8.1. Introduction: corporate aging and dying

In the specific context of a corporation, the main questions and concerns that we can state about its populations are as follows:

1. Does an “aging economy” exist? This question is quite natural since the first question, in any innovative system is: how to define a development economy, in poor and new growing countries?
2. What are the main topics of such emerging economies?
3. Is an aging society less dynamic and less attractive than a growing new economy?
4. Is the aging of companies in western countries correlated with steady and stagnant economy?
5. What is the impact of aging on the maintenance and survival costs of enterprises?

Before attempting to answer these questions, and study the particular case of business companies, we need clarification concerning how the people, a country or companies exploit a new technology (e.g. the bronze or iron, the Internet, etc.), new resources (e.g. human force potential, robots, etc.) or even a new energy (fire, coal, oil or nuclear, etc.). In the following, all these means will be included in a general concept called “potential”.

When an organization uses a new “potential”, it usually develops itself to the extent allowed by this potential, prior to a breakthrough, that is to say, prior to it has the ability to relaunch its development or to stop its activity. Hereafter, we will take a few examples:

• – when our ancestors invented and used new weapons (e.g. first able spears, and later guns and rifles), they were able to kill more people and animals, faster and at lower cost. They could feed more people and better protect themselves, so they took a decisive advantage from others, within their hostile environment. The human population has, therefore, developed;
• – when the use of a new potential becomes generalized, then it is used by anybody, and is no longer a competitive differentiation. Advantage goes to the guy who knows better to exploit an existing potential, relatively to other people, or to the first person able to switch to a new potential (as soon one cannot benefit from any additional former potential);
• – when a recovery or a renewal occurs in the business, the activity will no longer restart in the same previous way because some “potential” has changed, or because the underlying mechanisms have evolved, or because the human cultural and economic context has changed. This is why, in any field of activity, a system will be starting on new bases or will disappear.
• – we can interpret these facts as follows and make a few comments:
  • - first, since remote eras, what is important in any business is to maximize learning and assets, yields or returns to investments (ROIs) and to sustain them as long as we can. So, we will be reasoning in terms of “pay-back” and ROI. The value of a company through the shares and stock options does not directly represent the efficiency of an organization. It is the same for the sale price of a product: it does not reflect its usefulness and usage. The so-called “utility factor” which is influencing the sale price includes much different criteria (image, fashion, usage, etc.), often far from the economic and survival interests,
  • - what matters when earning money or gaining advantages is to do as it has always been: saving money little-by-little, making the best use of what already exists; to make advances, based upon gained positive results (assets) in order to access a new step of the podium, etc. This is equivalent to a well-known technique of compound interest which prevails: it is quite different from the hypothetical capital gains approach which consists of taking money from others, not so lucky and less financially fortunate,
  • - it is always important to know: have we finished building and developing businesses based on a new resource or a source of energy? Everyone likes to say that this is the end of the era of oil or nuclear power plants. Some famous economists say that the oil era is doomed and that we have reached the “peak oil”. The question is: is this true? Is there not some ideology behind this?

In [MAS 08], it is assumed that the end of oil or nuclear power has not yet been reached. Indeed, concerning oil and gas, every day we discover new oilfields and new mining technologies. We must be conscious about a possible scarcity of this energy type, but it is not sufficient enough to be “alarmist”. Any new energy, all new resource, is an asset because it brings us a lot of economic development and richness at the beginning of its use. But it also provides us with many advances and progress in different domains, and the more you use it, the better it is used and the more everybody becomes “rich” in the general sense of the word.

Huge parts of the world are still growing and under development (in terms of growth domestic product (GDP)); they are not still completely “mature”. This indicates that the use of oil is still low in these countries. Moreover, birth rates in developing countries are high. As a result, we have an evolution curve (see Figure 8.1) which follows Moore’s law. For these reasons, the use of energy increases rapidly in these countries where a lot of needs are emerging.

Legally, these countries have the right to develop, thus using more energy to recover their delay and catch up to the so-called developed countries. They still have time to make progress in their growth, etc. Additionally, western companies, in the US, Europe and Japan, etc., still need to take advantage of this rise. We must, therefore, stop hypocrisy and think that others’ growth can bring some activity to the already well-established organizations.

In 2050, when the Earth’s population will comprise about 9 and 10 billion residents, we cannot know what the future will hold: will the growth rates be always higher and higher, or lower and lower, in developed countries? What will they become in all the countries around the world? What will be the birth rates in different populations? Will they have fallen in developing countries? Who will manage and control the world? What will be the mode of governance? What will be the most used energy type? What will be the kind of automation and robotization implemented in our factories? Nobody knows.

