Humans may have been forced to walk on two feet; Entrepreneurs are often pushed to launch a startup

By George ILIEV

CorporateNature Metaphor Series, No 111

In evolution, we are often told that our human ancestors in Africa chose to go down from the trees and venture into the savannah walking on two feet. Recent research shows they may not have had a choice when the forest cover on the continent started disappearing 2-3 million years ago.

Similarly, many entrepreneurs become entrepreneurs not by choice but out of necessity: after conflict in the workplace, losing their job, or out of frustration with their current job.

When push comes to shove, the entrepreneurs simply pick up the shovel.

Man with shovel (Source: Wikipedia)

Note: The research quoted is from The Economist, May 30, 2019: Human beings may owe their existence to nearby supernovas. Cosmic rays from them would have changed the world’s vegetation.

Global cultures divide into two types: coconuts and peaches

By George ILIEV
CorporateNature Metaphor Series, No 100

The population of most countries falls into one of two cultural categories: coconuts or peaches, according to culture experts. Coconuts (e.g. Germans or Russians) are hard on the outside but soft on the inside: not warm and friendly on the surface, but they open up and turn soft once they get to know you. Peaches, on the other hand, are soft on the outside but with a hard stone on the inside: on the surface Brits are polite and smile a lot, but have a closed off inner circle of friends. If a Brit tells you "you should come over for dinner sometime", this is merely them being polite and does not imply an invitation at all. (It becomes an invitation only if the day and the time are specified.)

Yet, cultures evolve. Over the course of history, coconuts have been selected by humans not for larger size but for thinner shells. As a result, through selective breeding generation after generation, coconuts nowadays have much thinner husks than millennia ago. Similarly, "coconut" cultures are getting less intimidating upon first encounter: hanging out with the Dutch is good fun nowadays.

Might there be a similar process of evolution for peaches? - Not necessarily, because the peach stone is not useful for humans. However, if we used apricots rather than peaches as the metaphor, we might be able to observe some evolution of the stone inside over the centuries, as apricots have an edible kernel in the middle of the stone (peaches don't).

It may sound like a communist slogan but it seems to be the case that globalisation is driving this process forward:
Coconuts and peaches of the world, unite!

Coconut (Source: Wikipedia)

The formation of the EU unleashed socio-economic competition similar to the evolution of animal species when tectonic plates collide

The linking of North and South America led to the Great American Interchange: successful species advanced and unsuccessful ones retreated. The formation of the EU led to similar movements in the "Great European Shortchange"

By George ILIEV
CorporateNature Metaphor Series, No 77


Until three million years ago, North America (including Mexico and Central America) was separated from South America by an ocean in the middle. Then around three million yeas ago the Isthmus of Panama rose up from the sea floor and created a land bridge linking the two continents: a phenomenon known as the Great American Interchange. 

The New World was never been the same again since: Many northern species, including jaguars, pumas, llamas and a tonne of other animals invaded the South and thrived. But only three South American species moved north and spread out in any large numbers (the armadillo, the opossum and the porcupine). The reason for this discrepancy was that northern animals had had millions of years to evolve and acclimatise to tropical conditions in Mexico and Central America, which had served as a nursery for their southern expansion. On the other hand, southern animals had only lived in the tropics so the northern plains and mountains were not a hospitable habitat for them.

The creation of the EU since the 1950s is a similar story of competition among economic and social species: a Great European Interchange. The Common Market served as a training ground for the global expansion of the most competitive European companies: Airbus, German car-makers, a few pharmaceutical firms and the banks and funds of the City of London. These companies became the jaguars and the pumas of the corporate world. 

On the other hand, freedom of movement for people exposed to trans-continental competition European blue-collar workers who hadn't acclimatised to globalisation. These workers, just like the South American species, became the losers from the Great European Interchange. Their sidelining ultimately led to Brexit and to other anti-EU social movements on the continent, as the EU for them felt more like "a Great European Shortchange." 

In Britain former prime minister Gordon Brown set up a short-lived Migration Impact Fund at the end of his rule in an attempt to mitigate the consequences of globalisation for manufacturing workers. Unfortunately, this fund was closed by the next British prime minister, David Cameron, who took over in 2010. Cameron didn't see the writing on the wall until it was too late - which cost him losing the ill-fated EU referendum in 2016.

There was one key difference between the Great American Interchange and the Great European Shortchange. Three million years ago, the different species in the Americas could only vote with their feet. In present-day Europe, all people can vote in elections and referendums, so leaving behind a large segment of the population feeling shortchanged was never going to be a successful recipe for cohesive political and economic development.

