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The Biology of Business


Long ago, humans realized that living things
are made of cells. Moving, replicating, blobs of water, which,
when arranged just right, produce a bigger blob that moves, and replicates, and makes
YouTube videos. And then a biologist boarded a boat called
the Beagle to better understand the beaks of birds. He noticed that islands rich with seeds were
home to short-beaked birds, And where fish were far and wide, so too were
beaks. And since birds don’t change beaks like
humans and hats, he had discovered natural selection. But this study of how incredible living organisms
emerge from very simple, microscopic things is really a story of economics. Wherever resources are limited, the same basic
laws apply – whether in ants, plants, or Fortune 500 companies. Living organisms are running economic simulations
that can help answer some of our biggest questions. This is the Biology of Business. The goal of a business, like any organism, is to stay alive Yet they’ll set up camp even in the darkest,
dirtiest places. So why live in the extreme cold? And why buy and sell human organs when there’s
easier money to be made? Because economic laws make these places desirable. If there are too many penguins, they starve
and recover until a sustainable number is reached. In extreme environments, that number is very
low. So it might suck to live in the Antarctic,
but there’s so little competition that it’s worth adapting. And as long as there’s demand for corrupt
and distasteful services, so too will businesses be willing to provide them. That’s because prices naturally rise until
someone will make a deal, and someone always will. And in every environment, organisms have different
strategies for survival. Rats and mice are really just genetic batons,
passing on their genes as quickly as possible to many children. No need for private rat school, they play
the numbers game, betting that at least one will be successful. Elephants prefer to invest in just a few children,
which they gestate for nearly two years. And companies are no different. Many see Amazon as disorganized, this week
announcing a phone designed for… no-one? and next a button for buying pop tarts. And others think Apple is too slow at entering
markets and adding features – putting their eggs in so few baskets. But these aren’t failures of management,
just different strategies for survival. Amazon takes the mouse approach of trying
a bunch of products in hopes that some will succeed. Apple is the elephant, investing very heavily
in only a few products, which are late to enter the market. But surely not all strategies are equally
efficient, so which organism will win the game of evolution? And what does the perfect business look like? Well, there’s no finale to evolution because
as the environment changes, so too does natural selection. And the features that make a good species
in one environment are detrimental in another. There will probably never be a single, all-powerful
Buy-N-Large corporation because different markets require different adaptations. It’s easy to think
of evolution as a force that needs no controlling, that better businesses and species will thrive
naturally. But evolution is blind to all but one fact:
does this gene increase or decrease the chance that its host will reproduce? It doesn’t know if it also hurts the group
as a whole. Irish Elk are a good example: Bigger antlers
attracted more mates, which began an evolutionary arms race of all antlers getting bigger. But what evolution didn’t know was how much
of a burden these huge antlers would become. Every elk would be better off if all their
antlers were half as big, but no individual elk could do so and still find a mate. Likewise, market forces can shape businesses
in a way that hurts everyone but no individual business could resist and stay competitive. All of this means that you are guided by markets
like ants are guided by evolution. But it also means we have millions of accidental
economic experiments in nature, just waiting to be explored. As much as I love reading, I’m always frustrated
by how little content can be in such a large book. Authors are pressured to write longer books,
so they take their ideas and add as much fluff as possible. And even a short book can be hard to get through
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