Why an evolutionary approach to change might be a terrible idea

I've heard many people tell me, and see many posts on LinkedIn, that they prefer an 'evolutionary approach' to organizational change. Not a revolution. Sometimes, of course, this is an excuse for not changing much at all besides some titles and names for processes. But often, it's actually a genuine belief. And I worry about this approach more and more.

Why do I worry? Because you simply don't have the time. Let's explore this some more.

What is natural selection?

First, let's define natural selection (with a little help from ChatGPT).

ChatGPT tells me that: Natural selection is the process by which certain traits become more common in a population over time because they provide an advantage for survival and reproduction. Organisms with advantageous traits are more likely to survive and pass on their genes to their offspring, while those with less advantageous traits are less likely to survive and reproduce. This results in the gradual evolution of populations as advantageous traits become more common and less advantageous traits become less common.

Keep in mind here that 'less advantageous' does not include traits that have become superfluous. Nor does it mean every disadvantage is evolved out immediately, or even at all. Natural selection is less 'survival of the fittest', and more 'survival of the least unfit'. But this is fine, given an environment that allows for this slow adaptation to happen.

How does natural selection work in business?

For this we can turn to the field of strategy, and Professor Porter's Productivity frontier.

Porter's Productivity frontier is a concept in economics that describes the maximum level of productivity that can be achieved by a business or industry given its available technology, resources, and inputs. It represents the most efficient way of producing a particular product or service, and serves as a benchmark for businesses to strive towards. Businesses that operate at or near the Productivity frontier are considered to be highly competitive and efficient, while those that operate further away from the frontier have room for improvement. By improving efficiency and moving closer to the Productivity frontier, businesses can increase their profitability and competitiveness in the market. This can be visualized in a graphic, as shown below.

Every so often, something happens that pushes the Productivity frontier outwards. This can be some sort of technological innovation, or process improvement, or even the discovery of cheaper material. When this happens, one organisation will have a period where they benefit (same quality at lower costs or higher quality at the same costs) while their competitors catch up.

We can see some similarities here with natural selection:

1. Both concepts are related to competition: Natural selection is a process by which organisms compete for survival and reproduction, while Porter's Productivity Frontier describes how businesses compete to produce goods and services more efficiently.
2. Both involve a selection process: In natural selection, the environment selects which organisms survive and reproduce, while in Porter's Productivity Frontier, the market selects which businesses are most successful.
3. Both involve the idea of improvement over time: In natural selection, advantageous traits become more common over time, while in Porter's Productivity Frontier, businesses strive to improve their efficiency and productivity over time to remain competitive.
4. Both involve the idea of trade-offs: In natural selection, advantageous traits often come with trade-offs, such as increased energy expenditure or reduced reproduction rates. Similarly, in Porter's Productivity Frontier, businesses may have to make trade-offs between efficiency and other factors, such as quality or innovation.
5. Both involve a focus on adaptation: In natural selection, organisms must adapt to their environment to survive and reproduce, while in Porter's Productivity Frontier, businesses must adapt to changing market conditions to remain competitive.

So what's the problem?

Well, there's a reason we've gone through some major evolutionary shifts in the past. When the environment changes radically in a (relatively) short amount of time, the advantages and disadvantages of certain traits suddenly get all mixed up. Meteors impacting, Ice Ages starting and Ice Ages ending are all examples of sudden(ish) change in context where the established order was thoroughly restructured.

We've seen this in our modern world as well, and with an increasing frequency:

• The invention of the loom, and the upending of the textile industry.
• The invention of the assembly line
• The introduction of Lean manufacturing
• The introduction of computers in business
• The internet
• Robotics
• ChatGPT

The list goes on and on and on. And every time, the Productivity frontier moved for certain industries. In such cases, the first mover(s) had a competitive advantage while the laggards, that months before had (sometimes excellent) structures and processes, struggled to catch up.

Sometimes, the laggards never recovered. We all know the stories:

1. Blockbuster was a video rental chain that operated for more than 25 years before it filed for bankruptcy in 2010 due to competition from online streaming services like Netflix.
2. Kodak was a major player in the film and camera industry for more than a century before it filed for bankruptcy in 2012. The company failed to adapt to the digital camera market and missed the opportunity to invest in digital technology.
3. Toys "R" Us was a toy retailer that operated for more than 70 years before it filed for bankruptcy in 2017. The company struggled to compete with online retailers like Amazon and Walmart.
4. RadioShack was a popular electronics retailer that operated for nearly a century before it filed for bankruptcy in 2015. The company struggled to compete with online retailers and big-box stores.
5. Sears was a department store chain that operated for more than 125 years before it filed for bankruptcy in 2018. The company struggled to compete with online retailers and other brick-and-mortar stores.

You don't have time

The book "Big Bang Disruption" by Larry Downes and Paul Nunes explores how the digital revolution has changed the way businesses innovate and compete. The main findings of the book can be summarized as follows:

1. Digital disruption is not gradual, but sudden: The book argues that the digital revolution has created a new type of disruption, which it calls "Big Bang Disruption." This type of disruption is sudden, and it occurs when a new product or service enters the market, quickly gains market share, and disrupts the existing market.
2. The traditional approach to innovation is no longer effective: The book argues that the traditional approach to innovation, which involves developing a new product over a long period of time and then launching it into the market, is no longer effective in the digital age. Instead, companies need to adopt an agile approach to innovation, which involves launching new products quickly and iterating based on customer feedback.
3. Companies need to be willing to cannibalize their own products: The book argues that companies need to be willing to cannibalize their own products in order to stay ahead of the competition. This means that companies need to be willing to disrupt their own business models and launch new products that may compete with their existing products.
4. Digital disruption affects all industries: The book argues that digital disruption affects all industries, not just technology industries. The authors provide examples of companies in industries such as healthcare, finance, and manufacturing that have been disrupted by digital technology.

Overall, the book argues that the digital revolution has created a new type of disruption that requires companies to be more agile, innovative, and willing to disrupt their own business models.

What it means for you though, is that there's simply no more time for evolutionary change. While on the operational and tactical level an approach of continuous improvement or adaption is still beneficial (if not absolutely necessary), strategically you can't afford to sit on your laurels. Last week's winning strategy might actually be today's problem. You should be willing to revolutionize on a moments' notice, and set up your organization in a way that supports this. Scale is your enemy. Rigidity is your enemy. Centralization is your enemy.

The laggards mentioned failed for many reasons, but all them had in common that they were big, established and too optimized for their known way of working. Even had they wanted to change, they couldn't. Not in time.

Revolutions in business are painful because they're not set up for frequent change. We like slow and steady. We like knowing what's ahead. The answer isn't to reduce the frequency and impact of change. That'll leave you in the dust.

The answer is to increase the ability to absorb change. Big change if necessary. Because you're going to need to, more and more.