Startups, Evolution And Recession
by Richard Barrett
There’s good news evolution-wise for emerging companies.
When the environment is stable, evolutionary selection rewards small, incremental changes that optimize survival within that stable environment.
But in times of rapid environmental change, evolutionary selection rewards large, swift changes that track the environmental shifts.
If you work in a small or emerging company, your timing is excellent.
Change is global; it’s accelerating; and it is disrupting every aspect of business. Change is creating opportunities everywhere, from finance to automobiles, from communication to housing.
You are witnessing the greatest opportunities in a generation. Evolution points the way to success, and the playing field is tilted in favor of small, nimble players.
Smaller Species Learn Faster
Evolutionary history demonstrates that change favors the small and nimble species. Times of climatic stability have seen the growth and dominance of a few species. Dinosaurs, those staples of evolutionary discussions, grew and thrived during the Paleozoic era. Few new species emerged, and successful species changed little.
But when the climate changed suddenly around 251 million years BC, probably due to a huge meteor that impacted the earth in the area of the Yucatan peninsula, the dust cloud from the impact rapidly cooled the earth and the dinosaurs could not adapt quickly.
A new type of animal, one with the ability to control its body temperature, emerged. This animal, the ancestor of all mammals, exploded into many rapidly environmental niches. Very quickly many new species of mammals evolved to fill a wide range of ecological niches.
Evolution favoritism stems from one fundamental reason: they adapt faster to new conditions. Evolution gives smaller, species powerful competitive advantages in changing environments:
- Better Focus: Smaller species have fewer contact points with the environment. Therefore they can adapt faster. (Click here for more in-depth information.)
- Faster Testing (Fail fast): With fewer organisms in the species and a smaller overall environmental footprint, each individual organism tests a larger area of the environment. Each test covers more ground. (Click here for more)
- Faster Learning: Smaller species learn faster because the adaptations (knowledge of the environment) travel faster through the species. Communication lines are shorter.
These three advantages combine to give smaller species one single overwhelming advantage:
They have no choice. The structure of evolution is rigged in their favor in times of significant change.
Axiom of Evolution: Smaller species learn faster.
Do Emerging Companies Learn Faster?
Emerging companies can learn faster than larger companies, but there is one big caveat here.
Smaller species have no central planning, no hierarchical structure of managers, and no CEO to direct their evolution—whereas emerging companies have all three of these handicaps. This is of critical import and worth repeating, the potential major roadblocks to success for emerging companies are:
- Central planning
- Hierarchical structure
- CEO
These three factors do not exist in evolution; however, it is likely that your emerging company has all three. Moreover, you cannot imagine how your company, or any company, can operate without any of them.
Given humanities addiction to these structural handicaps, how can you and your emerging company apply the lessons of evolution to learn faster?
Better Focus: this simply means that there are fewer contact points with the environment. Each contact point creates a little drag, or inertia. Each contact point is one more interest group or constituency that must be considered and consulted before moving forward. Create enough contact points and the drag can stop your company cold.
Witness most governmental organizations, especially the US Congress and state legislatures, which have so many constituencies that they no longer make any progress at all. Loss of focus is such a common problem that it has earned many nicknames – scope creep, bells and whistles, death by committee, Christmas tree.
To help your organization focus, consider following another evolutionary axiom:
Evolutionary Axiom of Survival: A variation must survive immediately, in the next generation.
Use this approach to tighten your focus: Ask this single question of every extra feature or function: Does it improve survival immediately, for the next generation? Evolution does not keep a detailed priority list of ideas for future exploration. It has a brutally simple priority ranking—now or not now.
Test Fast, Fail Fast
As a business manager, your role here is simply to drive rapid generational testing, not to pick winners among the variations proposed. Let your customers do the selection. Your role is to run generations as quickly as possible.
Driving rapid generations in your service development process:
- Software projects: compile a functional module every day. Each compilation must show something functional and something improved over yesterday.
- Other products: drive for some measurable result and some tangible demonstration every day. Use the failures to map the environment.
Build on these failures to point the direction of possible success.
Evolutionary Axioms of Failure: Fail fast. Fail forward.
Learn Fast
Disseminate failures rapidly throughout your organization. Post them on a blog, a wiki, even on the office walls. Drive your teams to learn fast.
Next time we will discuss the other two facets of this issue: How to overcome the human organizational handicap vs. evolution’s attitude of “It’s not personal, it’s just survival.”
