Co-Evolution & Strategy

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 is now already reshaping the way we interact, think and operate.
Maruyama (1964) as completed by McKelvey (2002) mentioned 5 kinds of evolution.
1. ‘Coevolution between mutation rate and the environment’ (Mckelvey, 2002, p 3). This is can be predominantly seen in developing Indonesia where rising income has led to a rapid change within the nation’s FMCG market.
2. ‘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 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 subsequent 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) with some adaptation of the time tested principles of: ‘better differentiate than price; better revenue than cost’ is one useful methodology I often use to get an overview of ‘contextual constraints’ as described by McKelvey, 2002 and to better understand the underlying any given process of change. With the all factors the choice would then come down to either the structuralist or reconstructionist approaches. The final choice would then very much depend on the attractiveness of the given specific competitive environment as well as on the depth and width of the organisation’s specific internal capabilities and resources.
With superior resources an organization can seek through the reconstructionist approach dictate and shape its competitive landscape, But, in most cases, 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 – with the later being more sustainable over a longer period of time. Local companies in most cases may seek to exploit their mastery of domestic landscape to differentiate their practices and 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).
Referring to the present challenges facing many East Asian organizations, my on-going critical action research has assured me that organisations like mine do in fact – and relative to our environment – have ‘the necessary and sufficient conditions’ to allow for a productive engagement to the occurrence of co-evolution (McKelvey, 2002, p 4). The question is of course how can we best manage it?
Anderson (1990) of course insisted 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). As a community of evolving systems forming a ‘fitness landscape’ (emergent order) (Stacey, 1995, p 481) operationally, therefore, management needs to provide a workable platform for novelty and creativity to emerge. This is the most straightforward manner to managing co-evolutions within my given environment. The trick is on the balancing of a tight-loose approach to organisational control.
Now let us picture this. Talking about organization we will inevitably talk about the individuals, the groups and the communities that made up the mental structure of the 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). For example they exist to meet the need of the shareholders, those people who fill up the positions and jobs across the hierarchies and boundaries, and the community at large. Within an organization we become what we through 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 is thus best described as 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.
CAS dictates that without a creative and evolving provision for effective incentive system even if we were swimming in sea knowledge brought in by the many different knowledgeable agents of the organization nothing would actually change (Clark and Wilson, 1961). The key is therefore in finding the flexibly adaptive form of leadership, organisational design as the principle mechanism to manage (incite) the desired organizational behaviour within a CAS. I will elaborate further on this issue in the coming weeks.

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Used with permission from Bill McKelvey, Professor Emeritus, UCLA Anderson School of Management
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