Pete Foley, via Innovation Excellence

I’ve always believed that we can learn how to innovate, and organize our businesses by learning from nature. One example is to question Wall Street’s obsession with short-term results, by understanding how giant redwoods maximize long-term growth by embracing variations based on short-term changes in resources (see more). I also believe that we can learn a lot about fast, agile decision-making in large organizations by looking at the distributed, heuristic based behavior of insect colonies.

Ghosts of Evolution:

However, we also need to be careful when drawing organizational insights from nature. Yes, she has had millions of years to optimize systems, but she also suffers from ghosts of evolution – having to innovate around past designs, rather than starting from scratch if past designs create platforms that inhibit future progress. In fact, the only way natural selection can effectively wipe the slate clean, and start from a new platform, is via an extinction and replacement mechanism. This sometimes occurs, but we also see examples where nature has continued to innovate around a core design flaw, something we probably don’t want to emulate. For example, the light sensitive cells in the human eye actually face away from the light, and the complex workaround we have evolved results in a blind spot, and a complex neurological work around to overcome this short-coming.

But if we are aware of the risks of drawing insight from nature, then there remain valuable lessons we can draw from the analogy between evolution and our own innovation processes. I believe one of these lies in punctuated equalibria.

Punctuated Equilibrium:

This is an important, albeit contentious evolutionary mechanism, similar in many ways to Disruptive Innovation. It can drive what appear to be big evolutionary leaps in nature, such as the sudden appearance of new species, and often occurs in the context of big macro changes in climate or competition for resources.

These changes often appear to happen ‘overnight’, and can appear in the fossil record as sudden extinctions of some species, and the equally sudden appearance of new ones. However, look closer, and the mechanism becomes more interesting, and I think more instructive as a potential model for innovation culture and process.

Context Driven Evolution and Innovation:

What actually appears to happen is that change is slow and incremental in the majority of the population (stasis). No surprise, as if a species is efficient in their existing niche, there is little pressure for change. However, change is constantly happening at the margins. Small sub populations eking out an existance under less ideal conditions come under greater selection pressure, and evolve more quickly. Most of these adaptations disappear without a trace, but every now and then a big shift occurs in the conditions faced by the main population. When this happens, one of the ‘start-ups’ that has found a way to exist at the margins, is sometimes suddenly well placed to become the dominant species. It effectively disrupts the ‘market’.

It seems today that everyone wants to be disruptive, whether they are a start-up, or a large incumbent corporation who want to disrupt themselves. But both are hard. We see a lot of case studies built around startups or new companies that disrupt a market. But these are somewhat misleading, as it is quite hard to create case studies of the vast majority that fail. And anybody who has tried to be disruptive within a large organization has inevitably experienced the inertia and antibodies that protect the status quo. But I believe there are some insights from punctuated equilibria that we can all draw upon:

Experiment at the edges of your market. Leverage small niches, early adopters, very heavy and light users, extreme markets (high/low income) for design inspiration. Avoid marketing to niches, as this limits share and growth, but use them to look for innovation opportunities, and to add resilience to the core product. Don’t throw away failures. Instead keep them in your playbook. An upgrade that didn’t find traction during a period of austerity may be highly successful in a subsequent booming economy. Many ideas are time sensitive, and a reservoir of ideas and expertise, if managed carefully, can position a company for success as market conditions change. Crisis can be opportunity. When economic, social, technical or other large scale macro changes occur, we tend to see them as a threat. But a playbook of ideas that we’ve already developed under atypical conditions can turn big macro changes into a window of opportunity Evaluate innovative initiatives as part of the whole category. A super premium product that doesn’t break even alone can help trade up an entire category (the Compromise Effect from Behavioral Economics), boosting total category return. It can also provide a real world experiment to fine tune innovation ready for when the market or the economy expands, and demands better performing products or services.

Of course, this needs to be done efficiently. Most businesses cannot afford the resources to explore the margins to the same degree that natural systems do. But I’d argue that it is equally dangerous to ignore them. We all know that the pace of change is increasing. Game changing technologies such as 3D printing, AI and quantum computing clutter the horizon. Global politics, culture and economics are volatile, whilst climate change has the potential to trigger huge potential changes in the mid to long term. As this pace of change increases, reactive innovation will inevitably become less of an option. Used sparingly, taking a punctuated equilibria approach to draw insights from the edges provides an opportunity to be more proactive, more resilient, and ready for change when it inevitably occurs.