I think evolutionary thinking has a lot to offer strategic discussions. We shouldn’t be too simple and expect perfect matchings from biology. Still, good ideas can carry over neatly to give things to consider. Here I examine a piece in the Harvard Business Review that looks at firm strategy in unpredictable times. I want to draw out a lesson which I am calling: In praise of redundant capacity.
Life Is Complex And Unpredictable
Martin Reeves, Simon Levin, and Daichi Ueda argue that firms exist in a complex and unpredictable world. As such, it can be challenging for managers to apply the simple advice they might have learned. They won’t always know what is happening and that is normal.
First, they [managers] need to be realistic about what they can predict and control.Reeves, Levin, and Ueda, 2016, page 5
Given this, the authors argue that firms need to be structured in ways that can cope with a changing world. In such a world one can’t be confident that your predictions are any good.
A good response to unpredictability is to maintain diversity of thought. To do this you can encourage different thinking. Question assumptions, and ask ‘why’ a lot. Allow people to try new things even if they don’t seem like great ideas to you. Failure is a great learning opportunity. One reason to embrace diversity of thought is that if the mainstream prediction isn’t right an alternative approach might turn out to be correct.
Similarly, some sort of modularity might be a good thing. A modular system is less vulnerable to a single disaster. When something goes wrong in a centralized structure it can all fall apart pretty quickly. Modular systems are less likely to be taken out by a single critical failure. The authors argue that contagion is less of a problem.
This leads to the lesson offered: in praise of redundant capacity. Having a bit of redundant, what might alternatively be called wasted, capacity isn’t necessarily a bad thing and shouldn’t be removed in cost cutting.
In systems with redundancy, multiple components play overlapping roles. When one fails, another can fufill the same function.Reeves, Levin, and Ueda, 2016, page 8
The authors share the story of Ericsson a leading mobile phone manufacturer in the 1990s. They had a single-source procurement strategy. You can see why someone might think that this was a good idea. The source the firm settled on was likely the cheapest/best. On paper it made sense. Yet, when a fire took out that source Ericsson had no way to cope. It would have been better to maintain a bit of redundant capacity. Tolerating redundancy means losing a little in the short term. Still, it can mean gaining everything in the long run.
The implication of a changing, unpredictable world is that things will go wrong. So we should be prepared for this to happen. For academics, I’ll say don’t stress too much about everything in your portfolio making sense towards a cogent big story of what you are interested in. A better way of saying this might be don’t over-specialize to a small single field. It might turn out no one is interested in that field in the long run. Have some capacity to work on something else even if you think it isn’t the most efficient thing to do. (Obviously, you can take this too far). For more discussion of the benefits of range, see here.
For a manager in praise of redundant capacity means that sometimes it might be best for the business not to ruthlessly pair down staff. When jobs change try and protect the staff more than the doing numbers might indicate. Being a decent employer is more than just the right thing to do, it could be a key to business survival.
For more on evolutionary thinking in marketing and strategy see here.
Read: Martin Reeves, Simon Levin, and Daichi Ueda. “The Biology Of Corporate Survival” Harvard Business Review 94.1 (2016): 2.