By 
Organizations only exist to achieve something that individuals cannot achieve alone. This implies a coordinated and cooperative effort. In 1938, Chester Barnard, author of The Functions of the Executive, wrote “the only measure of a cooperative system is its survivability.” Despite its age, it seems like valuable information right now with so many household names gone in the last decade and many more to come during the current economic crisis.
But, how to measure the survival capacity of an organization?
Is it the age of the organization? But that only measures historical ability to survive, not necessarily current and future ability.
Is it a measure of vitality, like a doctor measuring vital signs: heart rate, blood pressure, blood composition, immune system, etc.? Measuring liquidity, cash flow, and any number of financial ratios are useful metrics. But, continuing the medical analogy, measuring vital signs helps you know if you’re outside the normal range of health, but don’t actually measure vitality much beyond that. If your blood pressure is too high or hematocrit too low, your doctor could diagnose atherosclerosis or hemolytic anemia and prescribe the appropriate treatment. But if they are within the normal range, it tells you nothing about your “ability to survive”. Given the current situation, monitoring vital signs will be essential for many companies. But vital signs don’t measure vitality beyond being within normal limits for life; they don’t really measure vitality in the sense of thriving.
What else is required?
Is it a measure of adaptability or flexibility? In a changing world, what could be more vital, more indicative of survivability than adaptability? Systems, processes, routines, and rituals, while essential to effective performance, can become cogs. When customers no longer want or need a product, want to consume it in a different way, or find an alternative, surviving means changing products, changing the way products are made, or changing the way products are delivered. Sometimes being adaptable will mean little more than being able to deal with the natural cycles of business. Other times it will mean reacting to crises, such as a pandemic, economic collapse, or political upheaval. And sometimes, a market will go into decline or disappear altogether. The evidence of a capacity to survive is, therefore, having effective mechanisms to (I) identify, in advance, the critical changes that are coming; (ii) adapt internal systems and processes accordingly; and (iii) continue to perform well during the transition.
Does that ensure success? No. The healthiest and most vital human being can be hit by a bus or incapacitated by disease. And so too, the most vital and healthy business. But the healthier and more vital it is, the more likely it is to survive and thrive. This is the basis of evolution – the survival of organization(ation)m better able to adapt to their environment and pass on their genes to the next generation.
To this note we should add Chester Barnard’s statement: the only measure of the efficiency of a cooperative system is its ability to survive long enough to achieve your goal or purpose.
Being clear about the objective or purpose of an organization allows an important decision to be made: dissolve the organization because its purpose has been fulfilled; define a new purpose and adapt; or adapt and continue working towards a purpose not yet fulfilled. If we accept, as initially proposed, that longevity is a factor in an organization’s ability to survive, then having a purpose or goal that transcends the foreseeable future is critical. Currently there are organizations that are more than 1000 years old. While the Shore Porter’s Society has a long way to go to reach that mark (it’s only 523 years old), it has adapted from being a cooperative of shore-based porters transporting goods from Aberdeen docks to the city, to being a removals nationally and internationally. The purpose of the company? It’s hard to say, but it has something to do with the strength of commitment and loyalty each member of the firm has to each other and to their clients. Survivability comes from the purpose that your commitment gives to the company. What is the purpose of your organization that will see it survive and prosper for a thousand years?