’s Best Manufacturer” (Hoboken, New Jersey: John Wiley & Sons, 2008).
9. “Shadowing Akio Toyoda: 72 Hours in Germany,” President, Aug. 1, 2016, 109 (in Japanese).
10. Based on an interview with Naito in 2005, when Nonaka started to serve on the Eisai board.
11. Based on interviews with Komori on multiple occasions, from 2012 to 2019, in Tokyo.
12. S. Komori, “Innovating Out of Crisis: How Fujifilm Survived (and Thrived) as Its Core Business Was Vanishing” (Berkeley, California: Stone Bridge Press, 2015), 134-135. The parentheses were added and the paragraphs shortened by the authors.
13. Komori, “Innovating Out of Crisis,” 157.