On Proteges and Tidal Locking: the dangers of being too close to a star

Proteges get "tidally locked" in an unequal way. Startup co-founders get locked-in as equals.
By George ILIEV

1. Protégés
In my article on mentoring and the V-formation of flying birds, I had a passing definition of the protégé: someone who follows blindly and sycophantly their boss in order to advances in their wake. The minus side of being a protégé is that one gains protection and advancement at the expense of losing their independence.

2. Tidal locking & tidal "licking"
In planetary terms there is a related phenomenon known as tidal locking: when a planet gets too close to the star it is orbiting, it loses its own rotation and gets locked in with the star. An example to this is the Moon, which is locked in with the Earth so that only one side of the Moon always faces the Earth. The Moon plays the role of the Earth's protégé by losing its independent rotation: as a protégé it now rotates always facing its master. In the corporate world or the world of politics, tidal locking can be summarised as "tidal licking". You get the meaning.

3. Startup Co-founders
There is an "honourable" version of tidal locking when the two participants are relatively equal. When two planetary bodies of a similar size are close enough to each other, they can be tidally locked so that both rotate facing each other always with the same side. An example to this are Pluto and its satellite Charon: Charon is locked in with Pluto just as Pluto is locked in with Charon. An analogy in the business world are startup co-founders who get locked in with each other, without losing their identity and independence.

Photo: Full moon (Source: Wikipedia)

Stealth mode among companies and animals: Crickets and spiders learn to lie low

Crickets give up chirping, spiders disguise as bird poo, companies slip under the radar to avoid corporate predators.
By George ILIEV

Two recent science stories exemplify the evolutionary importance of disguise:

1. Crickets vs. Killer flies
Crickets in Hawaii have lost their ability to chirp in order to avoid attracting the attention of killer flies, their North American predator, BBC Science reports. In less than 20 generations, a mutation in their wings (the chirp-producing organ) has spread to more than 90% of the crickets on the island of Kauai. As a result, the crickets are now unable to rub their wings and produce chirping sounds but in return they survive unnoticed by the killer flies.

2. Spiders vs. Wasps
Spiders in Taiwan have learnt to disguise themselves in a decor resembling bird excrement, Discovery News reports. The spiders drag onto their web a pile of desiccated insect bodies, eggs and plant detritus to make themselves resemble bird droppings and thus avoid the attention of predator wasps.

3. Stealth mode in the corporate world
Companies of all sizes use disguise to avoid the attention of powerful competitors. Apple and Google develop new products under code names and in secretive locations, while startups often spend years in "stealth mode" to slip under the radar of large competitors. The most fascinating recent example is Google X: Google's semi-secret facility in California where at least eight new technologies are being developed.

There is only one thing Google hasn't thought of: covering up the facility in bird poo.

The Google Campus in Mountain View, California 

(Photo: Wikipedia)

IBM and the Octopus: adaptability and the benefits of severing a limb

Agility in nature and the business world sometimes requires a sacrifice:"Life and limb" becomes "life or limb".
By Nathan Hartman (nathan@hartmanprivatelaw.com)

1. The octopus has the ability to change the color and texture of its skin, and uses this ability to attract mates and increase the survivability of its young.

One of the primary defenses developed by the octopus is the ability to camouflage or hide itself by changing the color and texture of its skin. An octopus can change the tone of its skin to varying shades of yellow, orange, brown, and black to blend in with its surroundings and avoid the notice of potential predators. The octopus also uses its color-changing ability to attract mates, and the more colors an octopus can display the more likely it is to attract a mate. This then ensures that young octopi will have maximum color-changing potential, thus increasing the likelihood that they will survive into adulthood.

2. The octopus also has the ability to autotomise: it can spontaneously sever its limbs when threatened.

When threatened, and octopus can also purposefully detach its limbs to distract predators, an ability known as autotomy. The detached limbs can still move and react to touch, drawing the attention away from the fleeing octopus.

3. IBM utilizes the strategies of the octopus in the business world: it remains highly adaptable to the current economic environment and is willing to cut off portions of its business when appropriate.

