The formula behind what it means to be a successful business is continually being redefined; the academic instruction in support of current thinking inevitably lags by many years or more.
Part of the issue seems to be introspection: powerful insights can be gained by simply stepping outside of your chosen field, and looking at other disciplines that might shed some light at the forces in play.
And I would argue one of those great outside perspectives is evolutionary biology.
While no analogy is perfect, a good analogy can illuminate in new ways and create interesting perspectives.
See if you agree.
Evolutionary Biology 101
In a nutshell, evolutionary biology is the study of the processes that are responsible for the diversity of life here on Earth: attempting to explain existing species differentiation, as well as understand the mechanisms by which new species are created.
In my view, successful species are roughly equivalent to successful business models. The natural environment can be very harsh in picking winning biological species; the business environment can be equally tough on businesses and their underlying models.
A species is nothing more than a successful genetic blueprint; an industry or sector is nothing more than a collection of successful business model blueprints.
Fast-changing environmental conditions (climate, predators, competition, etc.) can quickly topple a dominant species; the same is true in the business world.
If you can accept -- for the moment -- the rough equivalence of both models, what sort of interesting parallels can we pull out?
The Joy Of Richard Dawkins
Regardless of your personal feelings towards Richard Dawkins, he is unquestionably a man of seriously uncomfortable ideas: eloquently articulated and superbly defended.
One of his many landmark books -- The Selfish Gene -- paints an unflattering picture that we -- as organisms and human beings -- are nothing more than containers for genes competing for survival. As living creatures, we have no more purpose than to advance our genetic pool.
However disconcerting that thought might be, there's a strong analogy when we consider business models.
Shareholders care about economic success and usually little else. If the business model delivers economic success, it grows and thrives. And, if not, it's sold off or shut down -- and the resources recycled to a business model that is doing better. Harsh as that might be to employees and other stakeholders, that's the way the world works.
Winning species thrive and get to reproduce. Winning business models thrive, expand and are emulated by others. Fail at either game, and you're food for the next round.
Maybe Richard Dawkins should be required reading at business schools?
The Focus on Business Models
In the business world, we tend to make heroes of the leaders behind successful business models. There is nothing wrong with that; success in the face of adversity should be celebrated and rewarded.
But evolutionary biology has an interesting concept that should be considered: the "founder effect".
When studying isolated populations (usually on remote islands), biologists frequently can't come up with an explanation for certain species features that might be explained by selection or evolutionary processes.
As an example, over half of the residents of the island of Tristan de Cunha are asthmatic. Hard to make an argument that being asthmatic is some sort of adaptation, but it makes more sense once you understand that a high proportion of the original 15 settlers were also asthmatic.
Evolutionary biology understands that luck and happenstance plays a non-trivial role in natural selection and evolution; perhaps business people should have a greater appreciation that the same thing is true when considering successful business models.
Just because some company got lucky with their business model doesn't mean that others will enjoy the same success.
Another fascinating parallel concerns a species ability to adapt (through modifying its genes or behavior) to new conditions faster than those it competes with. Not all species can adapt at the same rate. As an example: insects, while not especially glamorous, are fast adaptors.
In the business world, we're quite familiar with once-successful companies that couldn't adapt fast enough to a quickly-changing landscape.
As a result, they lose revenue, customers, talent, capital, etc. -- and become food for another more-promising business model.
There are other interesting parallels to explore, but it's time to move on …
Here The Analogy Ends -- Or Does It?
Looking deeper, many successful businesses are not singularly pure when it comes to their business model; they're actually a collection of related business models -- each with its own DNA fingerprint that defines how it goes about creating value for customers.
Within our world of information technology, there's the hardware business, the software business, the customer service business, the professional services and consulting business, the leasing and financing business, the distribution business, the service provider business, the integrator business and so on.
Each business model is very different; each can work together in interesting ways as part of an ecosystem.
If your particular business doesn't have one of these, you tend to partner with others, creating a symbiotic extended ecosystem of cooperation and more usually coopetition.
And, yes, there are interesting examples of cross-species partnering in the biology world. But, make no mistake, every species is out for their own interests. Just as every business model is.
In biology, genes mutate, differentiation is created, and nature selects winners. In business, we think of this as innovation -- trying new things out, and seeing if they create new or additional value.
When it comes to the topic of innovation, the discussion inevitably gravitates to creating entirely new products or services that customers want. Here in the information technology world, we are inevitably drawn to the new shiny technology as a potential "game changer".
While there's nothing wrong with this, it tends to obscure a more important area of innovation, and that's coming up with new business models. If business models are the genetic blueprint behind a successful business, perhaps more priority should be given to innovating new ways of doing business.
Not every species variation is successful, nor is every new business model. But if you try enough of them -- either developed organically or through acquisition -- your chances of long-term success are greatly increased.
An example? A few years ago, most people described "cloud" as a set of technologies. In reality, it's a new business model for the production and consumption of IT services -- something Amazon appears to understand. Another example: big data isn't really about technology; it's about using information in entirely new ways to solve problems. And so on.
A Recursive Innovation Model
Any large organization has a recursive structure: corporate, multiple business units, individualized functions within those business units, teams within functions, and individuals within teams.
While it might be easy to pass the buck upstairs, business model and process innovation can (and should!) occur at every level in the organization.
Yes, there's ample room to innovate at a corporate strategy level, but that same opportunity is available to both business units and supporting functions -- like IT, for example.
Even we as individuals and members of small teams have ample opportunity to innovate and experiment -- if we deem it to be a priority. Having been a student of corporate structures for thirty years, groups and individuals who don't innovate tend to get replaced by groups and individuals who do. Natural selection, if you will.
Some get lucky and survive a long time regardless; others are unlucky despite their best efforts. But, generally speaking, a continuous innovation mindset tends to do better than investing in stasis.
The Mandate To Innovate
Successful species must adapt or perish -- that's the way of the world. Successful businesses must innovate around their business models and processes, or ultimately perish -- that's the way of the world.
There is strong evidence that we are going through an accelerated shift to an information economy. The rules for generating and delivering value are changing, and quickly.
If you'd like to go back to our evolutionary biology analogy, consider this a rapid climactic shift.
It's a very good time to be innovating -- out of necessity, if nothing else.
Take a look around your organization. How much innovation -- large or small -- is going on?
Are innovators embraced and supported, or simply tolerated? Are business leaders willing to invest in new ideas, regardless of outcome? Is failure celebrated for the lessons learned, or are people punished for trying?
Are the "new ideas" simply variations of familiar themes, or is there some dangerously disruptive thinking in play?
Innovation is serious, hard work. There doesn't seem to be any shortcut. But some organizations seem to do better than others.
But, then again, it's survival we're talking about here.
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