How Adaptable is Your Business Model?

Good ideas help your business evolve.

In a market economy, variation and selection are always at work. New ideas are created by scientists and engineers, meticulous middle management in large corporations or daring entrepreneurs.
Failures are culled because bad ideas do not survive long in the market place: to succeed, you have to make a product that customers wish to buy, at a price that covers costs and beats obvious competitors. Many ideas fail these tests, and if management does not shut them down, a bankruptcy court will.

Trial and Error

Good ideas spread because competitors copy them, the staff leaves to set up their own businesses, or because the company with the good ideas grows. With these elements of variation and selection in place, the stage is set for an evolutionary process; or, to put it more crudely, solving problems through trail and error.
In a complex, changeable world, the process of trial and error is essential. That is true whether we harness it consciously or simply allow ourselves to be tossed around by the results.

Elements at Work

Most real-world problems are more complex than we think. They have:

  1. The human dimension
  2. The local dimension

Dealing with Complex Problems

First, seek new ideas and try new things. Second, when trying something new, do it on a scale where failure is survivable. Third, seek feedback and learn from your mistakes as you go along.

After an exhaustive study of businesses in the United States, 43 companies were selected as being excellent examples of successfully run enterprises. Out of this effort Tom Peters and Robert Waterman wrote “In Search of Excellence” to great acclaim in the early 1980’s.

Peters became one of the most highly recognized management consult gurus of the late twentieth century because of this work. However, after only two years, 14 of the 43 companies were in serious financial trouble. That’s a whopping 1/3 of the original 43 companies. To be fair the early 80’s were going through some very serious financial times.

Peters’ effort to identify the truly most outstanding companies in America fell short. Why?

The Ideal Hierarchy

Even an ideal hierarchy can backfire. The three elements of the idealized, decisive hierarchy: a “big-picture” view produced by the refined analysis of all available information; a united team all pulling in the same direction; and, a strict chain of command. Sometimes, even being able to check all three of these boxes can still product catastrophic results. The “ big-picture” information that could be summarized and analyzed centrally may not be the information that matters. A loyal, unified team can leave no space for alternatives perspectives. And, the strict chain of command can neatly suppress bad news from further down the organization before it reaches top management.

In an idealized hierarchy, a “team player” is an asset that does not disrupt an effective organizational objective, but they may not be as effective as allowing opposing views to introduce another perspective. Never confuse loyalty and expression of disagreement. Loyalty is valuable asset in an employee. As the owner, manager you need to judge the loyalty of your staff by very specific criteria. Expressions of disagreement are not necessarily one of them. Unanimous advice should be viewed with caution.

A strong team – a kind of family- can quickly fall into the habit of reinforcing each other’s prejudices out of simple team spirit and a desire to bolster the group. It is far better to more aggressive about demanding alternative opinions, exhaustively exploring risks, and breaking up your advisory groups to ensure that they don’t become too comfortable.

Don’t always rely on “big-picture” information all the time, focus instead on the specifics of the situation before you to solve a tactical or strategic problem.

It is not enough to tolerate dissent: sometimes you have to demand it.

It is simply impossible to know in advance what the correct strategy will be. That is why trial and error will always be a part of how any organization solves a complex, ever-shifting problem.

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