Orginally published in Harvard Business Review blog on March 5, 2013
Remember when Apple's stock traded at $7 a share? I do, because that's when I sold my shares. Tech experts' sage predictions had convinced me that the Mac would never make a dent in the PC market. As it turned out, the Mac didn't need to make a dent, because Apple mutated its cute computer DNA into cute music players and phones that fit massive unfilled niches. Yet even the genius architect of this turnaround made faulty predictions sometimes. Remember the invention Steve Jobs said was going to be "bigger than the PC"? You may have seen a mall cop riding one recently.
Even the best of us are horrible at predicting the future. That's too bad, because our world is full of risk that we'd love to avoid and opportunity that we'd love to seize.
Fortunately, there's a rich source of lessons on how to thrive in an unpredictable world, and it has been cranking out success stories for 3.5 billion years. It's called biology.
All of Earth's successful organisms have thrived without analyzing past crises or trying to predict the next one. They haven't held "planning exercises" or created "predictive frameworks." Instead, they've adapted. Adaptability is the power to detect and respond to change in the world, no matter how surprising or inconvenient it may be.
While there's much chatter in the management world about the need to be adaptable, only a few creative companies and innovative managers have probed the natural world for its adaptability secrets. But when they have, they've been remarkably successful. A study of nature offers straightforward guidance through four key practices of adaptable systems.
Decentralization. The most successful biological organisms are structured or organized in such a way as to eschew centralized control in favor of allowing multiple agents to independently sense and quickly respond to change. An octopus, despite its surprisingly intelligent brain, doesn't order each arm to change a certain color when it needs to hide quickly. Rather, individual skin cells across its body sense and respond to change and give the octopus a collective camouflage.
CEOs and shareholders needn't fear this kind of organization. The independent sensors of adaptable organisms are not anarchists. They rely on the resources and follow the overall direction that the body gives them. But decentralized organization yields faster, cheaper, and more effective solutions to complex problems — think Wikipedia versus Encyclopedia Britannica, DARPA Grand Challenges versus Department of Defense single-source contracts, or Google Flu Trends (which uses the power of billions of users independently searching for flu-related terms on Google to identify flu outbreaks) versus the U.S. Centers for Disease Control and Prevention flu reports (which can give you the same results, two weeks later).
Redundancy. Adaptable systems make multiple copies of everything and modify the copies to hedge against uncertainty. Redundancy is not efficient, but it does help you solve a wide range of unexpected problems. A CEO I know who uses biological principles to run a manufacturing firm that has never been unprofitable or laid off an employee in 30 years keeps a massive warehouse full of multiple copies of every part he's ever made. This cache of inventory and wasted real estate violates all the norms of just-in-time manufacturing, but when a 20-year-old helicopter is grounded and needs to fly now, he is the only one who has the part. Customers that have been bailed out by him go back to him. He has turned commodity parts into a proprietary service, just as nature turns the massive redundancy of just four DNA bases into a dazzling array of unique ways to deal with risk and uncertainty.
Symbiotic relationships. All organisms use these to extend their own adaptability. Symbioses occur between the most unlikely of pairs, such as small scavenging fish and large predatory sharks — sometimes even between former adversaries. The effects can be profound. Tiny bacteria that live in the roots of legume plants and convert nitrogen into a useful form have literally changed the face of the entire planet.
Ben and Jerry's Ice Cream, a company known for its strong brand following and commitment to donating profits to social causes, would seem an unlikely match for Unilever, a food and beauty-products conglomerate with fairly anodyne brands. But each company had problems to solve. Ben and Jerry's needed to grow after years of flat and declining sales, so that through profit sharing it could do more social good. Unilever needed to capture more niches in "boutique" food brands. When Unilever bought Ben and Jerry's, the larger organization adapted more than the smaller one to make the symbiosis work. Unilever allowed casual dress for its Ben and Jerry's executives, maintained the brand's charitable giving, and expanded its commitments to sustainability by incorporating aspects of Ben and Jerry's DNA throughout its corporate practice.
Recursive processes. Adaptability in nature continually builds off of its own successes. The one turtle out of a hundred that survives from its infancy to adulthood is the only turtle that's important to turtle evolution.
The business literature is unfortunately rife with advice to "learn from failures." One HBR article from the 1990s held up BP as an exemplar of learning from failure. Certainly BP has learned a lot from the failures of the Deepwater Horizon disaster, but is killing 11 people, crippling a huge ecosystem, and absorbing a $4.5 billion fine how you want to run your business? In nature, failure is literally a dead end — you don't reproduce and you don't pass on your genes. Learning from failure may make your business more prepared for the disaster that has already happened, but it does nothing to prevent the disaster in the first place. Identifying even small successes out of a larger operational failure can be the most important way to improve performance in the future.
The practical way to start becoming adaptable is easy: Stop giving orders and start issuing challenges. Any organization of any size can develop faster, more effective, cheaper solutions to problems by challenging its people. 3M (hardly a nimble startup) used challenges to massively reduce its environmental footprint. Rather than having the CEO order all employees to recycle more, the company challenged employees to produce solutions. The result was more than 8,000 environmentally and financially beneficial changes, each developed out of individuals' particular expertise: Administrative assistants knew best how to reduce paper waste, and chemists knew best how to reduce chemical waste.
The U.S. Department of Defense now uses challenges to develop better weapons systems. Rather than paying single contractors billions over budget for products that arrive years too late and don't solve the initial problems, the DoD typically offers a paltry million-dollar reward and typically gets results even faster than it expects. I've taken to ripping up the syllabus on the first day of my university classes and instead challenging students to create and deliver the content of my courses on the basis of what they want to learn. The classes become far more engaging for the students, far more adaptable to the rapidly changing state of scientific knowledge, and, as a bonus, far less work for me. For more on how challenges work, see my website.
But in a deeper sense, awakening to the power of adaptability requires taking your eyes off the computer screen and your mind out of the boardroom long enough to appreciate the wonder and the lessons of the rain forest, the DNA helix, and the skin of the octopus.