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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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