On Evolution, Darwin and BPPM

Sean Silverthorne, editor of Harvard Business School Working Knowledge, posted a blog article titled “The Mother of All Disruptions” that starts off with the following statement : The corporation is tumbling through a period of uncertainty it has never seen before, one that will change the nature of business forever. Sean states that through all the wars, energy crises, technology revolutions and economic instability it was only a matter of time until equilibrium was restored and the world went on more or less as it was. But it seems that is no longer the case. It seems that the big thinkers at Harvard believe that constant change will now be the norm as the core technologies (computing, storage and bandwidth) that are now the utilities in our new world, are not stabilizing. But should this be news to us? Evolution has long been how we develop, improve and sometimes destroy our hard work.

Reading Sean’s blog reminded me of a book that I bought around 2000 or 2001 that takes natural laws from physical sciences and applies it to business. Richard Koch’s “The Power Laws: The Science of Success” is a compelling read and probably more applicable now than it was in 2000. One of the paragraph headings in the introductory chapter speaks of “The progress from order to chaos” and this statement always intrigued me. It seems that the world becomes more complex and less explainable the more we learn and the cleverer we get. Koch starts off in the first chapter with Darwin’s theory on Evolution by Natural Selection. “If selection did not apply to ideas, technologies, markets, companies, teams and products in precisely the same way as it applies to species, we would all be working on the land struggling to avoid malnutrition and famine. Selection drives all material progress” according to Koch.

So what does that have to do with the current economic turmoil in the market and “The Mother of all Disruptions”? The answer may be in Koch’s analysis of Natural Selection applied to economic sciences. First off, he states that Darwin’s theory of natural selection is based on 3 simple observations:

Creatures systematically overproduce their young, without exception. Not all the young will survive.

Secondly, all creatures vary.

Thirdly, the sum of that variation is inherited.

The first observation can be seen in the fiercely competitive and overcrowded economic markets and still it seems to spawn new start-ups in every industry. All these businesses and markets vary and these variants develop from similar businesses and markets. But Darwin observed that there is a process whereby some species survive and he coined the term Natural Selection defined as “The preservation of favourable variations and the rejection of injurious variations”. The book provides a detailed explanation of Koch and Darwin’s theory on applying natural selection to business but the fundamental ideas are:

There is variation (we breed new adapted species), then selection (only a few make it in the new conditions), then more variation based on those that survive, the selection and so on. Variation is based on the fact that the parents of the offspring are individually unique and this gives birth to a unique new offspring. No two entities are the same.

Being successful or “surviving” is based on fitting the “conditions of life”. The mutation from the unique parents creates a new entity with its own characteristics and these may improve or worsen the odds of survival. Those that don’t improve may disappear, just look at the dinosaurs.

Diversity leads to efficient use of the land, but only those best suited to adapt to the environment will survive.

I think you get the point and we are currently faced with a situation where conditions were favourable for a long period of time, businesses overproduced their products, services and their young. Conditions have changed, it is now time for selection, we have the “Mother of all Disruptions” and it may never return to the stable state that we are used to. Those that are not suited to adapt will not survive. It is a law of nature.

I believe that many of the large organizations that are now closing their doors, and the sad loss of jobs, are directly related to the fact that they only marginally survived in the good times and now that the next selection cycle is on us, they are ill-equipped to deal with Darwin. Geoffrey Moore (author of Crossing the Chasm) released a book in 2005 titled ” Dealing with Darwin: How great companies innovate at every phase of their evolution“. I highly recommend it.

Koch concludes in the chapter on natural selection that there are four lessons for economic selection for products and marketing:

Product ideas will be stronger, more likely to survive and reproduce, if they have emerged from a struggle for life from substantial competition.

New product variants will arrive sooner or later, whether you introduce them or not.

Scatter new breeds around your core product: fill up the potential product spaces so that newcomers can’t move into these niches.

Product and service development should always be accelerated.

RA Fisher developed a theorem in 1958 based on Darwin’s law of natural selection that markets, products, brands, technologies, companies and individuals who improve their fit with the environment faster (than other markets…) will expand faster and be more profitable. It sounds logical and stating the obvious, yet many businesses don’t know how to leverage this basic law.

Business processes are the DNA strings that make a business unique and business performance management provides the vital signs of life in an organization, showing whether it is improving, stagnating or dying. By combining these two methodologies into Business Process and Performance Management (BPPM) creates an opportunity to adapt the organization to better suit the conditions and improve the chance of survival.

Businesses should use this current disruptive business cycle to best adapt themselves to what the future conditions may require, whether we return to our previous equilibrium state or whether we have now entered the “Mother of all disruptions” and constant change will become the norm. Take the pulse and vital signs of the business, adapt the DNA to make it suit the environment, measure the impact of the changes and repeat the process. Establish the key process performance indicators of your business, automate those processes that are suited in a flexible Business Process Management Suite (BPMS), analyse the results and trends of the performance indicators and maintain an agile approach to the business processes. Change them to fit the environment or stand the chance to loose out in the Natural Selection cycle. It is a law of nature.