John Kay - Darwin’s humbling lesson for business

Darwin’s humbling lesson for business

Your correspondent is sitting below a large and ugly statue of Charles Darwin, overlooking the bay where the great scientist stepped ashore on Chatham, now San Cristobal, the most easterly of the Galápagos Islands I am here to discuss the ways in which evolutionary theory can contribute to our understanding of social sciences.

It seems barely possible that careful observation of finches, mockingbirds and tortoises could fundamentally change the way we think about the world. But in the 19th century it did. The Galápagos, 700 miles from the mainland of Ecuador, contain flora and fauna that differ from those of the rest of the world and differ, but less, from island to island. The genius of Darwin was to apprehend the process by which this pattern came about.

Evolution is a process with three elements; variation, selection and replication. Changes happen, a few of these changes yield advantages, and such changes tend to be reproduced in subsequent generations. The extraordinary outcome – so far – reaching in its implications that Darwin hesitated to publish his ideas – is that designs of extraordinary complexity and efficiency can be achieved without the aid of a designer. Designs can emerge beyond the comprehension of any individual.

That insight, and the mechanics of variation, selection and replication, are relevant to many problems other than the origin of species. Modern business has developed as a result of the variation that comes from experiments in products and business methods, the selection by customers and capital markets of adaptations that add value (and the rejection of those that do not), and the replication by competitors of strategies that succeed.

But evolutionary thinking has made little progress in economics and encountered vigorous resistance in other social sciences. One source of difficulty is the character of those who favour such extension. Herbert Spencer, the 19th-century philosopher who coined the expression “survival of the fittest”, seems a ludicrous figure to modern eyes but was highly influential in his time. Spencer saw social evolution as a process of progressive advance through natural selection, an idea developed by eugenicists, who advocated selective breeding to improve the quality of the human stock.

Eugenics was comprehensively discredited when the Nazis took the argument to murderous extremes. And even today, the idea human behaviour might have biological origins is tainted by these fascist and racist associations. When EO Wilson, the distinguished biologist, applied the insights he had gained from the study of communities of ants to human social organisation, his lectures were picketed and he was doused with water at a meeting of the American Association for the Advancement of Science.

But the demonstrators had little understanding of the points at issue. To describe evolution as “the survival of the fittest” is in a sense accurate but also profoundly misleading. The process of evolution is one of adaptation rather than improvement. The Galápagos tortoises survived for millions of years, not because tortoises are the master race, but because they are suited to a location characterised by mud, plentiful vegetation and a dearth of mammalian predators.

The match between capabilities and environment is the key to the success of the tortoise. It is also the key to successful business strategy, the effectiveness of institutions, and to personal development; and the evolutionary mechanisms of adaptation, selection and replication are as much at work in these areas of human activity as on the Galápagos. Evolution is a process of trial and error that receives regular feedback and tends to reproduce success. That is equally a description of how a market economy aligns productive capabilities with consumer needs.

Sitting at the feet of Darwin on a remote Pacific island with unique vegetation and wildlife is an invitation to humility. What worked best on one Galápagos island was not necessarily what worked best on another, and the reasons might not be obvious: it required 20 years of observation by Peter and Rosemary Grant, a century after Darwin, to understand properly what the 19th-century sage had seen when he observed the island finches. People who believe they understand complex ecosystems, biological or economic, generally know less than they think. “Evolution is smarter than you are”, but you need to be smart to understand the implications of that observation.

 

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