The Great American Interchange (Source: Wikipedia)

@GeorgeILIEV  
@CorporateNature

UK needs to choose its Brexit future: dog-into-wolf OR dog-into-dingo

By George ILIEV
CorporateNature Metaphor Series, No 69.

Brexit will need to unwind 45 years of economic and legal convergence between Britain and the EU. This is similar to unwinding the genetic evolution of the domesticated dog and turning it back into a wild wolf...or at least into a dingo (a feral dog). Britain's choice of divergence strategies (dog-into-wolf OR dog-into-dingo) is actually not much of a choice. Sadly both come with the stigma of being an outsider to the civilised human world.

The full text of this #BrexitMetaphors blog post can be found here: 

http://brexitmetaphors.blogspot.com/2018/12/dog-wolf-or-dingo.html

Dingo (Source: Wikipedia)

Helpless human babies and pre-revenue startups make for clever parents

It takes clever parents to raise a helpless human baby to adulthood;
It takes clever entrepreneurs to make a pre-revenue startup a success.

By George ILIEV

All babies are vulnerable when they are born. Yet, many animals give birth to young who get on their feet in minutes. Why are human babies so helpless?

Research by Rochester University suggests an interesting hypothesis: humans have become so clever exactly because their babies are so helpless. Helpless babies need smart parents to be able to survive: the more helpless the baby, the smarter the parents need to be to raise them to adulthood. This creates an evolutionary loop which allows babies to be increasingly helpless, as long as their parents are getting increasingly smarter.

Now look at this analogy through the prism of the startup world. The Googles and the Facebooks of the last two decades were born as companies that didn't generate revenue. Many of them were moonshots that took many years to become self-sufficient. Yet, they had smart founders who managed to raise seed and VC capital to tide them over their first years.

At least this is the case in Silicon Valley, where venture capitalists will support a team of bright founders working on a promising idea. On the other hand, European investors are much more risk-averse. European VCs primarily tend to invest in startups that are already generating revenue or are close to that point.

This makes me wonder why the US startup ecosystem and Europe have diverged in their evolution and who bears the responsibility. If US startups are the human babies, are European startups the orangutans?

Photo Credit: Barry Bland

In times of corporate crisis: domesticate corn!

On bleeding and seeding in companies, animals and plants
By George ILIEV

When someone is seriously injured, bleeding is often the primary cause of death. When a company is in crisis, employees leave en masse. What makes the situation worse is that the best employees are the first to leave.

An analogous phenomenon called shattering can be observed in the wild cereal plants, though a bit earlier in their life cycle: the seeds break off from the corn cob (or the wheat ear) as soon as they have ripened. This evolutionary adaptation of the plants works well for them in the wild, as the seeds are scattered in all directions, but this makes their harvesting by humans almost impossible.

Domestication of corn

This is why when prehistoric farmers at the dawn of agriculture set about domesticating cereal crops, the first trait they bred out of maize (corn) and wheat was exactly shattering. Only after they had managed to hold the seeds together for harvesting could they focus their attention on other traits for selective growing such as drought resistance and improved nutrition.

Image contribution: Wikipedia


Lessons for the CEO:

The first thing medics do  when someone is wounded is try to stop the bleeding. When a company is in crisis, stopping shattering is the prerequisite for corporate recovery.

Human memory does not prioritise retaining positive experiences. Customer feedback sites: beware!

Humans remember and recognise less attractive faces better. What about a great shopping experience?
George ILIEV

Psychologists used to assume that attractive faces are remembered better and recognised more easily. It turns out they were wrong. Scientists in Jena, Germany, recently proved with experiments on test subjects that we remember unattractive faces better than attractive ones. (Read the details here.) Humans do prefer to look at a beautiful face longer, but the emotional influence actually reduces the precision of recognising this face later on.

Attractive faces also lead observers into another trap: false positives in recollection. We are more likely to think that we recognise an attractive face, even if we have never seen this face before.

All this makes sense from an evolutionary perspective. A positive experience for an animal can be finding abundant food or meeting a receptive sexual partner, while a negative experience can be dying at the claws of a predator. The positive experience can be enjoyed but only up to the point of satiation, after which life continues as normal. Whereas the negative experience may lead to a terminal outcome. Since the negative experience shapes to a bigger extent the survival chances of the animal, one would expect that evolution will remove from the gene pool those animals which do not prioritise avoiding unpleasant experiences. Thus remembering positive experiences "takes the back seat".

