Survival of the Best Fitted

Although evolutionary notions about business often lack direct grounding in Darwin’s work, evolutionary theory can still help us understand how organizations, institutions, and markets change. Unfortunately, when used to illuminate business strategy, many evolutionary concepts are misapplied. This paper strives to address the garbled strategic advice created by misinterpretations of evolutionary theory, which have led to incorrect assessments of markets and market participants. We examine three widely held beliefs that are based on misapplications of evolutionary theory: 1) profit-maximization strategies inevitably lead to the best outcomes, 2) business is survival of the fittest, and 3) specialization makes you stronger. Applying four standard games (Prisoners’ Dilemma, Chicken, Battle of the Sexes, and the Stag Hunt) to the business world, we created models of competition to track interactions between market entities and demonstrate why many business ideas are based on garbled interpretations of the evolutionary concepts of selection, frequency dependence, and adaptation. The key takeaways from our research are: 1) selection on outcomes does not dictate that aiming for profit maximization will always lead to the best outcomes, 2) frequency dependence means there can be no unidimensional fitness to aspire towards, and 3) it is not survival of the fittest, but best fitted for any particular contest. Simply put, adaptation (both proactive and reactive), not specialization, is the key to success. Recognizing this requires a fundamental shift, inverting the normal strategy sequence by suggesting firms change themselves, rather than seeking to change their world.

• ecosystem organization
• corporate black box
• monolithis corporation
• business transformation