Currently, everyone gets excited about oil and its associated pollution. But, nobody talks about the Internet: in a few years, the Internet, as we know it today, will disappear and will be integrated, embedded into our environment (in household appliances, cars, our brain, etc.). Everyone will use it, but nobody will talk more about it. Its dissemination will be a global and comprehensive one. In parallel, fossil energy will continue its career because its expansion will not be finished. Concerning the achievements, we mean the so-called “Life Habits” which are daily activities and social roles that ensure the survival, evolution and vitality of a person or living organism (such as an enterprise) in society throughout its development and existence.

Question is: are we in a post-oil economy? Are we in a post-Internet economy? Which one will end or die the first?

8.2. The human resources situation of small-and medium-sized enterprises

In about 20 years, almost one-third of the population in western countries will be over 60: less children are being born and populations dwindle. The effects of demographic change on SMEs are quite simple: to sustain the economic activity, more and more people expatriate from less developed countries with different skills, cultures and social approaches. The resulting diversity resulting from this structural population evolution is a way to introduce innovations and paradigms changes, and then to foster the economy and provide new expansions. The question, however, becomes: which solutions could be developed to actively manage these changes in small-and medium-sized enterprises?

The problem is not a technological one. It consists of exploring the cultural significance of aging and anti-aging endeavor. Initially, it is a problematic biological process which can only be overcome by biology because an enterprise is a result of the creative activity of human beings: the aging and anti-aging in an enterprise mask very important social and cultural issues which have hitherto been under explored. This is based on a priori reasoning from established ethical and professional perspectives and into an understanding of how specific groups of people understand, respond and seek to modify the process of aging.

8.3. The human resources situation in senior enterprises

A senior enterprise is defined as a mature or declining organization, with regard to the S-curve representation, which we will study later in this section.

The problem is expressed in terms of adaptation and survival oriented toward technological and social aims:

1. How to enable older people to generate income outside the traditional work setting?
2. How can innovation in products and services be overcome with an aging workforce?
3. How to enable older people to derive income from interesting work and to meet product and service needs of the community?

Senior enterprises are attractive for a number of reasons: they possess knowledge, know-how; they are like a steady and stable organization, which is able to provide technological references and examples. They are useful for the global equilibrium of a society. In parallel, they can produce income for individuals and/or communities and long-term profitability.

Senior enterprises are often providing general interest services, e.g. fundamental research, health, social and cultural services, etc., which are not necessarily directly income-producing. They generally have an institutional base through institutional stability, with higher educational and skill levels, and activities between work and leisure. Indeed, they are not submitted to financial competition and net revenue obligation (no shareholders).

Saying “old out–young in” is only understandable in a very competitive environment, where financial yields and benefits are the main worry of a society. This principle will soon cease to work since the unemployment either has now to be financed by all the economic workforce in a country or it will create disparities and poverty among a population. Consequently, quitting on the one hand and entering again on the other is not a sound strategy.

In any enterprise (either a SME or a large company), its evolution depends on the skills and culture available. Qualified talents are scarce and difficult to find. Moreover to be successful, talent is not sufficient observation shows that a small dose of “genius” is mandatory because genius is a kind of flash, which will enable the company to find its competitive advantage and differentiation.

There is a difficulty coming from the fact that an aging company is not able to take advantage of impeding growth. It is a problem of lack of imagination that does not allow seeing a product from the standpoint of a customer. Encountered mentality consists of “doing good”, as we may have in a social service, while we have to provide a customer with a service he defines with his own terms, and the market place is moving toward a different direction.

As soon as the average aging of a company’s workforce increases, skills, know-how, culture and customers change.

8.4. Global evolution: the product lifecycle of an enterprise

A senior enterprise is defined as a mature or declining organization, with regard to the S-curve representation, which we will study later in this section. Based on these aforementioned considerations, we can observe that a company is submitted to the same phenomenon. The products or services are evolving same as for a human being. Their product lifecycle can be divided into five stages: birth and growth, expansion, maturation, saturation and decline.

