FROM BIOLOGY TO BUSINESS

My grandfather grew up across the classroom from the folks he would compete with
for life.
My father grew up across the country from the folks he would compete with for life.
I grew up across the world from the people I would compete with for life — only they
knew it and I did not! In 1859, Charles Darwin published his book

The voyage included a pristine venue, the Galapagos Islands.
His framework for organic evolution was based on what he observed about
mutation, variation, and adaptation to environmental conditions. He developed the
concept of natural selection, commonly known (after Herbert Spencer coined the
phrase) as “survival of the fittest.” The idea was, organisms that developed various
features differing from the rest of the population tended to prosper and survive and
reproduce if those different features — even slightly different — gave them some
sort of advantage in the environment. For example, a coloration that blended in a
bit better with the surroundings could better disguise an organism from predators,
giving the organism a better chance of survival. These traits would then be passed
down to offspring, and in some of those offspring, advantageous traits might become
even more pronounced.
This theory has been widely taught as a structural explanation for the diversity
of living organisms. It has also touched off countless ideas and debates, of all kinds.
In the modern age, scientists and theologians attack, champion, or modify aspects
of Darwin’s theory to explain the origin and development of life, but the value of
an organized theoretical framework remains. Without passing judgment on its factual
validity,
we can use Darwin’s Theory of Organic Evolution as a way to view the
interplay between key components in a complex, changing system and, by analogy,
understand organizational evolution through techonomic progress.
This parallel
extends the organic to the organizational, the biological to the industrial, Darwinism
to techonomics.

Organic evolution, as described by Darwin, is a process by which organisms
change by mutation during procreation and live or die by natural selection, creating
a stronger successive generation. This theory provides a framework in which to
study, classify, and analyze the diversity of biological life. The techonomic theory
of organizational evolution describes the technological mutation, economic adaptation,
and growth of organizations. In many ways, the success or failure of human
organizations parallel the success or failure of individual living organisms. The
similarities between the processes that drive these two theories will be frequently
used as a framework for understanding the new relative to the familiar. Both
approaches are theories, but they provide a framework for observing patterns in the
changing worlds of life and organizations.

The theory of techonomics is based on personal observations spanning two
decades of business development in a unique period: the dawning of the Internet.
Techonomics views the organization as the evolving “organism.” Unceasingly,
throughout history, organizations are born, grow, mature, and ultimately die. Technology
is the driving force that causes change, or “mutations,” in how organizations
function. The competitive economy is the “environment” that imposes “natural
selection” on organizations based in no small part on their effective adoption of
technology. Successful organizations grow to “procreate” again. Unsuccessful organizations
ultimately become economically bankrupt and “die.”
During the emergent In the U.S. in the year 2000, the number of businesses increased by over
500,000.

While some initiated new operations, others declared bankruptcy or ceased
operations. Figure 1.2 shows the parallel between the life cycle of an organization
and the life cycle of an individual person. Both entities, organization and individual,
begin very small at a definable instant. The organization starts as an individual’s
conceptual idea, the person starts with physical conception. At this stage, both are
fragile, not well defined, and must be nurtured to grow. If gestation continues, birth
follows. Now the entity becomes recognized by the world: the organization files a
legal charter and is named, the child is born and given a name and birth record.
In the early years of life, for both the organization and the person, a tremendous
learning curve and physical development must take place. Size and financial requirements
are small, but the need for guidance, protection, and training are large. The
experimentation and exploration continue for a season of life until both the organization
and the person find direction and focus. At this time, financial requirements
may increase, as resources are needed to pursue opportunities. Business organizations
need growth capital for manufacturing, inventory, sales force, etc.; individuals
need support for things like education, shelter, and transportation as they try to
establish their independence. As maturity comes, both organizations and individuals
reach a plateau of sustenance, knowing their roles and performing those roles in
exchange for the resources needed to thrive.

In the course of time, both organizations and individuals pass away, giving rise
to the next generation. This next generation may look nothing like the previous one
in composition and purpose.

The life-cycle time frame for any entity, organization,
or individual varies greatly, but the idea of generational cycles for a typical lifespan
is relevant to the concept of organizational evolution.

Certainly, throughout history
organizations have been born, grown, flourished, and died giving way to a next
generation more prepared for the demands of the marketplace. Understanding and
describing the factors contributing to the evolution of human organizations through
the ages provides the motivation for the “Theory of Organizational Evolution.”
While the norm is a continual, incremental advance of technology — and this
parallels Darwin’s notions about “gradualism” in evolution — there sometimes
occurs a discontinuous leap of innovation that powerfully impacts the world in an
irreversible way. For example, the discovery of atomic energy, the introduction of
mass production methods, the development of the microprocessor, and the creation
of the Internet represented discontinuous innovations that had significant societal
impacts beyond the realm of technology.

Big, seemingly discontinuous advances like these parallel something evolutionary
theorists call “punctuated equilibrium,” a variation/challenge to Darwin’s theory
that tries to account for seemingly big leaps of development in the fossil record. It
is a concept used to describe changes for which scientists cannot find “gradual”
explanations. But techonomics is an observable theory. Even big, discontinuous
technological innovations do not happen in isolation from the economic pressures
all organizations must endure. They occur within the bounds of science, technology,
economics, and society. The competitive environment of the marketplace ultimately
determines successful innovations that live to see another day.

Survival of the fittest in the domain of the organization is determined by the
economic survival of the organization. Organizations that embrace technology as a
means to continuously improve efficiency maintain and extend their competitive
position. An organization that becomes insular to technological advancement eventually
ceases to be competitive and ultimately fails economically. Therein lies the
generational cycle of organizational birth, growth, and death that mirrors the same
pattern in the living organism.