Business Adaptation and the Biology of Failure

I’m not a professor, but here’s my business school metaphor for adaptation and survival: Wear a business suit and act calm at all times; evade local detectives, the FBI, and Mexican gangsters while you assassinate a heavily guarded Asian badguy inside a nightclub blasting Paul Oakenfold (in Korean, no less); do this while you hold your own chauffeur hostage;  catch flight home at LAX. But most businesses are far more complacent than the adaptive, erudite character Tom Cruise portrays in Collateral.

Traditional newspapers in major U.S. cities are filing for bankruptcy under selection pressure from the changing environment they failed to adapt to: increased media outlets, more online readers, and less advertising revenue.  Jeff Jarvis recently noted the stark differences between a modern company like Google and a failing one like the San Francisco Chronicle in a blog post he aptly named “Time Travel”.

As economist Paul Ormerod points out in his excellent book, Why Most Things Fail, patterns of business extinction and species extinction are very similar, with long periods of stability interrupted by large spikes of failure (a.k.a. “punctuated equilibrium“). One of Omerod’s theses is that while the future can be quite difficult to predict, experimentation in the present can help adapt to an uncertain future.  The benefits of genetic diversity in living organisms operate on the same theory, and are useful in practice.

Just the opposite of experimenting, media coverage of newspaper failure focuses on giant office buildings filled with cubicles and landline phones, lists of addresses where employees hand deliver products daily, and disruptions of pension plans and workplace friendships. But in biology and business, the nimble, innovative, and adaptive do well in turbulent times. Somewhat ironically, this line from Citizen Kane sums it up: “I don’t know how to run a newspaper, Mr. Thatcher, I just try everything I can think of.”

Unfortunately, most things fail. Nearly all of the species that have ever existed are currently extinct. The Rocky Mountain News was published for nearly 150 years, making people sentimental about its demise. Past success is irrelevant to survival, however. Dinosaurs roamed for millions of years, but their extinction made the rise of mammals possible. So too will new companies fill niches abandoned by failed ones.

Students should ask why business schools offer so many courses on economic theory, operations management, and accounting principles that teach about “doing” business, but don’t offer many courses about “thinking” business. Here are some of my suggested topics: (a) ecological niche theory, (b) coevolution, cooperation, and competition, (c) genetic diversity and adaptation in fluctuating environments, (d) network science and emergent behaviors of complex systems. Does your business school make Darwin required reading?

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This post was written by:

Mark Drapeau - who has written 225 posts on Dr. Mark D. Drapeau.


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5 Comments For This Post

  1. JSchmitt (@cloudspark) Says:

    Mark – on target with the concept of teaching “thinking” about business and not just the operations/marketing/economics of industry. Best quote: “Past success is irrelevant to survival.” Well said lest anyone get complacenet and rest on their laurels/accolades/sales figures/stock prices.

    I’d add two to the recommended courses: 1) organizational/group dynamics so that you can learn about tripping points that contribute to failure and 2)neuropsychology/neuromarketing so that you can be in front learning about this new field and its application to behavior and patterns. We’re complex as humans and gaining more understanding can give you a competitive advantage to your survival.

  2. John Bordeaux Says:

    Mark – I teach an (online) MBA course: Effective Leadership and Business Ethics. Fairly introductory, but I have already incorporated d) above, which will not surprise you. Looking into expanding into other courses using elements of a-c. One focus area I’m involved with is something called “Sustainable Enterprise Network.” Basically a long-range vision that will require a-d and more to realize. Thanks for this view – it helps me gain depth in naturalistic systems as I combat the blinded warriors of engineering.

    One note: predicting the future (teleology) is actually downright impossible to do, not just difficult. Kant knew this way back when, and Taleb is making a mint writing and talking about it.

  3. anthonyb Says:

    Thought provoking and on point.
    We can all use a bit of biology in all disciplines of human endeavor

  4. Karen Moorhead Says:

    Mark,

    I sell real estate so you can image how true this article is for people in my business. I especially like, “experimentation in the present can help adapt to an uncertain future”. So true and so important to remain relevant for the future and have business tomorrow when the market rebounds.

    I found you from twitter where I follow you & I’m @a2karen for Ann Arbor.

  5. Noel Dickover Says:

    Kenneth Boulding called this the phenomena of being adaptive vs being adapted. Adapted businesses are optimized for there operating environment – they are “adapted” and stay dominant as long as the operating environment is static. Adaptive organizations are never really optimized, but are instead designed for environments experiencing radical change. That doesn’t ensure their viability, but according to Beer’s Viable Systems Model (Based on the law of requisite variety, which is the foundation of cybernetics), this is a MUCH better strategy for organizations in transient operating environments.

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