While it is rarely explicitly acknowledged evolutionary thinking is central to business theory. People often believe selection pressures change populations competing in markets. (How exactly this happens is often a little vague).
Armen Alchian was an early proponent of evolutionary thinking in modern economics. He suggested that if enough managers headed off in random directions then some would follow a course well fitted to the environment. (Think monkeys typing Shakespeare). The idea is that managers who succeed may just be the lucky ones whose strategies happened to fit the environment well at the time. Winners are not necessarily those with the best thought out strategy but the luckiest. “Success is based on results, not motivation” (Alchian 1950)
Why is this insight still important more than sixty years on? For at least two reasons I think:
1) Managers don’t need to make optimal decisions for markets to work well. This has profound consequences for decision making research. Experiments showing people make sub-optimal decisions may prove nothing about markets. Markets have their own evolutionary dynamic independent of the managers involved.
2) If luck plays a major role in market outcomes then interviewing a successful manager may be pointless as he or she won’t necessarily have any wisdom to share. People win the lottery but the winners have no strategy worth the name. Arguing business is only luck is surely too strong but the words of some CEOs suggest they aren’t any cleverer than the rest of us.
The lessons from Alchian: 1) Evolution of markets matters and 2) Jack Welch may not be especially bright.
Read: Armen Alchian, Uncertainty, Evolution and Economic Theory, Journal of Political Economy, 58, 3 (June 1950)