IBM is one of the world’s most recognizable companies and the second largest in the United States in terms of number of employees. The company has remained flexible, developed 7 service arms, and been involved in many different enterprises, including computer development, space exploration, early forms of artificial intelligence, and weapons manufacturing. Just as the octopus changes its skin tone to increase its survivability, so too does IBM change the face of its company to remain current and innovative in the business world. More so, IBM has shown a willingness to cut parts of its business when threatened, even when those parts were strongly associated with the company. In 2005, IBM sold its personal computer business to Lenovo, ending more than 30 years of involvement in the personal computer market.

Photograph of an Octopus (Source: Wikipedia)

Rafts of ants and investment banks in distress stay afloat by "banking" on their young

Ant colonies and banks "employ" their young to improve survival chances
George ILIEV

1. Ants build floating rafts using their eggs in the foundation:
When threatened by flooding, ants build floating rafts using their own bodies and put their eggs in the foundation of the raft to increase the buoyancy of the structure. This does not damage the chances of survival of the unhatched ants in the eggs.

2. Investment banks retain the most junior people in mass redundancies:
The youngest recruits are the cheapest employees, which justifies the investment banking practice of retaining these people when cost-cutting requires mass redundancies. It is rare that the new recruits would be let go before the higher-earning mid-ranking employees.

3. Next generation often serves the present generation:
The young exist for reasons beyond merely as a vehicle to pass on your genes (or corporate culture) to future generations. In the two cases above, the young are employed to increase the chances of survival of the present generation... which isn't too different from the traditional family model where children would work on the family farm from a very young age. The ants just take it to a new level of utilitarianism - using the generation that hasn't hatched yet.

Photo: Ants (Source: Wikipedia)

(Blogging style guide: Here)

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)

Startups can learn how to "fail forward" from mantis shrimp's layered clubs

Nature prevents big failures by allowing small failures. Startups succeed if they "fail fast, fail often".
George ILIEV

The mantis shrimp is a fascinating 30-cm crustacean in the tropical oceans. It is famous for its unusual colour vision (with 12 colour photoreceptors in the eyes) but also for the brutal force and lightning speed with which it stuns and catches its prey. The shrimp's sudden and powerful blow to mollusc or crab shells shatters them to pieces. It is even known to break aquarium glass with its massive clubs.

Research into the structure of the shrimp's claws carried out at the University of California, Riverside, shows that the clubs are composed of three separate layers of bony tissue. The big differences in orientation, stiffness and hardness between the layers allows small cracks to appear in each layer but stops these cracks from spreading across the entire structure. Counterintuitively, "nature prevents catastrophic failures by allowing local failures."

In the terminology of probability theorist Nassim Taleb, this would be the perfect example of anti-fragility, as described in his 2012 book "Antifragile: Things That Gain from Disorder". In the field of biomimicry, the multiple-layer structure is giving rise to bulletproof materials.

In the startup world, the principle of allowing small cracks is known as "fail fast, fail often". Small failures are part of establishing product/market fit and have saved many a startup from doom. The entrepreneurs who "fail forward" are forced to pivot towards new products, markets and business models and are thus more likely to succeed.

Photo: Mantis shrimp (Source: Wikipedia)

V-formation model aids bird flight, Asian industrialisation and mentoring

In multiple fields the first player helps the one behind – but only if lined up in strict order: slightly sideways

George ILIEV

Birds flying in V-formation need 20%-30% less energy than when flying alone. Big birds such as geese, storks and pelicans minimise their energy expenditure by capturing the uplift generated at the wing tips of the bird flapping in front, research published in the journal Nature reveals. However, for this mechanism to work, the second bird has to be located sideways from the leading bird. If flying directly behind, the follower would have to counteract a downdraft coming down the back of the leading bird.

The V-formation is clearly visible in the five-tiers of economic development of East Asia - the famous Flying Geese paradigm. As Asian countries industrialised after the 1960s, they moved in the wake of Japan and sequentially took on the older low-tech industries that Japan had outgrown. Textiles, toys, chemicals and steel, in which Japan once led the region, moved first to the four tigers (South Korea, Taiwan, Hong Kong and Singapore); then to a third tier of countries - Malaysia and Thailand; then to China; and now increasingly to Vietnam and India. Thus Japan created macroeconomic uplift for the four tiger economies behind it; they in turn passed on updraft to the ones following them and so on. And yet, the model worked so well because these countries did not exactly copy each industry but introduced slight variations - the sideshift seen in the V-formations of  birds.

