Darwinism and a Strategy for Survival in Business

In his essay "The origin of strategy," Henderson (2005) postulates that the key difference between Darwinian natural selection and business strategy is the deliberate and accelerated nature of the latter--a result of human imagination and logic. The analogy between business and biological fitness is based on both entities fighting for limited resources. In turn, those that distinguish themselves with unique survival characteristics continue on, while others die.

To prosper, Henderson suggests that organizations distinguish themselves through a combination of the following:

  1. Purchase price
  2. Function of the product
  3. Time utility (i.e., instant gratification vs later)
  4. Place utility (e.g., proximity of service)

Henderson outlines marketing strategy in the following statement:

Chasing market share is almost as productive as chasing the pot of gold at the end of the rainbow. You can never get there. Even if you could, you would find nothing. . . .

Market share is a meaningless number unless a company defines the market in terms of the boundaries separating it from its rivals. These boundaries are the points at which the company and a particular competitor are equivalent in a potential customer's eyes. the trick lies in moving the boundary of advantage into the potential competitor's market and keeping that competitor from doing the same. The competitor that truly has an advantage can give potential customers more for their money and still have a larger margin between its cost and its selling price. The extra can be converted into either growth or larger payouts to the business's owners.

So what is new? The marketing wars are forever. But market share is malarkey. (p. 99)

The main difference between "natural competition" and "strategic commitment" is that of time. When an organization is not committed to a strategy, a failure to react could lead to quick death. In natural competition, change is much more subtle. "Natural competition is evolutionary. Strategic competition is revolutionary" (p. 100). Other characteristics include the following:

  • Natural competition is low risk.
  • Natural competition uses trial and error with small changes tried and tested.
  • Natural is unmanaged.
  • Business strategy makes sweeping changes.
  • Failure is catastrophic in business.
  • Business has long periods of equilibrium punctuated by short shifts of change.

While Henderson's recommendations are sound, he incorrectly focuses solely on competition in his analogy. The value of cooperation is ignored. Cooperative elements are very present in natural selection. In fact, Darwin's theory does not exclude cooperation ("On the Origin of Species," 2009). There are several examples of symbiotic relationships in nature, such as plants providing air for animals, bees pollinating flowers, birds picking bugs off cattle, parasitic cooperation with host, and more. Some even argue that Darwin's theory emphatically supports cooperation (Michod, 1999), especially in theories regarding human survival and social Darwinism theory. The concept of mutual aid is also expounded on by Peter Kropotkin ("Survival of the Fittest," 2009). Thus, the fitness of a natural organism may require both cooperation and competition. In many cases, cooperation is superior (Kohn, 1986). Likewise, the fitness of an business also demands cooperation.

Perhaps Henderson's narrow focus on competition only is due to the time period of when he originally authored his essay, 1989. This era of communism and distrust included many closed markets and isolated domestic businesses operations (Friedman, 2006). Since then, we have seen the value of cooperation in business come to fruition, under globalization (Hill, 2009). The most successful business strategies include strategic alliances, international collaboration, multi-national companies, shared resources, and monetary controls. While distinctiveness still remains important, cooperation has proven to be a stalwart factor in organizational growth. This renders Henderson's overemphasis on competition less applicable; furthermore, his equating of natural selection to competition is erroneous, or misleading at best.

Reference List

Friedman, T. L. (2006). The world is flat: A brief history of the twenty-first century [1st rev. and expanded ed.]. New York: Farrar, Straus and Giroux.

Henderson, B. D. (2005). The origin of strategy. In C. W. Weick (Ed.). Out of context: A creative approach to strategic management (pp. 97-101). Mason, OH: Thomson/South-Western.

Hill, C. W. L. (2009). Global business today (6th ed.). Boston: McGraw-Hill Irwin.

Kohn, A. (1986). No contest: The case against competition. Boston: Houghton Mifflin.

Michod, R. E. (1999). Darwinian dynamics: Evolutionary transitions in fitness and individuality. Princeton, N.J.: Princeton University Press.

On the Origin of Species. (2009, August 5). In Wikipedia, The Free Encyclopedia. Retrieved 10:35, August 5, 2009, from http://en.wikipedia.org/w/index.php?title=On_...

Survival of the fittest. (2009, August 7). In Wikipedia, The Free Encyclopedia. Retrieved 06:13, August 7, 2009, from http://en.wikipedia.org/w/index.php?title=Sur...

Comments

I found this really interesting and prior to this class had not thought of business in that manner. I also have a Biology Major and spent many hours studying the Origin of species/natural selection.

I really like the comparision of competition and cooperation in nature and the business world. Where would we be without competition? In order to compete, there also must be some form of cooperation between to entities. As I said before, this was a very interesting perspective for me.

But to me this was facanating!!! I never thought about the applications of Darwinism to the business world but the more you think about it the more it makes sense.