The Darwinian model of random variation with selective application of survival, works fairly well in commerce.
If we look at a shopping street with large buildings that have offices in them, we will see a steady change over time as the foot traffic changes, as the demographics change and as tastes replace one type of business with another. Technological change also plays a role.
The source of change is primarily innovation in the society and it is most often focused around new businesses. A pastry shop becomes a flower shop as the Italian immigrants are replaced with a gay population and the flower shop is replaced with a children's clothing shop as married couples move into the safe neighborhood. Then a boutique shoe store. Then a Radio Shack opens on the street as electronics become part of the social fabric, lately giving way to a watch retailer and then a smart phone shop.
We can watch the evolution of automobiles under Darwinian conditions. In 1920 there were dozens of car factories in the U.S. including steam cars, electric cars and reciprocating gasoline cars. There were fat tires, skinny tires and balloon tires with tubes. By 1935 many companies had consolidated and many types of cars were gone. A few major technologies became dominant as more people used cars and simplicity of repair and simplicity in driving became ascendant.
Headlights and starting motors were being standardized and ignition timing was being automated.
Watching autos evolve has been a process of seeing technologies that failed being dropped and tastes of consumers slowly dominating. As women and families became buyers, and roads became highways, safety and reliability became selection factors. By 1960 automatic transmissions with a ‘park’ feature and gasoline engines became dominant. Starting motors were universal.
Imports improved the entire auto industry in the 1970’s as Japanese quality and durability became norms while English, French and Italian cars, with obscure engineering elements, lost importance in the world market; and Communist cars disappeared altogether.
The next major evolution came with the hybrid engine in the late 1990’s and became almost universal. It combined the high torque of electricity at starting speeds with high speed reciprocating engines. Much like the evolution of railroad diesel-electric engines in the previous century.
There are two aspects of Darwinian evolution that have bothered me in the biological world. I asked Stephen J. Gould about both and he changed the subject because he didn’t know the answer.
‘What is the minimum size of a sub-species that can survive long enough to become a separate species?’ The problem is that too small a group will permit fatal genes to become dominant.
In the world of commerce I was introduced to a 1972 Xerox Parc idea of a small portable computer model that was supposed to become the future ‘laptop’. For that to happen, nearly 30 years later, required a dozen elements including the Internet, Google and wi-fi.
In Darwinian terms: ‘for the subspecies to become a new species required a new very rich environment where many separate survival modes developed and were consolidated’. Probably the way a wolf became a dog.
In terms of inflow to a weak sub-species; I’ve watched as a few international businesses expanded to new cultures, new nations with new kinds of people in management. Like IBM and Sony where the expansion over a heterogeneous set of environments, nations, created a new vitality and far greater survival capability. Because of the inflow of new genes, a new diverse membership in management, survival was extended.
Commercial evolution has many similarities to Darwinian biological evolution.
I think we can learn about the biological model from observing the commercial model.