I caught Malcolm Gladwell talking about conceptual vs. experimental innovation and it brought to mind my favorite business read of 2006, The Origin of Wealth by Eric D. Beinhocker. In it, Beinhocker explores an interesting shift in thinking within the field of economics about the nature, structure and governing forces of economies. Rather than the traditional view that holds an economy as a closed system trending toward equilibrium over time, new thinking explores economies as complex adaptive systems, much like the system of evolution.
Complex adaptive systems are open rather than closed, accept inputs, adapt to those inputs and create outputs. Complex adaptive systems evolve through learning. Examples include financial markets, certain insect colonies, the human brain, manufacturing and the Internet.
A multitude of interactive algorithms govern the growth and morphic nature of complex adaptive systems, but one of the most fundamental is: Differentiate, select, amplify. So the algorithm for evolution – and economic growth – has a differentiation mechanism baked in. Evolutionary change is not spurred by random, accidental mutation, it’s differentiated by design in order to spur rapid learning and adaptive growth.
So what’s the magic formula for differentiation? How many different ideas, products, organic life forms should you put out there in order reach your full creative potential, get the best return or evolve into the most successful species, product or brand?
I just picked up The Black Swan: The Impact of the Highly Improbable by Niassim Nicholas Taleb. I haven’t cracked it yet, but I expect a lot of argument for the value of the bold and the radical. We’ll see.
For now, I’m with Malcolm. Evolution is most successful through a combination of conceptual innovation – the bold and radical, and experimental innovation – the small and iterative. An examination of rich artistic traditions, wealthy economies and successful species reveals a common theme: Those with a history of both small, iterative exploratory change and bold, breakthrough radical change tend to come out in front.