Mentoring in a similar way creates metaphorical uplift for the “disciple” being mentored by a leading figure. And it is exactly the V-formation that distinguishes a "mentee" from a "protégé". The mentor-mentee relationship works best when the two are not in the same industry or organisation, i.e. when located sideways in V-formation. Otherwise when a "mentee" is moving immediately in the wake of the mentor in the same organisation, the mentee is more fittingly described with the unflattering term "protégé".

Rolled out on a grander, “open-access” scale, this model can even apply to the Linkedin influencers category, where 500+ influencers like Richard Branson and Jack Welch trample the road with their thoughts and wisdom for thousands of others to follow. A giant V-formation of birds indeed, numbering 3.5 million followers in the case of the No 1 influencer, Richard Branson.

Photo: Flying goose (Source: Wikipedia)

Photo: V-formation (Source: Wikipedia)

Decoys: favourite tools for bacteria and businesses

Bacteria secrete decoys to deflect virus attacks; Supermarkets set price decoys to distract customers.
George ILIEV

A recent MIT study published in the journal Science explores an interesting phenomenon: the ocean-dwelling photosynthesizing cyanobacteria produce bubbles of nutrients and DNA and release them “most charitably” into the ocean for other microorganisms to feed on. Cyanobacteria live in the sun-lit layers of water and account for over 50% of all photosynthesis in the ocean. As a crucial component of phytoplankton, the cyanobacteria are at the bottom of the food pyramid and are the food source for krill and other zooplankton. The mystery of the charitably secreted bubbles (vesicles) turns out to have a not-so-charitable explanation. The most intriguing hypothesis holds that the membrane-enclosed vesicles of DNA serve as decoys to attract virus attacks, thus vastly reducing the chance of viruses successfully zooming in onto the cyanobacteria themselves.

Companies use decoys in a similar way in “decoy pricing”, most eloquently described by Dan Ariely in his 2008 best-seller "Predictably Irrational" with the example of subscription plans for The Economist. When offering three or more products in the same category, supermarkets strategically price the most expensive two products at the same price level. The less attractive of the two products serves as a basis against which the customer compares (the more attractive product. Thus the customer is unconsciously nudged towards buying the more attractive expensive product as it appears to be a better deal for the same price, completely forgetting the cheapest product on the shelf.

Photo: Cyanobacteria in the ocean  (Source: Wikipedia)

Calorie restriction prevents Dutch Disease

Insufficient resources: "a blessing in disguise" for living organisms and states
George ILIEV

Calorie restriction - a diet usually containing 30% fewer calories but with the nutrients of a standard diet - is associated with increased life span in a range of living organisms, including primates, mice, drosophila flies and yeast. Restrictions in protein intake also lead to improve health as cells recycle waste protein much more efficiently and repair themselves more successfully.

The same principle is visible in a series of macroeconomic failures known as Dutch Disease. Countries with abundant natural resources, such as oil-rich states in Africa and Latin America, end up wasting these resources in a spectacularly profligate way. On the other hand, countries with limited natural resources, e.g. Japan, Singapore and Switzerland, mobilise themselves by minimising waste and building functioning institutions and thus achieve significantly higher productivity than their resource-endowed counterparts.

Photo: Oil pumpjack (Source: Wikipedia)

Why hot water freezes faster and why companies underprice their stocks in IPOs

Counter-intuitive actions/phenomena often achieve better results
George ILIEV

Nature and business sometimes make a step back in order to make a step forward. The Mpemba paradox in physics holds that hot water freezes faster than cold water, which is frustratingly counter-intuitive. Scientists from Nanyang University in Singapore recently found the explanation to this strange phenomenon. The key is the heating-triggered relaxation of the weak covalent bonds between the two hydrogen atoms in one water molecule and the oxygen atom in the adjacent molecule.

Initial public offerings (IPO) provide a similar counter-intuitive example in the business world. Companies naturally should want to sell their shares at the highest possible price. Why, then, did Twitter set its stock selling price at $26 per share in its November 2013 IPO, even though the company and its underwriter Goldman Sachs could have realistically foreseen a trading range around the current level of $41-$45. Risk aversion is probably not the whole story. Many consumer products and media companies prefer to make a splash on the market by leaving money on the table for a bunch of happy investors in a heavily oversubscribed IPO, rather than milking every single investor to the top of their willingness to pay. They see this is the way to long-term success. If you don't believe these companies, pick up John Kay's 2010 book "Obliquity" on how to achieve things indirectly.