For a given product, the market size and sales revenue are evolving as per an M-curve. Each part of this curve is related to a specific life stage of the product, with different activities, expected costs and benefits. Traditionally speaking, we will distinguish the five steps:

1. Product introduction: the new product is launched. It is a monopolistic or oligopolistic situation and the penetration of the market share is very difficult to obtain and also takes time. There are certainly debugging problems and early life fails which cost a lot to the company; moreover, the market and commercial are expensive and associated costs are high. Consequently, very often, the net revenue is a negative one.
2. Development and expansion stage: the production is being started and is under development. Volumes of product and services are periodically higher and higher. The product is successful and the market is big. As a result, profit earnings enable the enterprise to develop its business. The competition, however, is interested in this new profitable product and several new competitors appear. To fight this new competition, the company is first improving the product and is investing in market development.
3. During the maturation stage of the product, the sales and transactions are highly increased and the product is profitable. Later, the product is enhanced, based on the inputs provided by the customer satisfaction surveys. This is done again with few investments to maintain some competitive advantages. Lastly, massive investments acquire and preserve market shares. But the innovation level of the product will become limited: indeed, the structure and architecture of a product seldom enables the introduction of technological or economical breakthroughs. The production capabilities and the level of the technologies used cannot be improved drastically and quickly. As a result, the market share will decrease because of the competition.
4. This previews the saturation stage during which the market is saturated and the competition is high. Prices and demands for such products decrease. Only the financially strongest companies can recover from such competitive situations.
5. In the last stage of the product life, the product becomes obsolete. It is redundant and does not cover all the customer needs. The product market is decreasing. During this decline, manufacturing overcapacities increase the production cost and the product is much less profitable. Finally, the product is withdrawn and a new product has to replace it.

Aforementioned details easily define the priorities that we have to take into consideration for the product development strategy in order to ensure a continuous growth of the company.

8.5. Product lifecycle management

Product evolution along with these five stages may change according to its type. Some products seem to stay permanently at “maturation level” (this is the case for the basic products such as milk, oil, bicycles, etc.). Changes are mainly at marketing level, since different techniques are used over time to delay the decline stage of the product. It is possible, however, to know the average PLC of most of the products and to adjust the strategy accordingly.

The marketing strategies are always changing according to the type of products, the life stage of the product, etc.: they are informative during the market growth, persuasive during the maturation stage and then tradition and nostalgia oriented during the saturation and decline stage of the product. In each case, a number of investments are necessary.

Compared to what is happening for the brain, we can state:

1. Learning at brain level is replaced here by innovation. A new product must bring and introduce an innovative functionality at the same price, or in a simpler and more efficient way.
2. Improvements by innovation (instead of learning) and better flexibility and reactivity (plasticity for the brain) are a continuous concern at product level.
3. Which products have to be removed, what kind of design do we need for the new ones and at what time obsolete products have to be replaced?
4. Which level of innovation do we have to integrate into the development and production process? This is a check and balance problem aimed at determining the innovation level of the product to be designed: it depends on the design cost, the time delay required, the expected revenues, etc.
5. Do we have to maintain, even at high cost, the sale of an obsolete product? This depends on the new products strategy of the company, the expected future innovation level of the products to be introduced, the maturity of the technologies and their acceptability by the customers, the level of the competition, etc.

8.6. Example of corporate life and death: the saturation stage

In a recent paper, Brass [BRA 10] posits Microsoft could become a declining company since it did not integrate technology changes. It is the same situation encountered with France-Telecom: causes, effects and mechanisms are the same.

The first observation and/or surprise comes from the fact that Microsoft (once the most famous and profitable company in the world) in information technology did not design and develop the “iPad”, the Kindle, Google, the BlackBerry or iPhone, the iPod or iTunes, Facebook or Twitter.

Many researchers and highly skilled engineers are working at Microsoft: all of the human resources are very likely available at Microsoft to design and develop such innovations. Things have been achieved, yet were not likely integrated into the development strategy. Why? What is the disease?

1. Envisioning: the management has previously and successfully achieved efficient development strategies and are convinced by the fact that the actual strategy is the best one.
2. Culturally speaking, it is difficult to challenge and reconsider a strategy which conducted the company to over successful and leading positions.
3. Treadmill: the managers on the premises always feel threatened and shaken as soon an innovative team proposes a breakthrough: many arguments will be forwarded to discredit any “disturbing” project which is viewed as a biological aggression.

It is the same in any company: in the 1980s, at IBM, for instance, a battle was initiated between the people in favor of personal computers (PCs) and those of the large computer systems. Now, even if large computers are still useful and are in use in many companies, the PCs are everywhere and we are talking in terms of cloud computing; no more in terms of hardware but in terms of software as a service (SAAS).

