Evolution in nature has long been a metaphor for business.
You know, survival of the fittest, might make right, only the selfish thrive,
etc. These analogies are clearly oversimplifications and they are based upon a
superficial understanding of the biological underpinnings, but they are
nonetheless quite pervasive in the business world. So it only make sense that new research in evolutionary
theory be applied to the business metaphor as well.
Evolutionary theory looks at how organisms respond to environmental
changes. Those that can’t adapt,
disappear. For example, when temperatures rise, some plants and animals are
able to adapt to the withstand the new temperatures. Those that can’t, die out.
New research suggests we take a revised look at the mechanisms by which
organisms respond to environmental change. I believe these discoveries have a
strong relevance for business. Here are four
questions biologists have revisited and how they apply to business:
1. How fast should we respond to change?
It was once thought that nature changes slowly, through many small incremental
steps. By changing slowly, an organism could gauge progress at each step; corrective
changes could be taken if necessary. Some
biologists now believe that medium size changes are more successful in nature. The
idea is that if you react too slowly, you won’t survive. If you react too
quickly, you may adapt better to one change, but you will likely cause
detrimental changes elsewhere.
Fear and uncertainty drive businesses to knee-jerk reactions. Some, afraid to
rock the boat, make small, insignificant changes. The response is too little,
too late. Others, fearing the worst, institute sweeping changes, which may
respond to the change, but negatively impact the business elsewhere. A medium, measured
response is best.
Case in point:
a competitor comes out with a new product that is eating away at your market
share. One approach is to immediately lower prices to gain back market share.
Another is to do nothing and wait to see how things develop. An intermediate approach,
such as emphasizing product differentiation while looking to develop new
products or markets would probably be more successful over time.
2. How many changes
should be made once an environment change is detected?
It was once thought that the more complex an organism (think elephant vs.
slug), the more changes would be needed to respond positively to environmental
changes. But recent research shows that the number of changes that an organism
can undergo is quite limited. The reason
seems to be related to the fact that too many changes at once can wreak havoc. Again, too much change at once seems to be a
The bigger a company is, the more difficult if finds itself being able to
affect multiple changes at once. Dependencies between different departments and
markets makes it hard to make sweeping changes without inadvertently impacting
the business somewhere else. So the bigger the organization, the more
uncertainty is introduced by major changes.
point: a financial crisis causes panic in the markets. A company wants to
respond, but finds that existing commitments to customers makes it difficult to
cut back significantly at once, without dire consequences. The ramifications of
massive cutbacks is no less daunting than the alternative. The bigger the
company, the more complicated this process becomes.
3. What is the unit for successful adaptation?
— Biologists still do not know whether nature picks the ‘best’ individuals (‘individual
selection’) or the ‘best’ groups (‘group selection’), where best means the
most successful adapters. There are several camps of researchers and this topic
is still hotly contested.
While every organization is made up of people, each organization has its own
personality. How big a part does corporate culture play in determining whether
a company is able to adapt and how much is dependent on key individuals? The role of corporate culture in long-term
success is also hotly-contested.
point: a company finds that by organizing into small business units, each
unit is more manageable and can become a center for profit and loss. Some units thrive and some die off. Treating
each unit as an autonomous unit helps the overall company survive.
4. Is altruism a good strategy for success?
For those who believe in ‘group selection,’ altruism may play a key role in the
success in the survival or an organism. For
example, an animal is altruistic when it sacrifices itself for the survival of its
group. Many such examples exist in nature.
When one person or group sacrifices for the good of the organization, they are
being altruistic. Is altruism good for the
overall organization in the long run?
point: when one department stops development of a product in order to pitch
in and help another department make a key delivery date, they can said to be
behaving altruistically. Like in nature,
when done properly, being nice can often be a good strategy for success.
Here is a thought
for the new year: contrary to what many of us were taught in Biology class, behaving
nicely might be a better long-term strategy for survival that we once thought. Maybe it’s time we took the message to heart
in how we run our businesses.