Darwinism in a Consumer-Driven World

Natural selection is fast at work in the world of business with large, long-established firms disappearing quickly and new highly successful ones establishing themselves instantly. Speed is of the essence. Where once it took two years to progress an idea through to a marketable product, now it can take two weeks or less.

In this new world order, consumers are the ones with the power, a shift facilitated by their continuous connection to digital devices and networks. Increasingly, physical assets are less important than experiences and intangibles such as “trust” – something that is hard to win but very easy to lose.

Authors Campanini and Hutchins, senior executives respectively at BearingPoint and West Monroe Partners consulting firms, frame their analysis of this fast-changing business landscape against Darwinian evolutionary theory in this clever and very accessible volume.

Darwin’s theory, they note, was often misunderstood as a simple matter of competition and survival of the fittest. In fact, Darwin demonstrated how collaboration between different species – big and small, strong and weak – can be a decisive factor for survival. Taking this perspective, companies can rethink their perspective and Darwin’s vision on collaboration forms the inspiration for business opportunities such as co-creation, open innovation and crowdfunding.

Another misunderstanding relates to the process of evolution, which is not a big step-by-step one with each species being replaced by another. The reality is more subtle. During the same period of time, different species – for which we can read business enterprises – can coexist.

Traditional return on investment models emphasised the value of the biggest at the expense of the nimblest, ignoring the possibilities that can be unleashed by coexistence and niche initiatives that can deliver for consumers while also making a profit for business. In a consumer-driven world, for example, it is possible to create specific products for small groups of consumers with a good margin, using methods and processes such as co-creation, digital distribution and even 3D printing.

Experimentation is often key here. Businesses need to launch multiple initiatives and to trust the environment for natural selection.

They also need to move with changing consumer trends. New consumers care less about owning products and more about experiences, so customer-relationship management is increasingly important. Now, it’s not so much about transactional processes as about meaningful relationships. Earning and maintaining customer trust is vital.

The authors suggest three specific things that organisations need to do to thrive in this new environment. First, they need to entertain and empower. By becoming entertainment companies they can regain customer attention and involvement. Second, they need to gain trust. Reputation is a new form of currency and it needs to be carefully protected. Third, they need to over-deliver on their operations. Without dedication to operational excellence, customer loyalty and – with it – profitability is fleeting.

Campanini and Hutchins present four nature-inspired models – symbiosis, enhanced migration, super-charging your instinct and leveraging natural selection – to extend the Darwinian comparisons.

The need for flexibility is a common theme. While management has focused on hardwiring consistent processes into organisations using techniques such as business process re-engineering, there is a fatal flaw in this approach. Inflexible, IT infrastructures constrain a company’s ability to operate using a more evolutionary perspective. The paradox is that companies need to operate with ruthless efficiency as well as being adaptive, diverse and fast.

The solution to this prescribed here is a blended one. Businesses need to invest in gathering diverse data, need to develop enough plasticity to formulate the most appropriate questions, get to an 80 per cent certainty of causation/correlation, search for adjacent weaker signals that might be something bigger and explore, iterate and test.

Market research firms already embrace this thinking and are eschewing the 99 per cent statistical discipline in favour of 80 per cent confidence coupled with the application of business instinct. This produces fast feedback.

Should you always trust the insights that emerge? Not necessarily, the authors acknowledge. However, you should have enough from your 80 per cent to at least risk an experiment in the market and an evolutionary perspective means you need to show flexibility, adaptability and an open mind.