Saturday, May 24, 2008

The Red Queen Hypothesis ... Part II

Organisations contain a mass of different activities and a network of people performing those activities.

If you take away both the activities and the people, you are left with what an organisation really is, which is nothing (bar reserves of capital). Organisations only exist in the interaction between people and activities. However, people come and go and, as previously mentioned, activities are in a constant state of flux. Hence all organisations are continuously exposed to change.

No organisation can ignore such changes for long as they are not islands but instead live in a competitive environment. If an activity becomes more of a commodity and the organisation fails to respond, the result is a competitive disadvantage. Organisations must therefore continuously respond and adapt to these changes, in people and activities, in order to retain their competitive position against others.

This is the business equivalent of the Red Queen Hypothesis from Genetics. It should be remembered that there are two very different and powerful forces of change in any competitive environment:-
  1. Adaption: the need to constantly respond to changes in people and existing activities.

  2. Creative destruction: the constant destruction of the old ways of doing things by the creation of the new.
The general rule of thumb is:-

"You need to adapt in order to survive today but you also need to innovate in order to survive tomorrow."