Evolution is the real hidden hand in business

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Businesses are complex systems. We tend to infer design where there was only adaptation and improvisation, and to attribute successful business outcomes to the realisation of some deliberate plan.

Unless you have been asleep, you will have noticed that 2009 is the 150th anniversary of the publication of The Origin of Species. Evolution is one of the most seminal of scientific ideas. Yet the application of evolutionary approaches to problems of business, politics and society has been slow.

That application took two false steps. Herbert Spencer, the 19th-century philosopher, coined the striking phrase “survival of the fittest”. A bundle of associated ideas was thereafter widely but probably unjustly attributed to Spencer. It included a Panglossian conservatism. Whatever might happen was generally both inevitable and desirable. It also justified the assertion that social and economic organisation should be based on aggressive pursuit of self-interest.

Although such thinking continues to exert influence at the University of Chicago and in the City of London, it discredited the wider application of Darwinism in broader intellectual circles. Evolutionary thinking also became associated with eugenics. Selective breeding was not just relevant to racehorses and vegetables, but might develop human capital. For a time, eugenics attracted the attention of many intelligent, ethical people. But then the Nazis began a genocidal campaign to eliminate what they considered inferior stock and eugenics was forever discredited.

Despite these historic setbacks, the wider application of evolutionary thinking is again fashionable. Fine scientists such as W.D. Hamilton and John Maynard Smith not only explained the mathematics of evolution – it took a further century after Darwin’s publication for this to be done properly – but showed that many other processes might be described in evolutionary language. Brilliant popularisers, such as Richard Dawkins and Stephen Jay Gould, explained Darwin to a wide public. Prof Dawkins’ inspired metaphor of the selfish gene encapsulates the basic mechanism of evolution in a single phrase.

There are many legitimate applications to business and society. Another of Prof Dawkins’ powerful metaphors describes the blind watchmaker. This idea originates with the Rev. William Paley, a 19th-century theologian who described the experience of a man who stumbles on a watch lying on a heath. The intricacy of the discovered object shows indisputable evidence of design. For Paley, and for many who thought the same way, the complexity of the natural world was evidence of a Designer, and hence provided proof of the existence of a Divine Being.

Within a few decades, Darwin and his followers would throw Paley’s argument back in his face. Evolution could produce outcomes whose complexity was beyond the capacity of any – human – designer. All the resources of modern optics and information technology cannot yet rival the sensitivity and flexibility of the eye. Evolution, “the blind watchmaker”, is more skilled than any sighted manufacturer.

Businesses are also complex systems. We tend to infer design where there was only adaptation and improvisation, and to attribute successful business outcomes to the realisation of some deliberate plan. Large companies are represented as the expression of the will of their chief executive – General Electric is, or was, Jack Welch; Microsoft is, or was, Bill Gates.

Such thinking repeats Paley’s error. Large and complex corporations not only are, but could only be, the product of incremental change and adaptation. The specific mechanisms of organisational evolution differ from those of biological evolution. But their common essential characteristic is inexact replication. Such replication is associated with a tendency to favour modifications that improve the fit between the organism and the environment. There is a better shortened explanation of the success of evolution than the survival of the fittest. It is that “evolution is smarter than you”.

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