From the Conversation with Arie de Geus
London, September 22, 1999
Claus Otto Scharmer

After I was appointed as the planning coordinator in Royal Dutch Shell, the first question I addressed was what the hell does planning actually contribute? What is planning for? I’d been in decision-making positions at the same seniority level for quite some time, and wondered did I really need a plan to help me? And the answer was yes…

Thus, the second element in my question was the nature of the decision-making process. So one was just the role of planning and the second one was what was the nature of the decision-making process in a large institution? It was the large decision-making processes in which I was interested, not the operational ones, which are clearly the application of knowledge that is codified and available in the organization. I knew the decision-making process was important, and thought that fundamental structural decisions were in fact learning processes. But that was a hypothesis, very much a hypothesis…

[In 1983] we first went to Jay Forrester, and Jay organized an afternoon in that awful building there where the System Dynamics group is… Two or three of us went there, and Jay said, "I sure have a roomful of people." Peter Senge, Barry Richmond and quite a number of other people from in and around MIT were there. Jay said, "Well, here are the Shell people, I’m not sure that I understand what the hell to talk about." But he seemed to think it could be of interest to us, and let’s listen…

The next question became, what is the nature of the thing or the being that is making those decisions? Is it the mind of the CEO? Is it just the sum of all the individuals on a team, or is it something bigger…

The whole is something separate from the parts. It’s something bigger than the parts. And so in those days, I was thinking in terms of Personen…

All these things started to influence my thinking about the institution as a living being… In the beginning I did mean it as a metaphor. But I think now I am no longer prepared to accept "the company as a living being" only as a metaphor. I think it is much, much deeper than that…

I’m beginning to see more and more loops that strongly reinforce the idea that there are hierarchically, higher placed living systems, higher than the human being. I called them "A Living Company," because basically I talk about the commercial population of the institutional world population…

Francisco Varela helped me to gradually drop the idea that it was a metaphor. He says that in biology they have now learned that life essentially builds up in the same way as Stern described 50 years ago. Life is moved by two or three basic principles – one is cooperation, another one is competition. And the third principle is that very early on, successful life organized itself in relatively small groupings that created the cellular structure…

[The population of global institutions] population really only exploded from the middle of the 19th century. Before that we had the family, we had a few governments, we had a few nation-states. We are becoming even more successful because we are members of an ever larger and ever more specialized and able group of superhuman institutions. To me, this is a force, and I don’t need an academic debate...

I think every institution is a living system. What we see is that the life conditions of these living systems are being threatened from the inside by participants in the institutional living systems. They have no idea what they’re doing there and what their institutions do, and they have no idea how to create better conditions for the survival of the institution of which they are a member...

Learning is the relationship of changing environments. The learning that we talked about is learning by accommodation… each individual institution goes through different phases in life and can only go through these phases by learning by accommodation.

Every startup is the birth of a new being…

I am close to thinking that since companies are living beings, they have something like an immune system. Varela can tell you very interesting stories about how the immune system works... The immune system is the one that keeps the equilibrium and Varela has made me understand that the human immune system can deal with intrusions up to 25 percent of its own total population… The minute there is an invasion that goes beyond the capability of the immune system to maintain an equilibrium, the immune system goes into a fighting mode… When I think in those terms about mergers and acquisitions, it is exactly the same thing…

I think we should have more a multicultural research center about the nature of decision-making and the nature of public institutions.

Another important question would be to do a little bit more demographics about this institutional population. Is it really true what I’m saying about this explosive growth? I would like to see a lot more demographic work done on the institutional population in the world… If we could discover demographic differences between the different institutional tribes, we might also begin to get a better idea about what determines death or evolution.