Why all companies look alike

Our offices are spacious and inspiring, we develop a feedback culture, we sponsor charities, we cut management layers, we develop cultural programs and on top of that, we all have formulated a purpose and our personal why.

Have you ever wondered how it’s possible that all companies compete with their competitors, want to be unique and stand out, but that, in the end, they all do the same? That we collectively built the hierarchical, bureaucratic organization and then tried to break it down again. That we believed in punishment and reward, but now more in intrinsic motivation. Or that we let go of the tight schedule and started experimenting. Strange, isn’t it? When we look at our organizations (and especially at companies that operate within the same industry), we cannot help but notice that they are very much alike.

Isomorphism

Companies continuously strive for legitimacy. Whether or not an organization has the so-called ‘right to exist’ not only depends on the products or services it provides. Companies are – for instance – also judged by its sustainability, corporate responsibility, or efficiency. And in this struggle for a raison d’être, many companies make similar choices. The phenomenon of organizations resembling each other is called ‘isomorphism’ and has its roots in three forces.

The law, uncertainty and the norm

First, there is a compelling force from the government. Legislation and regulations simply prescribe certain things. For example, good employment practices are a duty in the Netherlands. This ensures that Dutch companies are more alike than a Dutch company would resemble a foreign one.

Second, there is the power of uncertainty. Companies must fight for their customers, who nowadays are two clicks away from the competitor. You have to provide good services or products, build a solid image, have perfect customer service, and be socially aware. That’s all quite delicate because a misstep is on the internet in the blink of an eye. So what do we do to feel more confident? We look at the Coolblue’s and the Spotify’s of this world (or that high performing competitor) and imitate what they do. We devour best practice management books and apply them to our own company. Or we go to conferences to listen to Semler, Musk, or Sinek.

The third force is that of the norm. This has been subject to public discussions and politics for a very long time, but our management boards are still predominantly white, male and highly educated. This means that there is relatively little variation in our ‘business rationale’. We learn the same prevailing views, we read the same books, and we are in the same circles. And well, then you will look alike and you will do the same things.

Is isomorphism bad?

The answer is yes and no. Firstly: no, it is not bad. Isomorphism is a natural phenomenon. In other words, there’s not much you can do about it. In fact, there are even advantages to it. The fact that we all work the same way makes it easy to do business with each other. We understand what the other is doing and we speak the same language.

On the other hand, there is also a risk in isomorphism. As long as nobody dares to stand out, we stick to practices that have proven not to work. To make progress (quite a strong need of our species after all), it is necessary that there are pioneers who dare to take risks and to deviate from the usual. The prototyping.work methodology can provide this. By experimenting with new practices all the time, deviation is created.

In addition, it is good to be aware of how isomorphism works. It helps you to remain critical and not just take over every management hype. For example, more and more organizations implement the scrum method, just for the sake of scrum. But some activities just go much smoother if you don’t have to formulate epics, user stories, and to-do’s first!

With regard to the imperative power of the law, I would say: let yourself be steered and stay alike. Concerning the other two forces, I would like to call on companies to remain critical. Stay with yourself. Keep investigating what suits your company and don’t copy-paste everything you see or read. Only apply the things that really work for you. It is important to stay true to your own identity. 

But wait a minute, isn’t having a recognizable identity also a trend nowadays? Are we still look a likes after all…

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References

Source: DiMaggio, P.J. & Powell, W.W. (1983), ‘The Iron Cage Revisited: Institutional Isomorphism and Collective Rationality in Organizational Fields’

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