Chapter 2. Adapt or Die
To anyone who thought the world was a predictable place the 2020s would have come as a shock. Yet, anyone who thought the world was a predictable place probably hadn’t been paying attention. This ‘short 21st century’ has seen planes appearing ‘out of a clear blue sky’ sparking global wars and spikes in loan defaults on the west coast of America triggering a massive global financial crisis. Edward Lorenz, it turns out, was right[1] — small causes can trigger large, over-sized consequences. This is why the future is an unknown country and the only inevitability is unpredictable change. Change therefore is something we’re going to have to learn to deal with better.
Fig. 5: The Adaptive Cycle
‘The Adaptive Cycle’[2] describes how change occurs in the natural world (of which we humans, of course, are also a part):
- Successful actors in an ecosystem (ex, apex predators, industry giants) enjoy a long period where their dominance is conserved (K)
- But when a shock hits this tightly-coupled system (that has formed around the apex predator or industry giant) system there’s a sudden release of previously trapped potential (Ω)
- To adapt to the new conditions all players in the ecosystem must re-organise (ɑ)
- Some fail to do this and don’t survive (X)
- However, those who exploit the new potential most effectively not only survive but thrive (r) becoming the new apex predators or industry giants as the cycle repeats.
For example, Earth was once covered in lush mega-fauna, conditions which large dinosaurs were best able to exploit (r). Growing to enormous size they could eat whatever, (or whoever) they wanted, which conserved (K) their status as the planet’s apex predators for millions of years. Then a shock hit: A large comet struck Earth (we believe) sixty-six million years ago, triggering a collapse in the planet’s tightly-connected ecosystem, wiping out 75% of all species, including the dinosaurs. Yet this shock also released (Ω) new potential — the emergence of niches, (‘unoccupied ecological real estate’) that could sustain life. These were exploited by those species best able to re-organise (ɑ) and adapt to the new conditions. None adapted better than the early mammals.
Mammals appeared 200 million years ago, around the same time as the dinosaurs. But, as a species way down the food chain, mammals had to rely on whatever food sources they could find, so remained small. Yet these limitations (being small and having to be flexible to find food) became competitive advantages when the ecosystem suddenly changed. Being small meant mammals were energy efficient, so they needed less food and, as their diets had evolved to be less fussy, they were also better able to adapt to changes in food sources. In contrast the dinosaurs, so long able to rely on abundant mega-fauna and flora to fuel their massive frames, struggled to adapt to the new conditions as they had optimised to an ecosystem that was disappearing and slowly went extinct [3]. Their status as the planet’s apex predator taken by the mammals — humans.
However, the Adaptive Cycle is ‘more than just a metaphor’[4] for describing change in natural systems — it also describes the rise and fall of industry giants as well. On their front cover in November 2007 Forbes magazine posed the question: With “one billion customers — can anyone can catch the cell phone king?” Yet, just seven years later the market share of the ‘cell phone king’ had fallen to zero. Nokia had been the dominant player in the world of Symbian mobile phones but earlier that year Apple launched the i-phone — a ‘comet-like’ event in the mobile phone industry — that ushered in a new era Nokia failed to adapt to.
Fig. 6: ‘Can anyone catch the cell phone king?’ Forbes (Nov 2007)
At the time of the i-phone release Nokia had 50% market share of the global mobile phone industry. Yet smaller players — with little power and seeking ways to get ahead — started to explore the potential that had been released by Apple, namely in developing apps and in mobile computing. They uncovered new ways of doing things that had been inconceivable before, such as mobile shopping and banking. New, exciting possibilities attracted rare talent — innovators who want to explore tomorrow’s world (rather than maintaining yesterday’s world) — and these smaller players started to organise themselves in radically different ways (ex, flexible working, agile techniques) to exploit the opportunities of this changed world. Financial capital — often an early adopter driven by the desire to get in early and maximise future returns — recognised the potential and started to invest heavily, reinforcing these emerging changes. Creative destruction had been unleashed.[5]
At first Nokia ignored the emerging changes taking place at the periphery of their world and focused instead on conserving their current position. These were the early years of China’s precipitous market boom and Nokia executives were thinking about their next billion customers. When they belatedly recognised the big shift taking place — as customers embraced new ways of shopping, banking and running their lives — and tried to go ‘all-in’ on the new, they found that the talent and finance needed to make this work were in short supply. Furthermore, being late to the biggest game in their industry dealt a tremendous blow to their brand as a market leader. Nokia’s inability to adapt meant the ‘cell-phone king’ went the way of the dinosaurs — only much, much quicker.
Fig. 7: The Precipitous Crash of the “Cell Phone King”
In the future, when historians look back at the 2020s, they may see a series of comet-level shocks that impacted every industry and every institution across the planet. For example, big shifts were already occurring with a year or so of the CoVid pandemic: From physically-locating employees in a building to working from home; from in-person conferences to remote events; from debates about work-life balance to a more determined focus on looking after one’s mental health. At the time of writing some of the consequences of these changes are still working themselves out as many firms lose the talent they are desperately trying to force back into the office because their management methods have not adapted to handle a distributed workforce; to the impending financial disaster that might be triggered by a devastating collapse in commercial property prices and the after-shocks this will send through our tightly-coupled ‘financialised’ global economic system.
The response of the dominant players to the disruption of the 2020s has, naturally, been to try and conserve the status quo by promising to ‘build back better’ — if only people will return to the office and carry on as before. But, if you look closely at the Adaptive Cycle, you will see that the arrows of change only run in one direction — once new sources of potential have been released and pioneering talent has re-organised itself to exploit the new opportunities there’s no going back. Everyone is then left with one choice: Adapt or die! We can embrace change, or we can fight against evolution and risk going the way of the dinosaurs and Nokia’s mobile phone business. Simon Wardley (more on him later) argued that “the single most important factor for any company in this time will be the imagination and willingness of executives to adapt to the change.”[6] What kind of executive you are, or what kind of executive you work for, is going to matter greatly moving forward.
1 See introduction
2 Resilience and Adaptive Cycles. C. S. Holling and Lance H. Gunderson (2002) p.27 http://www.loisellelab.org/wp-content/uploads/2015/08/Holling-Gundersen-2002-Resilience-and-Adaptive-Cycles.pdf
3 With the exception of the avians, which evolved into modern birds. NB:- this process took around 10 million years.
4 The adaptive cycle: More than a metaphor. Sundstrom and Allen (2019) https://www.sciencedirect.com/science/article/pii/S1476945X1830165X
5 We will explore this in more depth in Book Three
6 https://swardley.medium.com/the-great-division-87a58e8d3709
Introduction to Book One — Why Best Practices Are Holding You Back
Chapter 1 — Forget Strategic Plans!
Chapter 3 — Pal’chinskii’s Principles
Chapter 4 — Ashby’s Law of Requisite Variety
Chapter 5 — FujiFilm: Innovating Out of a Crisis
Chapter 6 — Honda B: Miscalculations and Mistakes
Chapter 7 — Honda-Yamaha War of Natural Selection
Chapter 8 — The Eastern Approach to Strategy
Chapter 9 — The Western Approach to Strategy
