Competitive Advantage or Competitive Advantage? Biology and Business.

As a scientist who specializes in business strategy, competitive advantage means two things to me: how to succeed in business and how biological species evolve. I’m enjoying the irony that the goal of capitalist pursuits might be mistaken for a fundamental, back-to-nature, biological process.

We value nature with an instinctive appreciation that it sustains us. But that isn’t quite right. All of earth’s creatures are part of a massively interwoven dynamic equilibrium. Birds eat fruit and poop out the seeds at a distant location, broadening the plant’s horizons. Carpenter ants chew up decaying wood, hastening it’s transition into compost allowing new vegetation can grow. Humans exhale carbon dioxide, feeding the growth of flowers, from which bees collect pollen and make honey – food for bears. I could go on about who eats who, excretes what, or creates habitats where. Nature isn’t there to support us, we are part of it.

Like capitalism, nature isn’t pretty all the time, as any feast by seagulls, crows or other carrion fowl devouring road kill demonstrates. Less attractive still are the squished rabbits, skunks and squirrels decomposing by the action of insects and bacteria. All natural, with the smell to prove it.

Natural selection, the survival of those within a species with a competitive advantage, is even less attractive. It leaves behind those less capable of dealing with changes in the environment. Just like business. If a business comes along with a better way of providing music to people (eg. iTunes), other forms of music delivery (tapes, records or CDs) die.

Competitive advantage in a business only works because it’s fulfilling needs. Sounds humanitarian, doesn’t it? Cars displaced horses and buggies was because they got people where they want to go, faster, and more comfortably. Lives were saved because the sick got faster medical care. A hundred years ago, Ford had a competitive advantage because they invented a way to make affordable, convenient transportation. Today, business models like Uber and Zipcar have a competitive advantage because they provide what people want (getting from here to there) faster and cheaper. Uber provides spontaneous, on-demand transportation. Zipcar replaces the need for car ownership, without taking away access to the car.

Successful businesses thrive because they sell something people want. Individuals in a species survive because they are better able to adapt to changes in the environment. A central premise in strategic management is that a business’s ability to sustain competitive advantage depends on how it adapts to changes in its environment. Similarly, the members of a species that survive, and repopulate the species, are those best able to adapt to the environment.

It’s harder to see examples of biological selection because they happen on a longer time frame than it takes Netflix to make Blockbuster’s video rental irrelevant.

In biology, we can observe a trait becoming more prevalent. For example, some humans, but not all1, are able to digest milk after toddlerhood, which relates to the cultivation of cows and production of milk, cheese and recently, ice cream2. It’s easy to imagine that thousands of years ago, people who were able to metabolize milk products would have a survival advantage in harsh times, as would their children. If we continue dairy farming, in a few millennia maybe all people will be able to digest milk as adults.

My favourite example of visible evolution and survival of the fittest is the moths3 whose dominant colour evolved from white-ish to grey-ish as the trees they rested on became soot-covered from the industrial revolution. Before industrialization, the dominant moth colour was light and there were few dark ones. Birds had a harder time spotting the light-coloured ones, so they were less likely to be eaten when they rested on trees with light-coloured trucks. As the trunks darkened, grey moths had the camouflage advantage, survived, and now represent the majority of the population.

The difference between evolving businesses and evolving species is active decision making. The phrase ‘survival of the fittest’ conjures up visions of death matches in Thunderdome4 where opponents rely on their smarts and resources to outwit their competition. This is kinda true in business. But not even slightly what happens in biology.

Strategic management dictates providing a superior product compared to competitors, whether it’s cheaper, has more features, safer, or more durable. Although it sounds contradictory, in biology, survival of the fittest tends to be an accidental thing. Businesses plan to outdo the competition, which Walmart appears to be doing in grocery retailing5. On the other hand, bacteria that are resistant to common antibiotics are becoming more prevalent. This isn’t because the bacteria have formed a consortium to determine defence tactics against humans. Those that aren’t resistant are killed off. It’s a simple accident of genetics. Those that have genes that confer drug resistance survive. They are the fittest in the environment that bacteria now inhabit.

Businesses can manoeuvre, change their strategy, hire new people, create different distribution and supply partnerships. Species, faced with a new force in their environment, must do the best with the genetics they have. Perhaps some day we will engineer ourselves in real time, becoming more business-like in our approach to natural selection. Would that be a bad thing, if we were fulfilling our needs?

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1http://evolution.berkeley.edu/evolibrary/news/070401_lactose

2Ice cream also required the invention of the refridgeration, which caused the demise of the ice industry.

3for details, see Wikipedia: https://en.wikipedia.org/wiki/Peppered_moth_evolution

4in case my cultural references are a bit dated, Thunderdome was glorified in MadMax 3, where combatants did anything and everything to win against their opponents https://en.wikipedia.org/wiki/Mad_Max_Beyond_Thunderdome

5http://www.cbc.ca/news/business/walmart-grocery-store-1.3717480

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