The Natural Laws of Business: Applying the Theories of Darwin, Einstein and Newton to Achieve Business Success

Book by Koch Richard

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The Universe Is Run by Selection

If I could give an award for the best idea ever I would give it to Darwin, because his idea unites in a stroke these two completely disparate worlds, until then, of the meaningless mechanical physical sciences, astronomy, physics and chemistry on the one side, and the world of meaning, culture, art and biology.

daniel dennett

Evolution by Natural Selection

In the material world, nothing is more important than evolution by natural selection. Without natural selection, our species could not exist. If selection did not apply to ideas, technologies, markets, companies, teams, and products in precisely the same way as it applies to species, we would all be working on the land struggling to avoid malnutrition and famine. Selection drives all material progress.

The Origins of Darwinism

In the 1830s, both during his long trip around the world and when back in England, Darwin observed the behavior of animals that favored the survival of themselves and their offspring. For example, when in the Gal?pagos archipelago in the South Pacific in 1835, Darwin noted that a certain white bird would calmly sit by while the first of its hatchlings killed the second. Why did the bird not intervene--or, if she wanted only one hatchling, why bother to lay more than one egg? Repeated observation gave Darwin the answer: he determined that a single egg gave only a 50 percent survival rate (survival being defined as that of at least one hatchling), that two eggs raised the survival rate to 70 percent, but that three eggs brought the survival rate below 50 percent. Further, if there were two live hatchlings, the probability of one of them surviving was lower than if there was only one hatchling. Hence the mother's apparently perverse behavior was actually conducive to the survival of her family.

Darwin combined observations from his field research with two ideas that had been around for many decades in different academic disciplines, and fused them together with explosive effect. The two ideas were competition and evolution. Darwin first thought of natural selection in 1838 while reading Thomas Robert Malthus's Essay on Population, a dire prophecy of the effects of competition between individuals for food. Malthus in turn had been influenced by Adam Smith's theories of economic competition in The Wealth of Nations, the first volume of which had been published in 1776. Smith's thinking had been influenced by a writer another century or so earlier, namely the political philosopher Thomas Hobbes, who had in 1651 described society as "the war of all against all."1 This means the idea of competition was common currency among intellectuals almost two hundred years before Darwin published On the Origin of Species by Means of Natural Selection; or, the Preservation of Favoured Races in the Struggle for Life.

Evolution had also been widely discussed in the early nineteenth century. Fossils showed that species had evolved from earlier, more primitive species. K. E. von Baer (1792-1876) revealed a major key to the process when he stated that "less general characters are developed from the most general, until the most specialised appear."2 Evolutionists talked about "heterogeneity emerging from homogeneity."3 What no one before Darwin had explained satisfactorily was how evolution worked.

Natural Selection

Darwin's theory of natural selection is elegant and extremely economical, resting on three plain observations.

First, creatures systematically overproduce their young. "There is no exception to the rule," Darwin states, "that every organic being naturally increases at so high a rate, that if not destroyed, the earth would soon be covered by the progeny of a single pair." He observes that cod produce millions of eggs. If they all survived, the oceans would be solid cod within six months. Elephants are the slowest breeders of all known animals, yet within five centuries, if unchecked, "there would be alive fifteen million elephants, descended from the first pair." Survival is a numbers game, with the odds stacked against most creatures. "A struggle for existence," Darwin concludes, "inevitably follows from the high rate at which all organic beings tend to increase."

Second, all creatures vary. We are all unique.

Third, the sum of that variation is inherited. We are more like our parents than we are like other people's parents.

Darwin put these three obvious facts together to derive the rudiments of natural selection. Competition among siblings means that only a few can survive. As Darwin wrote with feeling in On the Origin:

. . . all organic beings are exposed to severe competition . . . Nothing is easier to admit in words the truth of the universal struggle for life, or more difficult--at least I have found it so--than constantly to bear this conclusion in mind. Yet unless it be thoroughly engrained in the mind, I am convinced that the whole economy of nature, with every fact on distribution, rarity, abundance, extinction, and variation, will be dimly seen or quite misunderstood.4

Which individual plants and animals will survive? Clearly, those that exploit or fit in best with what Darwin called "the conditions of life." Darwin coined the phrase "natural selection" as the "preservation of favourable variations and the rejection of injurious variations." This means plants and animals that have been naturally selected will have had the most successful parents--those who in turn had survived and came from a long line of survivors--and in turn will have more offspring than other organisms. So in each generation there is improvement, driven by the natural selection of the survivors and by the relative reproductive success in that generation of the survivors: "The slightest advantage in one being . . . over those with which it comes into competition, or better adaptation in however slight a degree to the surrounding physical conditions, will turn the balance."5

Darwin keeps hammering home his point that natural selection depends on variation. When the "conditions of life," such as climate, change, he says: ". . . this would manifestly be favourable to natural selection, by giving a better chance of profitable variations occurring; and unless profitable variations do occur, natural selection can do nothing."6

For most of Darwin's contemporaries, the really controversial aspect of On the Origin was not the original part--natural selection--but rather the support that Darwin gave to the general idea of evolution, and especially humanity's descent from animal species. But although he collected (rather inconclusive) data between 1838 and 1859, his main contribution was the flash of insight that he had in 1838: that there was competition for life between individuals and that traits were conserved through their relative adaptability to life's conditions.

The process is thus very simple: variation, then selection, then further variation. Then more variation, more selection, more variation. And so on back to the start of life and forward to eternity. This is how species evolve.

Variation Leads to "Better Adaption"

Intrinsic to improved congruence with the conditions of life, therefore, is variation. If there were no differences between parents, there would be no differences between offspring. If there were no differences, even between the offspring of the same parents, there would be no basis for differential success. And success means fitting the "conditions of life." There will thus be a continual process of improvement or better adaptation to the environment. Although, of course, the environment may change, producing different winners and losers.

Variations and improvements occur continually within species, but occasionally a mutation occurs when an individual has a new characteristic. This mutation may improve or worsen the odds of survival. If the latter, the mutation will die out. If the former, the individual mutant will prosper and leave plenty of offspring, who will inherit and pass on the advantage.

Over time, therefore, most species will evolve positively. And they will respond to any change that the environment brings. When conditions change, new characteristics are required--and encouraged.

Diversity Leads to Efficient Use of Resources

Darwin suggested that the more species there were on a piece of land, the more efficiently the land would be used. A number of recent experiments have confirmed his hypothesis. Research reported in 1984 on 147 plots of Minnesota prairie, for example, demonstrated that the greater the number of species in a plot, the more biomass the plot produced and also the more nitrogen the soil produced; with fewer species, nitrogen leached out of the soil and was wasted.7

What does this prove? That if a species is diverse, it can survive and prosper; if a species is homogeneous, it is vulnerable.

In the Pacific Northwest of the United States, where wild salmon were disappearing, scientists bred huge numbers of hatchery salmon and dumped them into the rivers. But these hatchery salmon had little diversity. They were vulnerable to a slight change in the ecosystem. Too many riverside trees had been cut down for logs. Result: less shade and therefore a slight rise in river temperatures. Further result: an increase in certain diseases that couldn't flourish in colder water. Final result: the hatchery salmon nearly all died from disease. On reflection, the scientists realized that lack of diversity was the root problem--had the salmon been gradually interbred, allowing mixing and mutation, a diverse adult population would have contained some salmon resistant to the new diseases.

The same applies to computers. More than nine out of ten computers today have the Windows operating system. These computers have the same core internal components. And every computer with Microsoft software ...