Few years ago, in the beginning of 2000s, the tablet PC was presented in Las Vegas at the Comdex. Microsoft Office Vice President said he was not convinced by such a new product, since he was in favor of a manual keyboard instead of a tactile one. The various Office applications were not modified accordingly; then, a pop-up window was mandatory to communicate between the tablet and software. With a slow interface, the tablet was removed from the market. Now, 10 years later, the iPad released by Apple Corp. in January 2010 is shown as a revolutionary product (even if most of the new technologies inside a product are already well-known).

We can exemplify another failed evolution in industry: several innovative initiatives are often eliminated in a company after an internal competition because some dominating senior managers decide not to invest in such “skating” and apparently risky projects. This is why new companies such as Wikipedia, Google and Amazon could emerge; now, they have the leadership in a given domain of applications and will compete with the so-called “old-companies” in different related fields.

About the innovation, we have to keep in mind that we are in a prey–predator system:

1. Competition may foster the innovation as soon as a healthy emulation can be established. When an organization is able either to crush down new proposals or to deny efforts undertaken by small and innovative teams, then adaptation cannot occur. The most dynamic people leave their mother company and join a competitor which is able to provide them with adequate resources and better open-minded culture, which then enables them to achieve and launch an innovative product/service.

   Irreparably, even the future of a very profitable company becomes questionable.

2. Another approach consists of keeping control of the technologies under development through external growth: a mature company can acquire the start-ups which designed an innovative product or service; then, it can either integrate the relative innovation in its strategic development or kill it to maintain a market share status quo.

Other examples in industry can be easily found, such as the case of Kodak filing bankruptcy after 131 years of existence, or a revitalized IBM after its long 20th Century leadership glory, etc. A salient related issue evidently is to delineate feasible long-term futures of one epoch’s giants into the next one (Microsoft, Apple, Google, AOL, etc.).

8.7. Product lifecycle of new technologies

Now, if we consider successful products designed, developed and manufactured in a same company, we encounter the same phenomenon for the aging of technologies: the evolution of a technology is similar to the one observed at the human, organizational or enterprise level (and exemplified with the M-curve). Each technology has its own M-curve, and they overimpose themselves over time: it is the case for assemblies of discrete component, followed by integrated chips such as TTL, CCD, C-MOS, etc.

As a result of the above considerations, there is no apparent limit to the acceleration of local intelligence, interdependence and immunity in new substrates over time.

It is the same graph we can obtain when analyzing the successive steps related to software business technologies [CUS 06]. At the beginning, many information technology companies (among this family, we can quote IBM, HP, Sun, Oracle, SAP, GE, etc.) were mainly involved in computer industry. For business and revenue reasons, they progressively switched from hardware to software; now, we can observe the following evolution:

Hardware→ Operating Systems→ Data Base → Communications facilities→ Development Tools → Applications → Services

In this framework, we have to keep in mind that the evolution of new technologies has to take into consideration some comments and the context of the problem, as presented in Chapter 5 section 5.1. Indeed, the introduction of new technologies depends on the expansion ratio of the previous one. We remember an example within the IBM EMEA Advanced Technology Center: we were developing IA applications, Prolog based, to increase the competitivity of some European manufacturing plants. Prolog was, in the 1980s, a promising language to develop knowledge based systems (KBS). This language, a new software technology, could not be adopted just because many applications were already developed in LISP (several millions of LOCs were written and available), and there was no possibility to reinvest and develop new skills in Prolog, and then to shift toward a new paradigm.

As a result, all the graphs and models we use to explain a phenomenon are useful; they are, however, including some bias, in terms of interpretation because they do not integrate the overall environment and context around the subject under study. So, a different approach has to be considered to avoid partial and inconsistent statements.

8.8. How to model the evolution of an organism (enterprise)

In the previous sections, we have developed several items related to the evolution of the enterprises and their internal resources. In fact, a company is an organism, similar to a human being, submitted to many constraints and influences. Such an organism depends on a lot of various interactions, internal and external.

To illustrate this fact, we will show a graph (Figure 8.4) which details some relationships we have to consider in the evolution of living beings. What is happening for a population of humans can easily be transposed and applied to any organization/enterprise.

The kinds of relationships are quite distinct. Some interagents variables can be defined as follows. For instance:

• – the sophistication (level of maturity) of a technology depends on its usage, i.e. the size of the population/consumers;
• – the quantity of energy consumed by a population depends on its richness (wealth level);
• – the birth date, in a population, depends on its richness, GDP development, etc;
• – since the human species is part of the 1% of the biomass and uses 31% of the photosynthesis on the Earth, the quantity of energy consumed (food production, transportation, etc.) depends on the growth rate of the population;
• – quantity of elaborated CHONs consumed by human beings depends on his needs in proteins, and then on the sophistication of the complex systems;
• – level of consumption of unnecessary products depends on the cultural level of the society (individualization and greed attitude), etc.

