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Evolution of Business: Are You Leading Your Business into Extinction?

by Richard Barrett

This is part 1 in an ongoing discussion.
Evolution may be one of the most powerful forces in the world. It is certainly one of the most peculiar natural forces, with the unusual characteristic of being a long-term, natural statistical process with no particular goal. Because it is statistical it is not as dependable as the law of gravity. Because it is statistical, it operates over thousands of trials, so it operates over long time scales – often millions of years. It does not have any particular goal, but it does seem to move in particular directions. Finally, it operates with a very simple set of rules, needing only some life and three actions to work its magic:

  • Replication (Reproduction)
  • Variation (Mutation)
  • Selection (Survival)

Evolution starts the survivors of the last generation and uses them to produce the next generation. Replication is very good, but not perfect, so a few variations creep in. This new generation, with its variations, competes in the environment. The survivors then seed the next generation. While this process appears almost trivial, over millions of generations (or statistical trials) the random process of evolution has created some amazing forms of life, including people who are reading and writing this blog.

If evolution is so powerful, can we use its basic principles to drive improvements in a business? Yes, but the deeper question is how. Before digging into that question, let’s investigate three environmental conditions required for evolution to operate.

  • Evolution requires many trials in each generation, because it is a random process. Fail often.
  • Evolution operates only over a large number of generations. Fail fast.
  • The external selection criteria (the measure of fitness) must be stable over many generations.

In short, evolution won’t work in any environment that does not provide these three conditions. Some operations within a business might provide these conditions, while other business operations might not.

Celebrate Failure—Fail fast, fail often.

In the late nineties (in the last century), many business books and business consultants preached about “celebrating failure.” One popular expert took the concept even further, exhorting his readers to “fail fast, and fail often.” Little did he know he was advocating an evolutionary approach to business. While it makes no sense to celebrate failure per se, it does make sense to celebrate failures which identify dead-end paths. The quicker a company can explore and eliminate opportunities, the quicker it will find good opportunities to exploit. A business seeks successful markets, successful products and successful customers. In the search for these successes a business will encounter many dead-ends, or failures. Failing fast and failing often will accelerate the discovery of the successful markets and products. In evolutionary terms, the business will discover survivable niches in its environment only as rapidly as it explores its business environment. Therefore, don’t celebrate failure, but work hard to fail fast and often.

Evolution has a high failure rate at every level. Within a single generation, very few of the members survive to propagate. Of all the acorns an oak tree grows, almost none actually grow to be another oak. Most don’t even survive to become a sprout. Within each single generation, evolution fulfills the exhortation to “fail often.”

Evolution also prefers to “fail fast.” In the mammal kingdom, evolution starts a new generation every year for large animals, even if an individual mammal may survive many years. But evolution is not locked into the annual calendar. At the bacteria level, evolution can starts a new generation every few hours or so. In a business what are the natural generation time cycles for various operations? How can a business accelerate its generational cycles to “fail faster?”

Selection Criteria – External, not Internal

Evolution simply provides the experiments, by creating variations. The environment provides the selection criteria that pick the winners. Each species “discovers” these environmental selection criteria by watching which the variations survive. Each of these variations contributes a small amount of improved survivability to the species.  It is critical to understand that the selection criteria are not provided internally, by a president, business owner, or central planner. The business must discover the natural selection criteria in its environment—its customers, competitors, suppliers, and partners. This is particularly difficult for most businesses because, as business leaders and owners, we think we should “lead” the business.

In addition to being hidden in the environment, selection criteria also change over time, usually slowly, but sometimes suddenly. Dinosaurs thrived largely unchanged for hundreds of millions of years. Over that time the environment changed little, so the selection criteria for survival changed very little. Dinosaurs, already pretty good at surviving in a hot, humid environment, continued to thrive while evolution made only small changes at the margins. However, a sudden cataclysm (huge meteor, giant sunspot, massive volcanic eruption or something else?) changed the environment almost instantly. Hot and humid switched to cool and dry. Swamps dried up, plants changed and selection criteria for survival changed accordingly, faster than dinosaurs could adjust. A previously marginal species—prototype mammals—had the unusual ability to regulate its body temperature internally. While dinosaurs could not stay warm in the new environment, the prototype mammals thrived.

Several million years later, we are reading and writing business blogs. In this environment of constant change, the selection criteria for survival in business change swiftly, sometimes overnight.

Business leaders and owners have great difficulty in discovering the selection criteria for business survival. Even worse, when a business leader finally does “get it right,” the criteria for business survival change, leaving the business leaders leading furiously in the wrong direction.

So, what do we do? The good news is that business leaders are not evolving into extinction. But, the requirements for business success are evolving, swiftly.

Are you leading your company into extinction?

Tune in next week as we explore in depth how a business can evolve toward success.

One Response to “Evolution of Business: Are You Leading Your Business into Extinction?”
  1. MAPping Company Success Says:

    […] Post from: MAPpingCompanySuccessPreviously…. we discussed the three functions necessary for evolution: […]

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