After Success, Devolution

The tightly linked nature of the emerging economy makes it behave like a biological community. Wars and battles were the allegories of the industrial economy. Coevolution and infections are more apt in the new economy.

Companies are like organisms evolving in an ecosystem. Some ecosystems in nature offer few opportunities for life. In the Arctic there are only a couple of strategies for survival, and a species had better get good at one of them. Other biomes are chock-full of opportunities, which are in constant flux, appearing and disappearing as species jockey for their niches. The harmony we attribute to nature is not static perfection but a complex dance of ups, downs, trips and falls, and balance regained.

Rich, interactive, and highly flexible in shape, the network economy resembles a biome seething with action, a jungle in fast-forward motion. New niches open up constantly and vanish quickly. Competitors sprout beneath you and then gobble your spot up. One day you are king of the mountain, and the next day there is no mountain at all.

Biologists describe the struggle of an organism to adapt in this type of habitat as a long climb uphill, where uphill means greater adaptation. In this metaphor, an organism that is maximally adapted to the times is situated on a peak. Imagine a commercial organization instead of an organism. A company expends great effort to move its butt uphill, or to evolve its product so that it is sitting on top, maximally adapted to the consumer environment.

All organizations (profit and nonprofit alike) face two problems as they attempt to find their peak of optimal fit. Both problems are exacerbated by the constant turbulence of the network economy.

First, unlike the industrial era's relatively simple environment, in which it was fairly clear what an optimal product looked like and where on the stable horizon a company should place itself, it is increasingly difficult in the network economy to discern what hills are highest and which summits are false.

In biological terms, the new economic landscape is "rugged," disrupted by gulfs, precipices, and steep slopes. Trails are riddled with dead ends, lead to false summits, and made impassable by big-time discontinuities. Because the economic terrain is jumbled with no overall pattern, there is no certainty that a company intending to head up a slope toward a peak new market is actually climbing anything larger than a hill. In biospeak, they may succeed in getting to the top yet find themselves stuck on a suboptimal peak.



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This is a blog version of a book of mine first published in 1998. I am re-issuing it (two posts per week) unaltered on its 10th anniversary. Comments welcomed. More details here.
-- KK