Since everything is interconnected with fragile balances, we cannot ignore that we are part of a unique biosphere any longer. The mode of functioning and the evolution of an enterprise is the same as those existing for a human.

8.9. How to measure and control aging in the enterprises

In biology and living systems, we have stated that it is possible to increase life expectancy using some anti-aging molecules.

The same approach can be applied in industry in order either to detect the aging level of a company or to define anti-aging processes and react against its aging.

Here, we will detail a few techniques and methodologies which we used in our company:

1. Innovation can be considered an anti-aging approach. A new technology is repeatedly proved to be attractive to increase the curiosity and acuteness of employees and managers. This is a strategy a company may implement through the creation of an advanced technology group: such a group can develop advances, innovative and efficient tools and methodologies, which can be deployed later in the whole company. It is also the approach for early staged companies with low valuation; the problem is that it is much easier to maintain and integrate innovations in a large company rather than to build a business model based on such concepts through a SME.
2. Successful innovation follow-on financing requires either rapid development into the commercial entity, integration in the present operations, or rewards; indeed, any innovation or anti-aging action is synonymous with dynamism and one cannot spend too much time on this before obtaining concrete results.
3. Anti-aging technology and approaches can inform the management and boost the employee productivity, but not dominate the strategy of a company. Anti-aging actions can be measured and controlled through indicators such as:
   1. investments assigned to each activity sector;
   2. type and amount of local purchasing performed by a company;
   3. work days lost due to occupational accidents, injuries, illness, etc.
   4. employment creation, and turnover (turnover being the number of employees leaving the organization voluntarily (on own free will) or due to dismissal, retirement or death in service);
   5. employee morale/motivation;
   6. labor practices;
   7. employee productivity and performance;
   8. customer dissatisfaction.
4. Presently, management development often favors treatment over prevention. This can conduct to a late reaction of the company and another approach can be implemented. It consists of performing regularly reorganizations of the company. Very often, we do not know why a new organization study is undertaken: if we do not know, nature knows, because it is a continuous process which is related to a permanent challenge of our assets and situations and which is likely to reconsider the processes in use. This is a kind of permanent process reconfiguration: it is a basic concept in living and adaptive systems.
5. In the short term, in some aspects of anti-aging/disease prevention, science may be more readily applied to the sourcing industry and parts procurement. Indeed, they are often more open-minded sectors since they have to innovate permanently (because of process performance and cost constraints) and they are in contact with several of our competitors.
6. Deploying and commercializing innovative or anti-aging research and development is not easy; it requires entrepreneurship in a company, and investors from outside. Moreover, it is necessary to remain opportunistic and pragmatic since achievable results are always required. Thus, we can measure the results through:
   1. defining objectives and target dates to research and development activities;
   2. setting up indicators to measure ROI and return on equity;
   3. setting up indicators to identify benefits and costs provided to/by employee as reported elsewhere in the company’s financial statements, or its internally management accounts.

Identification and periodic comparison of subcompanies or departments is now based on business plans built on tradition notions of value rather than hype technologies. This is also followed by the presentation and comparison of innovative products processes and services in terms of technology, quality and performances, human and social situation, economic results, etc. Such a comparison, performed twice a year for instance, supposes an organization by region and provides a permanent bid which offers a lot of improvements and innovative enhancements at product and process levels.

In the recent past, during the so-called “subprimes crisis”, many governments were involved in interfering in the financial and business affairs of the banking institutions. These actions were conducted for two main reasons: finance and strategy [DUR 03]. We have to keep in mind that competitiveness comes from the level of skills and resources assigned to solving problems in the company. If they are strong enough, the company will survive or the decline will continue. Actions undertaken by a government will never be able to save a failing company and provide it with a competitive advantage since, on a long-term horizon, the market forces and trends always select the activities which are structurally competitive and profitable.

Such “restructuring funds” activity – as we have in banking and agriculture – is often considered a social effort, a bonus to inefficiency and a penalty for the whole population of the country and the competition.

As a counterpart, a government has to support, in a different way, people involved in the decline of a company, help individuals in their education, develop new economic capabilities and foster the integration of these people into the new jobs.

It is also the role of a government to explain why and how an economic activity can develop employment and richness or to determine if there is no alternative except to die, and then to define and negotiate the conditions of a corporate death, and not to use intensive medication against death.