In a figurative way this principle applies to collecting customer feedback. Internet forums are full of irate customers who share at length their negative experience with a product or service, while much fewer stories are shared about a positive experience. It might be because customers don't remember the positive experiences as well as the negative ones. Or it might be a typically human example of selfless cooperation where irate customers try to alert fellow customers. Yet the parallel exists: a positive shopping experience can rarely be as indelibly printed in our mind as a negative experience would be. Just think of the feedback you would leave about a restaurant that gave you food poisoning.

Photo: Gisele Bundchen (Source: Wikipedia)

Photo: Sean O'Pry (Source: Wikipedia)

Daniel Kahneman's "Thinking, Fast and Slow" seen through the eyes of mantis shrimps and humans

Mantis shrimp's vision of only 12 basic colours allows it to act fast. Humans see complex colours - conducive to more deliberative decisions.
George ILIEV

As scientific trivia go, it is well known that the mantis shrimp has 12 receptors for colour in its eyes (including several in the ultraviolet spectrum), while humans and honey bees only have three and dogs have two. I used to envy this 30-cm crustacean for the myriad of colour combinations that it could potentially see. However, recent research published in the journal Science shows that the shrimp cannot see myriads of colours. Not even a hundred colours. All it can see is 12 colours, while all the variations between the 12 colours are lost on it.

Managers and CEOs are sometimes accused of being two-dimensional: of seeing things as black and white. That's an overstatement. However, even seeing in 12 finite ways would be a gross oversimplification of the world around us.

Why does the shrimp need 12 receptors? They probably evolved as a shortcut giving the shrimp a speed advantage. It is a lightning-fast predator, so by sacrificing accurate colour definition, it gained a quick way of detecting basic colours and creating a simplified image of the world. Using direct chemical/neural signals from the receptors is faster than adding the extra stage of brain simulation - as the human brain does e.g. when simulating the perception of purple from mixing red and blue. Thus the shrimp can rapidly detect prey or other predators in the coral reefs while saving the little brainpower that it has.

Shrimp vision versus human vision is exactly the same dichotomy as laid out by Nobel Prize-winning economist Daniel Kahneman in "Thinking, Fast and Slow". The shrimp deploys a fast and instinctive system while humans resort to slower and more deliberative brain simulations, which capture the world in its complexity. The lesson from all this: if it is not about shattering crab shells, better spend some time poring over your important decisions.

Photo: Mantis shrimp (Source: Wikipedia)

Google's "Don't Be Evil" philosophy is encoded in the evolution of the human fist

Fists compensate for fangs in nature; Algorithms compensate for aggression in business
George ILIEV

Because of the unique proportions of the bones of the human fingers, a clenched human fist is 4 times as rigid as the fist of a chimpanzee, according to research published in the Journal of Experimental Biology. This allows humans to deliver bone-breaking blows with their knuckles and may partly explain how humans evolved (and survived) through an era of large predators while at the same time losing the fangs that served a defensive role in earlier humanoids and in present-day great apes.

Human fingers have evolved to fold neatly into a fist without leaving a gap in the middle. This makes the structure stiff, while chimpanzees fingers curl up in a way that always leaves the centre hollow. The human thumb adds extra support to the structure by buttressing it sideways and turns the fist into a formidable defensive tool.

The evolution of the fist resembles the rise of Google and its "Don't Be Evil" motto. By giving up the fangs of aggressive corporate techniques such as cornering markets, leaning on suppliers and squeezing long hours out of employees (think investment banks), Google has built a "gentle empire" of innovation and creativity. Google's development of superior data crunching algorithms is the virtual fist that punches heavy blows in the online world.

(Photo: Google HQ, Mountain View, California, May 2009)

(Photo: Human fist, March 2013)

Dog domestication resulted from "free market style" diet adaptations, not from "central planning style" capture and taming

Dogs volunteered for domestication by adapting themselves to eat starchy food
George ILIEV

The dominant theory about the domestication of dogs has so far postulated that humans caught wolf pups to use for hunting and gradually tamed them into dogs through selective breeding. However, new DNA research at the University of Uppsala published in Nature shows that it was probably the wolves who volunteered for domestication by developing mutations that allowed them to digest starchy foods - found in the rubbish tips of early agricultural human settlements.

The wolf ancestors of modern dogs must have stumbled upon this unoccupied ecological niche - just like companies find lucrative underexploited niches in a free market and adapt to exploit them accordingly. This possibly disproves the earlier hypothesis that the domestication of dogs came about as a result of the "central planning" of humans, intervening by capturing and taming wolf pups.