Photo: Ice Cubes (Source: Wikipedia)

Bees and Wikipedia: quintessential generators of "invisible GDP"

Crop pollination and Wikipedia knowledge create hidden value that is not captured by conventional statistics
George ILIEV

A 2007 study estimates the value that bees and other pollinators create for farming at 153 billion euro. A more recent study shows that 84% of European crops are partially or entirely dependent on insect pollination. The former number alone equals around 0.3% of global GDP, but these significant statistics are rarely given due coverage in national and international GDP figures.

Economists have been noting in recent years that the IT revolution and the internet are not leading to increased productivity and increased output. "As early as 1987 Robert Solow, a growth theorist, had been asking why 'you can see the computer age everywhere but in the productivity statistics'."  (The Economist. Jan 12, 2013. "Innovation Pessimism: Has the ideas machine broken down?") These macroeconomic studies omit the crucial role of knowledge pollination and cross fertilisation played by Wikipedia and the other volunteer-driven IT and online platforms: the Google search engine, blogs, the Linux operating system, etc. Volunteers contribute to the economy their time and skills in writing and editing Wikipedia articles even if these are not recorded in GDP statistics. Having all the world's information at your fingertips has a visible empirical impact on research, entrepreneurship and innovation, just as bees visibly produce honey.

Photo: Bee "on" the bonnet (Source: Wikipedia)

Ambergris, Pearls & Silk serve roles similar to Lawyers, Consultants & Outsourcing Agents

Luxury products made in living organisms play roles analogous to outsourced professional services in companies
George ILIEV

Living organisms sometimes produce biologically-expensive materials to isolate themselves from harmful factors in their environment. Ambergris, a thick oily substance used in expensive perfumes, is produced in the digestive tract of sperm whales to encapsulate the beaks of squid they swallow and stop them from damaging their intestines, according to Italian research published in the journal Geology.

Similarly, pearls are produced when an oyster tries to seal off an irritant inside its shell by covering it with layers of nacre (mother of pearl). These irritants are often microscopic worms or some other organic material. Contrary to popular belief, grains of sand are rarely the cause of pearl formation.

Silkworms ensconce themselves in cocoons of silk for the same defensive reasons: the vulnerable chrysalis (pupa) needs to isolate itself from the environment during the crucial metamorphosis process of turning from a caterpillar into a butterfly.

In the corporate world there are analogous phenomena: companies use valuable resources to hire external help - lawyers and consultants - to deal with dangerous or potentially harmful situations. When a company like Apple wants to isolates itself from labour disputes and complex legal and cultural issues in its production and supply chain, all it takes is to outsource production to a faraway company like Taiwan's Foxconn. Thus Apple can stay focused on its in-house R&D and marketing - done comfortably inside its California silk cocoon - though at the price of severing valuable feedback loops from the real world.

(Photo: Akoya pearls. Source: Wikipedia)

"Taken by Storm" Applies Equally to Cyclones and Crowdfunding

Crowdfunding thrives thanks to the Internet - just like inland tropical cyclones are energised by global warming.
George ILIEV

In 2007 a tropical storm named Erin took America by surprise. Cyclones usually weaken after making landfall but Erin defied the hurricane convention: it grew stronger over Texas and even formed an eye above Oklahoma. Since Erin, scientists have defined a new category of tropical cyclone: while the usual type derive their energy from the heated surface water of the ocean, this new tropical storm category derives its energy from evaporation of soil moisture (figuratively called "brown ocean"). NASA-funded research at the University of Georgia (USA) shows that rising global temperatures and increased humidity in some areas are making this unorthodox category of hurricanes not only possible but increasingly common.

In a similar way, the spread of the Internet and growing consumer wealth create "the perfect storm" that has made a new social phenomenon possible: crowdfunding. The conventional way of funding a project or business has always been through savings and bank loans or by selling shares on the stock market (analogous to the conventional view that the warm ocean feeds tropical cyclones). Crowdfunding projects are known to have existed in the past - e.g. for raising funding for the pedestal of the Statue of Liberty in the 1880s - but were never the norm. Crowd-sourced fundraising has taken off only after the Internet and consumer wealth became widespread. Microfinance platforms such as Kiva and creative micro-investment platforms such as Kickstarter are now making a significant impact worldwide. However, unlike the hurricanes, their impact is hugely positive.

