Chapter 2. Adapt or Die
For anyone who believed the world was a predictable place, where plans could be made and executed easily, the 2020s would have come as a nasty shock. Yet, anyone holding such a view could not have been paying attention. The events of our ‘short’ 21st century alone — where planes that ‘came out of a clear blue sky’ sparked global wars, sub-prime loan defaults on the U.S. West coast triggered a global financial crisis, and a tiny virus brought economies worldwide to a standstill — prove Edward Lorenz[1]: small causes lead to large, unpredictable outcomes. This underscores a critical truth — the future stubbornly remains an unknowable country, where the only constant is change. To survive and thrive, we must become better at adapting to change.
A powerful model for understanding how systems, both natural and human-made, change over time is ‘The Adaptive Cycle’ developed by Holling and Gunderson (2002).[2] . It outlines the four stages of dynamic change:
Fig.5: The Adaptive Cycle
- Conserve (K): In ecosystems and human systems, (such as industries) a few large players (apex predators, large corporations) dominate. The rest of the system then organises around them, in complex predator-prey dynamics or interconnected supply chains. As long as resources (food, talent, capital) remain abundant, the system has a high potential for growth. But, over time, excessive interconnectedness creates rigidity, making the system fragile and vulnerable to shocks.
- Release (Ω): When a major external shock strikes — a natural disaster or economic collapse — the system is thrown into chaos. Disruption spreads rapidly through its tightly woven connections, like a virus. Its rigidity prevents it adapting quickly enough and, as Jack Welch warned, “if the rate of change on the outside exceeds the rate of change on the inside, the end is near.” The system now starts to disintegrate, releasing all its accumulated potential (such as resources and talent).
- Re-organise (α): A period of great uncertainty follows. To survive, players must explore and experiment with new approaches, while those who cling to outdated methods often hasten their own extinction (X). As they disappear, competition for resources decreases, benefitting those who adapt.
- Exploit (r): Those who successfully reorganise now thrive, gradually becoming the new dominant players. As the system reorganises around them, interconnectedness increases again, bringing the same rigidity and vulnerability as before. However, innovation continues at the periphery, where new ideas and approaches to address that will address future disruptions are developed. It’s this “diversity retained in residual pockets preserved in a patchy landscape”[3] that ensures the system’s long-term resilience, allowing it to evolve not in spite of change, but because of it.
A compelling example of the Adaptive Cycle in action is pre-historic Earth, which was once covered in lush mega-fauna, conditions that dinosaurs exploited (r) best, often growing to enormous sizes. Able to eat whatever — or whoever — they wanted, they secured their position as the planet’s apex species, a dominance they conserved (K) for millions of years. Then a shock hit. Sixty six million years ago a comet is believed to have struck Earth, collapsing the ecosystem and wiping out 75% of all species. With the system’s accumulated resources now released (Ω) species had to re-organise (ɑ) to exploit new, ‘unoccupied ecological real estate’ to survive. None did this better than the early mammals.
Mammals first appeared approximately 200 million years ago, around the same time as dinosaurs. Occupying a much lower rung on the food chain, mammals had to rely on scarce, unpredictable food sources that dinosaurs ignored, which kept them small. However, their small size and highly-evolved foraging skills became advantages when conditions changed. Smaller creatures are more energy efficient, meaning they required less food to survive. Constant foraging also developed flexibility, making them more adept at finding food and less selective about what they ate. In contrast, dinosaurs at the top of the food chain thrived on an abundance of highly-specialised foods, resulting in their massive frames becoming over-reliant on an ecosystem that was now disappearing. The gradual extinction [4] of the dinosaurs made way for new apex species on the planet to appear — the mammals, including us humans.
Yet, the Adaptive Cycle is ‘more than just a metaphor’[5] for describing change in natural systems — it also explains the rise and fall of industry giants. On their November 2007 cover, Forbes posed the question: With “one billion customers — can anyone catch the cell phone king?” At that time, Nokia dominated the global mobile phone market, with around 50% of all devices sold being theirs. However, earlier that year, a ‘comet-like’ event had struck the Symbian system Nokia relied on — Apple’s launch of the iPhone.
Fig.6: ‘Can Anyone Catch The Cell Phone King?’ Forbes (November 2007)
The launch of the iPhone shattered Nokia’s dominance by exposing the limitations of its rigid Symbian system. It couldn’t adapt quickly enough to the possibilities released by Apple — touchscreens, apps, and third-party integration — which nimble players rapidly exploited. These innovations ushered in a new world previously thought inconceivable — mobile retail, banking, living — redefining customer expectations and re-shaping entire industries. The new possibilities attracted talent — innovators eager to explore tomorrow’s world, rather than maintaining yesterday’s. They organised themselves in radically different ways (such as flexible working and agile teams) to exploit opportunities more effectively. Financial capital — driven by the desire to maximise future returns — became an early adopter, investing heavily and reinforcing these emerging changes. Creative destruction had been unleashed.[6]
At first, Nokia underestimated the magnitude of this shift, as it was happening on the periphery of their world. They focused instead on conserving the Symbian system, trying to extend its reach. These were still the early years of the great Chinese economic boom and Nokia’s executives were targeting their next billion customers. However, even China’s new aspirational migrant class[7] embraced the new ways of shopping, banking and living and Nokia belatedly recognised a massive shift had occurred. They tried to go ‘all-in’ on the new but, by then, found the talent and finance they needed were in short supply — already occupied by smaller, faster early movers. Being late to the biggest game in town dealt a tremendous blow to Nokia’s reputation as a market leader. Within seven years, the market share of the ‘cell phone king’ had fallen to essentially zero. Unable to re-organise or exploit the potential of the new ecosystem in time, Nokia declined, mirroring the fate of the dinosaurs — only much, much faster.
Fig.7: The Precipitous Fall of the “Cell Phone King”
When historians look back at the 2020s, they may see a series of comet-level shocks that impacted every industry in our tightly-coupled global economic system. The dominant players have tried to conserve the status quo by promising to ‘build back better’. However, as the Adaptive Cycle’s one-way arrows show, success comes from harnessing pioneering new ideas and methods — often the very ones dismissed in the past. Once new sources of potential have been released and pioneering talent re-organises itself to exploit emerging opportunities there’s no going back — the system evolves. Everyone is left with a choice: Adapt or die! We can embrace change and develop, or we can try to resist evolution and risk going the way of the dinosaurs, or Nokia’s mobile phone business. “The single most important factor for any company in this time will be the imagination and willingness of executives to adapt to change”.[8] What kind of executive you are, or what kind of executive you work for, is going to matter greatly moving forward.
1/ See introduction — Why Best Practices Hold You Back.
2/ Resilience and Adaptive Cycles. C. S. Holling and Lance H. Gunderson (2002) http://www.loisellelab.org/wp-content/uploads/2015/08/Holling-Gundersen-2002-Resilience-and-Adaptive-Cycles.pdf
3/ Resilience and Adaptive Cycles. C. S. Holling and Lance H. Gunderson (2002)P.35
4/ With the exception of the avians, which evolved into modern birds. NB:- this process took around 10 million years.
5/ The adaptive cycle: More than a metaphor. Sundstrom and Allen (2019) https://www.sciencedirect.com/science/article/pii/S1476945X1830165X
6/ This will be explored in more depth in part three.
7/https://www.ted.com/talks/tricia_wang_the_human_insights_missing_from_big_data?subtitle=en
8/ https://swardley.medium.com/the-great-division-87a58e8d3709