A somewhat similar starch-focused digestive mechanism may have been at play in the domestication of the cat. Cats have not developed special mutations to break down starch but instead have longer digestive tracts compared with their wild ancestors. This allows them to better absorb nutrients from starchy leftovers.

(Photo: Patches & Lamb, domestic dogs, Atlanta, 2010)

Evolution through multiple small mutations in line with Nassim Taleb's innovation by "aggressive tinkering"

Nature's "tinkering" with mouse colour gene through multiple mutations works better than one major mutation
George ILIEV

Deer mice in Nebraska changed their coat colour over an incredibly short period of 8,000 years as a result of nine separate mutations in a single gene, rather than in one single big mutation, a recent discovery by Harvard evolutionary biologists reported in Science reveals. With each mutation, the originally dark-coloured migrant mouse species obtained a lighter and more camouflaged coat, which made easier its survival in the lighter-colour environment of the prairie. This mechanism shows how natural selection produces fine adaptations through series of many small changes, rather than through a handful of big mutations.

This discovery could lend support to Nassim Taleb's "Antifragile" theory of innovation and scientific progress, in which he asserts that "aggressive tinkering" with a product leads to better and more innovative results than directed research. Taleb compares the R&D process with cooking, which "relies entirely on the heuristics of trial and error": adding an ingredient or spice to a dish is usually followed by tasting that verifies if the addition has led to an improvement. Crucially, the cook has the option but not the obligation to retain or discard the resulting mix, just like natural selection retains the positive adaptations and discards the negative.

(Photo: Nassim Taleb, photographed by Sarah Josephine Taleb, Wikipedia)

Companies can be worse than plant roots in self/non-self recognition

Competition and miscommunication among company departments harms the organisation: the story of Volvo
George ILIEV

(Mangrove tree, Wikipedia)

As the roots of a plant grow, the root branches of the same organism recognise each other (the underlying mechanism for that is still unclear) and stay out of each other's reach as much as possible: "plants develop fewer and shorter roots in the presence of other roots of the same individual". This is an evolutionary adaptation that minimises direct competition for nutrients between parts of the same organism. On the contrary, the roots can speed up their rate of growth if surrounded by roots of other plants, in order to be successful in competing externally.

Sadly internal cooperation is not always the norm in the corporate world. Company departments can be notoriously bad at synchronising their actions and sometimes even compete against each other. A case in point is the following story at car-maker Volvo in Sweden in the mid-1990s:

Volvo was accumulating a large stock of cars painted green. To reduce the stockpile, the sales department began selling green-coloured cars at a discount. Unfortunately no one told the manufacturing team down on the production line. No sooner had the production managers seen demand for green cars perking up, they immediately ramped up the production of green cars to build up the inventory (a typical supply-chain phenomenon known as the bullwhip effect)

Thus the cooperative plant roots seem to avoid "biting the dust" even if they literally do this all the time.

More than just a name: Car plants and green plants share asymmetric structures

Companies appear to have the asymmetric structure of plants rather than the symmetry of animals
George ILIEV

The physical world is asymmetric on the macro scale: coastlines, river systems and mountain ranges adopt an infinite variety of forms. Animals, on the other hand, usually have either bilateral symmetry (along an axis) or radial symmetry (around a central point), as a result of a predetermined embryonic cell division process. Starfish and sea urchins, uniquely among animals, even have both: bilateral symmetry at the larval stage and  fivefold radial symmetry as adults. The eggs of birds also have bilateral symmetry but one end is sharper than the other in an evolutionary adaptation that makes the egg roll in a circle, preventing a destabilised egg from rolling out of the nest.

(Basic fern symmetry, Sino-Burmese border, Dec 2011)

Plants fall in between the two extremes. Their growth follows a pattern, e.g. the Fibonacci sequence of prime numbers determines the repeating spiral pattern of tree branches and plant leaves. Yet because of the constraints imposed by its fixed environment, a tree may grow in an irregular shape, e.g. to fill a gap in the forest canopy. This would rarely happen in animals, where the outcome is binary: any development of major structural irregularities usually leads to the death of the organism.

How do corporate organisational structures compare with rivers, plants and animals?

