We spoke last time about an ecological metaphor of business and business development.
This convergence across the seemingly separate realms of business and the environment may seem surprising at first, but, as it turns out, the survival rules for finches and for purveyors of mobile telephones (for example) are surprisingly similar.
It is a property of complex, adaptive systems to seek out, evolve into and to exploit new or emerging opportunities in their immediate environment. This is equally true of viruses, human beings, companies and stars, in their respective ecologies (and perhaps even universes).
There is one, significant difference between a simple biological organism (or an inanimate construct like a star) and an organisation. A virus or a tree may not have conscious awareness of its environment and, consequently, will be shaped by the environment, more than it is able to shape the environment (this is less true as we climb the scale of biological complexity). On the other hand, an organisation has the capacity and may have the will to shape its own evolutionary path.
Thus, in the ecology of organisations the process of “natural” selection may be modified or even replaced by a process of artificial selection. It is open to actors in the ecosystem to define its boundaries, within limits, to suit their own purposes.
Darwin v Lamarck
While in contemporary biology Charles Darwin’s views generally are preferred to Lamarck’s, the view of evolution more appropriate to the study of organisations may be Lamarckian, rather than Darwinian.
While Darwinian thought remains central to our understanding of evolution and, as a consequence, remains fundamental to our understanding of ecological systems in nature, an old intellectual antagonist of Darwin’s may be far more relevant in understanding the ecology of business. That antagonist, widely held to be the loser in the evolutionary struggle for dominance with Darwin’s thoughts on evolution, is Jean-Baptiste Lamarck.
Lamarck, born in France in 1744, biologist and author of Flore français (French Flora) (1773) and Philosophie zoologique (Zoology) (1809), was the dominant thinker on evolution before Charles Darwin came on to the scene.
Lamarck’s study of invertebrates in Histoire des animaux sans vertèbres (Natural History of Invertebrate Animals) (1822) led to the conviction that species evolve through the hereditary transmission of acquired traits, by means of which each species perfects its adaptation to its environment. For example, Lamarck maintained that the giraffe developed a long neck by stretching to reach tall trees, then passed this characteristic to its offspring.
Lamarck’s theory of inheritance of acquired characteristics was replaced by Darwin’s theory of natural selection.
Darwin's theory holds that individual variability means that some organisms have a slight advantage over others in their particular ecological niche. That advantage, such as a longer neck when vegetation on or close to the ground is scarce, will allow the organism to be a better competitor in the “struggle for existence”.
The favoured organism will produce more offspring, which in turn will inherit the advantageous qualities, such as a longer neck. Through many generations, this process will produce an animal with a very long neck that is well adapted to grazing on trees, such as a giraffe.
Well then, you might think that all you have to do is to pick up where Darwin left off, leaving the marketplace to decide what is best. Unfortunately, the answer is not so simple, partly because evolution is blind, it does not care who wins or who survives – or why.
Smith’s belief in the benevolent results that would flow from the actions of “the invisible hand” was perhaps misplaced. Smith’s invisible hand, like evolution, is a blind force, that does not necessarily result in progress, if progress is defined as improvement. Similarly, evolution may result in extinction or in reversion to an earlier (or “lower”) state, if that is what the environment and chance (or complexity and chaos) combine to produce.
A classic example in the field of technology is the success of VHS over Betamax technology in the manufacture of videocassette recorders. Betamax was technically superior (though some would disagree, see here), but VHS was better suited to the commercial environment in which both products had to survive. In the realm of biology, innumerable species have disappeared from the face of the Earth; some, like dinosaurs for example, disappeared after a very long period of existence and evolution. For such species, the culmination of evolutionary progress was extinction.
The dramatic collapse of the Eastern European command economies is another example of extinction, in some cases, of reversion in other cases, and of improvement in others. East Germany disappeared altogether, swallowed into a reunified Germany. The Russian economy has yet to return to pre-Yeltsin production levels. Countries like Poland or Hungary are faring much better as capitalist economies than they did as command economies.
The unifying theme is that each of these entities has had to adapt to changing environments, with very differing outcomes, despite shared conditions and common circumstances. It is ever thus in the world of business, as an analysis of the Fortune 500 lists for the last few decades will illustrate – only a few survive more than a decade or two.
Whether in nature or in the economy, the changes wrought by natural selection reflect only one value: fitness to survive in a given environment. Ergo, change the environment and ipso facto change the pattern of life, growth and death for all those who inhabit it.
It is the system that matters, as we will see in the next instalment.