Co-Evolution & Strategy
Reflecting on the concept of co-evolution helps me think through what sort of co-evolution may be encouraged or in fact now is already slowly but surely reshaping the way we interact, think and operate. Maruyama (1964) as completed by McKelvey (2002) mentioned 5 kinds of evolution. The first is ‘coevolution between mutation rate and the environment’ (Mckelvey, 2002, p 3). This is certainly a phenomenon taking place in any organization within the industry we are in. The rapid economic growth, the rising of the middle class spending power and aspirations have all for example shifted the Indonesian market towards more premium branded choices of diapers, napkins and other paper based hygiene products. The more the market move towards that direction the more we need to continue to improve our brand values and product offerings. The second is ‘predator/prey co-evolution’ and this reflects the force of change that is now taking place in East Asia across most industries. The rising economic value of Indonesia for instance has attracted an even faster rise in foreign investments. This in turns push us the domestic firms to adapt to the increasing competition by constant tinkering of our organizational dynamics (Lewin, et al, 2003 in Volberda and Lewin, 2003, p 2112). These preceding co-evolutions in turn produce the other 3 co-evolutions, namely: ‘supernormal; in breeding and population size; and, symbiotic (McKelvey, 2002, pp 3-4).
Before discussing how to best manage the co-evolutions, I find it useful to first to think through its constraints and dynamics. Porter’s five forces (Allio and Fahey, 2012) is one useful methodology we often use in my organization to get an overview of the ‘contextual constraints’ (McKelvey, 2002, p 4) underlying any process of change. With finite resources, there is only so much internal forces may be accumulated to cope with the evolving external landscape. Kim and Mauborgene (2009) for example argue in choosing whether to go with the structuralist approach or reconstructionist proposition, we need to consider the attractiveness of our specific competitive environment as well as internal capabilities and resources.
With superior resources an organization can afford to be dictated and shape its competitive landscape but in cases like mine, as the ‘law of competitive exclusion’ (McKelvey, 2002, p 4) dictates we need continue to seek comparative advantage through either low cost or differentiated offering. As a local company in most cases we seek to exploit our mastery of domestic landscape to differentiate our offerings. This is in line with Williamson’s (1997) analysis that because local firms are closer to the market rapid decisions have been one of their comparative advantages when dealing with foreign players (p. 55). Now with the ‘red queen evolutionary paradox’ cautioning that in constantly changing world and co-evolution detected or undetectably reigning across organizations of the kind, I agree with McKelvey (2002) that the “function of advantage resting on being able to speed up micro-evolutionary development..” (p 4-5).
Reflecting and discussing with my team on the present problems of many Eats Asian organizations, I am assured that we do in fact and relative to our environment have ‘the necessary and sufficient conditions’ for co evolution to occur (McKelvey, 2002, p 4). The question is of course how can we best manage it? Anderson (1990) of course argues that “Applying complex adaptive systems models…leads to an emphasis on building system that can rapidly evolve effective adaptive system” (p216; Gong Li et al, 2010). And, in seeing the organization as a community of evolving systems forming a ‘fitness landscape’ (emergent order) (Stacey, 1995, p 481) operationally we need to provide a workable platform for novelty and creativity to emerge. That is of course the theory. How do we apply them successfully into practice?
Talking about organization we will inevitably talk about the individuals, the groups and the communities that made up what we refer as an organization. These individuals, groups and communities are brought together for one important reason: the need to reciprocally meet the requirements/interests of the whole as well the sum of its parts (Sigmund, 1998). Take my organization for example we exist to meet the need of our shareholders, the trustee of the owners, and those people who fill up the positions and jobs across the hierarchies and boundaries that officially define who we are and what we do and who we must talk in our day-to-day activities. Yet we are what we are because of the informal interactions which provide a space and venue for interpretation about what we are all about, where we are going and about the competitive landscape within which we need operate.
Organization, I think, in the end, is about a complex infrastructure of conversations, actions and interactions that constantly aiming to create some sort of a state of equilibrium where we manager work to balance through analysis, planning, implementation and control . Yet, we know that even if we were swimming in a sea knowledge brought in by the many different knowledgeable agents of the organization, without the provision for an effective incentive system nothing would actually change (Clark and Wilson, 1961). My argument is that incentive system should be regarded as the principle mechanism to be applied to manage the desired organizational behavior within a CAS. I also agree with Clark and Wilson (1961) that “The contributions of personal efforts which constitute the energies of organizations are yielded by individuals because of incentives…..The individual is always the basis strategic factor in organizations” (Chester Bernard as quoted by Clark and Wilson, 1961, p 132).
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Used with permission from Bill McKelvey, Professor Emeritus, UCLA Anderson School of Management
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