How the theory of evolution governs the business world

The theory of evolution talks about how creatures evolved from one critter to another....

Each step brought each critter closer from something broad to something more specialized and niched.... Sometimes, though, even that greater "niching" could become more generalized, and be useful for so many other things....

What is true is that this is also the case for business evolution.

Evolutionary occurrences may happen as a result of a change in the environment -- as the world's atmosphere became filled with oxygen (which is released by plants), oxygen-breathing creatures began to appear. As the world cooled down, warm-blooded creatures, like mammals and birds, emerged to take advantage of the new colder conditions, while the less well-suited dinosaurs were wiped out....

This happens in business too. As a result of the changing environment, businesses evolve.....

Think about it. The new gasoline engines brought about the new evolution of automobiles. These new cars pretty much brought about the extinction of the horse and buggy.....

Of course, around these new evolutionary changes, even more niches were created, and we found the "evolution" of auto mechanics, rubber tire manufacturers, taxi companies, bumper sticker printers ....

There's an economist from the first half of the 20th century, Joseph Schumpeter, who talked about "creative destruction" in entrepreneurship.... Each creation brings about some "destruction" too, by making old ways outdated....With new creation also inevitably comes the loss of some of what was happening before....

Sometimes, what starts out as a specialized niche can turn out to become very generalized... For example, in birds there were the evolution of feathers. We believe that feathers first evolved for warmth -- and they are still used only for warmth in many big birds, like ostriches and emus, and even some small flightless birds like the kiwi.... However, eventually they came to also be used in flight by the majority of the birds in the world today....

Similarly, in business, what started out as being very specialized niche, can sometimes become very generalized. This is what's happened with the internet... The internet started out as being a specialist network for the military and for university academics.... From there, it has evolved so that now, it is so widespread that it is entering millions of new homes every year....

How can this help you?

Here's how I think it can.... The key, I believe, is to be on the right side of the "creative destruction" process.... Today, that means working with what it seems will be very big -- like the internet, with WAP, with the new technology of optical networks, and so on.... What you might call the new "evolutionary" trends....

You don't have to necessarily be creating the infrastructure. Remember, each new "evolutionary" development like this will create its own new niches....

For example, take the big "evolutionary" change of personal computers in the late 1970s and in the 1980s. One of the people who profited the most from that was Michael Dell.... But he doesn't put computers together. He just sells them better than anybody else does.... (I believe he outsources his assembly services to a different company.)

The computer industry spawned its own new niches. Things like word processing software, spreadsheet software, and even the internet becoming accessible to the general public was partly a new "niche" spawned by the personal computer....

The internet will in itself spawn its own new niches.... We can see some of them now, like web site developers, ebook sellers, ezine publishers, and so on.... I'm sure there are still many more "niches" which will emerge from the internet, which we haven't even seen yet.

Right now, many companies are working on the problem of internet bandwidth.... They are working on new optical technologies to allow us to get more data even faster than before, such as the emerging technology of optical switching.

Once these problems are solved, I believe we'll really start to see live internet movies take off.... Who knows, internet TV may even begin to replace things like cable TV, once the problem of bandwidth is solved (we see the beginnings of it already).... However, it could still be a few years down the track before this becomes very widespread....

The process of "creative destruction" is happening all the time... Just as the word processor helped to make the typewriter almost "extinct", similarly the internet will cause this to happen to some other businesses too.... It's not always possible to tell with 100% accuracy, but I wouldn't be surprised if the fax machine and the long-distance phone companies go the way of typewriters, as the internet eventually makes these businesses almost obsolete....

If your business is evolving to fill the newly created niches -- and if your TIMING is right and your execution is good -- you could do well!

- Dien Rice