Internally, company departments resemble the systems/organs in animals. There is always someone sitting at the top ( = the brain, though Dilbert might disagree); at operational level ( = muscles); a finance department ( = heart and circulation). The organs do not all need to be symmetrical: animals have pairs of some organs but only one heart and liver and the reason for this is not well understood. Yet, the overall symmetry in the animal body is preserved. In contrast, the size of company departments/divisions can vary so widely that the entire shape of the organisation rarely has any symmetry. Think of the Coca Cola Company, which is now not much more than a huge marketing and new product development department. This imbalance makes corporate structures conceptually incompatible with the rigid structure of an animal body and much more closely aligned with the diverse shape of plants.

The question is what causes the lack of symmetry. Plant adjustments in shape are a substitute for movement in animals. Varying their shape is the only way for plants to overcome the physical constraints in their environment and gain access to sunlight, water and nutrients, whereas a grazing animal just needs to move on to greener pastures. Do companies evolve as geographically-rigid, rather than mobile, organisms with little scope to change their location? Can this explain why their internal departments adjust their structure instead? This makes companies similar not only to plants but also to cities. It might also explain the coincidence of having one and the same word for manufacturing plants and photosynthesising plants.

(Basic fern symmetry, Bolivian highlands, July 2009)

Who says caterpillars and milkweed cannot do game theory?

"Outgrow to outcompete" strategies succeed in both nature and business
George ILIEV

(Caterpillar feeding on Milkweed, Wikipedia)

My favourite game in Game Theory is the little known "sailboat race": When you are the leading boat in a race and the second strongest competitor is right behind you, all you need to do to maintain your lead is simply to mimic every move the second boat makes. You must have seen this in Formula 1 racing as well.

The biggest threat posed by this strategy is that a third boat that does not play by your rules may overtake both of you while you are locked in the mirroring strategy. Therefore, when other competitors are around, your best bet is not to look back but to focus ahead.

This is what milkweed seems to be doing: First it evolved a range of defensive mechanisms against caterpillars, such as hairs on the leaves and poisonous latex in the plant's tubes. However, in response caterpillars evolved leave-cutting techniques that stop the flow of latex, while the monarch butterfly caterpillar has even developed immunity to the toxicity of the plant. 

At some point this outcompete/co-evolve strategy must have got too complicated and risky for the two sides locked in the game and some plants just took the fast lane. Instead of defending against the caterpillars, many of the 38 species of milkweed focus on repairing and growing faster. The strategy of outgrowing the enemy, rather than defending itself, seems to be working for the milkweed.

In the corporate world, Sony was applying this forward-looking strategy for decades. Rather than fighting over market share with its next biggest rival, it would simply create a fundamentally new category of product and outcompete everyone in this newly created blue ocean: from the radio transistor and the walkman to the Blu-ray DVD and PlayStation. Apple and Google seem to be doing the same though they still dominate most of their historical market niches. In East Asia, this strategy of shedding old technologies and industries and focusing on the new ones has a name derived from nature: The Flying Geese model of economic/technological development.

Of insects and startups: External threats make them small

Prehistoric birds may have reduced the size of insects just like African governments keep startups from "spreading their wings"
George ILIEV

What could insects and birds have in common with startups and governments? Could the size of one side of the pair be related to the danger that the other side poses?

In nature, it appears there may be a connection:

Reign of the Giant Insects Ended With the Evolution of Birds:

Maximum insect size tracked atmospheric oxygen levels surprisingly well for about 200 million years between 350 million years ago and 150 million years ago, as more oxygen allowed the existence of creatures with a bigger body mass. When oxygen concentration in the atmosphere soared to 30% around 300 million years ago, dragonfly-type insects reached a 70 cm wing span. Then, at the end of the Jurassic period about 150 million years ago this connection seemed to have broken: oxygen levels went up again but insect size paradoxically went down. However, this strikingly coincided with the evolution of birds. "With predatory birds on the wing, the need for maneuverability became a driving force in the evolution of flying insects, favouring smaller body size."

(Dragonfly in the Rodope Mountains, southern Bulgaria, 2010)

In the business world, instead of oxygen concentration, the level of transaction costs in an economy seems to determine the size of companies - though in the reverse way. In emerging markets with weaker institutions and high transaction costs companies need to grow bigger. The size and scope of a diversified conglomerate allows corporate organisations to internalise (and thus minimise) transaction costs by doing deals internally instead of going to the market. 

However, in Sub-Saharan Africa we can hardly find any large-scale companies. Could this be put down to predatory governments assuming the role of the predatory birds in the least developed economies? Bribe-taking officials and rent-seeking institutions preying on companies and startups might be stopping them from growing in size in the same way that pre-historic birds have possibly limited the size of pre-historic insects. The rest is history. Or, more precisely, evolutionary history.