Occasionally you read a good book on holiday.
This time I read a great book : the Origin of Wealth.
For those of you who have ever come across complexity theory (or chaos theory) and wondered how to make it work in business then this McKinsey guy has got pretty close.
His big idea is that evolution is not a metaphor for how business works, it is exactly how business works.
As he puts it, traditional economists made a category mistake when they described the economy (and hence businesses) as stable equilibria. They were wrong. The economy is actually a "complex adaptive system" just like the biological world. Both the economy and the ecosystem are members of one group : complex adaptive systems. Organisms and organisations work in parallel systems. They are not metaphors of each other.
Thus it is evolutionary pressure and complex interactions within the system that a causes growth, variety and mass extinctions whether of organisations or organisms.
Evolution is not a metaphor for how business works. It is precisely how business works.
The implications for this "discovery" are numerous.
But as a taster for how it can be applied to business the formula for how evolution works is DIFFERENTIATE, SELECT, AMPLIFY, REPEAT.
This reminds me of the business adage : we try lots of things, the one that works we do more of and we call that our strategy.
In longer hand (and taking my favourite issue of the day "how should PR companies respond to social media?") we at Chime should (DIFFERENTIATE) create multiple responses to blogs etc (ranging from buying a specialist, setting up internal units, re-training people, through to having a business unit that ignores it). We should see which ones clients, revenue and talent support (SELECT). Then we should pour more resources into the most successful variants and imitate their success (AMPLIFY). And repeat.
How this is different from classic business planning is you don't assume that you can gather enough insight and data about a market (or the impact of a new technology) in advance. You don't try to analyse it into one perfect strategy that you then implement. No one has more wisdom than the market.
But you do give yourself the chance to get it right by being in the market. Because some times strange gawky creatures get selected by the evolutionary process as the best of breed.
Sounds very interesting indeed - have added it to my "must read" list. Cheers.
Posted by: Antony Mayfield | 09/06/2006 at 08:51 AM