Think of a business ecosystem as a “microeconomy” that coalesces around business innovation, spanning a variety of industries. Within that ecosystem organisations can develop capabilities around the innovation, work cooperatively and competitively to support new products, to satisfy customer needs, and to incorporate the next round of innovation. Or they can “compete” each other to death, in a non-nuclear version of MAD (“mutually assured destruction”).
An example of this is the development of the pay television industry in the last decades of the 20th century. The various industry players in Australia’s nascent pay TV industry have managed for a decade or so to use competition to destroy the market, rather than grow it.
A more positive example is provided by the various gold rushes of the 19th century, which generated whole new economic systems, directly and indirectly. An even earlier positive example is provided by the invention of a coherent set of banking practices and conventions in Renaissance Italy.
It is the fit who survive, not the fittest
A microeconomy will emerge (or will be created, as we will see later) where there is an opportunity environment in the fitness landscape. The term fitness landscape comes from biology, where it is used as a framework for thinking about evolution. A fitness landscape is “where the peaks represent high fitness, and populations wander under the drives of mutation, selection, and random drift across the landscapes, seeking peaks, but perhaps never achieving them” (Kauffman) .
Think of an opportunity environment as “a space of business possibility”, created by or arising from unmet customer needs, unexploited technologies, potential regulatory openings, prominent investors, and many other untapped resources . Examples of this are numerous, starting with mobile phone technology, cycling through home theatre, encompassing home delivery of fast or prepared foods, and many others.
These are natural phenomena, not unique to business or the world of economics. In fact, anyone familiar with environmental studies will instantly understand what I am saying here.
As Darwin observed in the Galapagos, where there are niches in the local environment that allow for organisms to thrive, then an organism will evolve to fit each of those niches, even if those organisms turn out to be variations on the same theme (in Darwin’s case, a multitude of varieties of finch).
In the next instalment we will turn to the contest of ideas between Darwin and Lamarck and how that is relevant to the world of business in the 21st century.