(Photo: Tropical cyclone, as seen from space. Source: Wikipedia)

Physicists Compare Embryo Development and Cancer. What Connects Google with Enron?

Good and Bad Outcomes: Common in Evolution of Multicellular Organisms and Stock Markets
George ILIEV

Here is a daring double-barrelled hypothesis - among the most daring I have produced:
1. The evolution of multicellular organisms possibly leads to both good and bad outcomes: embryos and cancer, respectively.
2. Stock markets similarly sustain good and bad outcomes: Google and Enron.

A newly founded institution in Arizona called Center for the Convergence of Physical Science and Cancer Biology straddles the border between physics and astrophysics on the one side, and cancer research on the other. Two theoretical physicists and cosmologists are exploring a (yet unproven) hypothesis linking the origin of cancer to the evolution of multicellular organisms and the development of embryos. They assert that "genes that are active in the embryo and normally dormant thereafter are found to be switched back on in cancer. These same genes are the 'ancient' ones, deep in the tree of multicellular life." The researchers expect to find that "the more malignant stages of cancer will re-express genes from the earliest stages of embryogenesis".

A similar parallel is even more evident in the impact that stock market listings have on companies. For many, including leading "goodies" such as Google and Apple, a public listing has the beneficial effect of providing resources for growth and credibility for transacting in the business world. For others, such as Enron and WorldCom, the stock market created perverse incentives for top managers to cheat and lie.

To put it simply, one man's meat is another man's, ...eh, defeat.

(Photo: Enron's logo, Wikipedia)

Quantum Physics Lends Strategies That Beat Classical Game Theory

Quantum Entanglement Is Firmly Entangled with Game Theory 
George ILIEV

Finally someone has produced a paper expressly for my blog. "Link Between Quantum Physics and Game Theory Found", published in Nature Communications, explores novel Nash Equilibria that beat the conventional Nash Equilibrium. Players in a Prisoner's Dilemma type of game who have access to using an entangled pair of quantum particles outperform classical players who are interrogated in full isolation from each other. If only Schrodinger's Cat could rise from the semi-dead and come out of its box to see that.

(Picture: Schrodinger's Cat, Wikipedia)

On investment bankers and bird excrement: Read on, it's not what you think

Birds of a feather: Seed passage through bird digestion yields positive effects similar to stint at investment bank
George ILIEV

It is no secret that many young investment bankers (analysts, associates, even VPs) work 100-hour weeks. Why do they subject themselves to such inhumane treatment? An analogy between investment banks and bird digestive systems may reveal instructive similarities.

Capiscum (chili pepper) seeds eaten by the common South American flycatcher are four times more likely to germinate after passing through the bird's digestive system, a recent paper in Ecology Letters shows. This is based on two unrelated processes: the gut passage kills a pathogenic fungus that grows on the seeds and also scrubs the seeds of an odour that would otherwise attract seed-eating ants once the seed lands on the ground.

Working for an investment bank confers similar advantages: by exposing employees to extreme pressure, it makes them resilient and possibly more likely to succeed in future careers. By doing this, banks are not too much different from the Indonesian palm civet (cat) which increases the value of the coffee beans it devours and excretes, making this coffee one of the most-expensive varieties in the world.

(Photo: Bird diversity, Wikipedia)

Green bananas and university graduates are like two peas in a pod

University graduates ripen like green bananas - on demand;
Vocational training schemes produce ripe peppers that ripen no further.
George ILIEV

It is tempting to compare corporate employees with pumpkins but I will limit the analogy to bananas and peppers. The two crops are hugely different in one respect: bananas are picked green and will then naturally ripen over time, while peppers cannot ripen once detached from the plant. Furthermore, the ripening of harvested green bananas (or green tomatoes by the same token) can be accelerated if they are exposed to ethylene gas, which is a plant hormone. Placing an apple next to a bunch of green bananas can do the trick, as apples emit ethylene. Peppers, grapes and strawberries, on the other hand, lack the ethylene receptors and genes that trigger this ripening process and can only ripen on the stalk.

Back to the analogy with employees: broad university education churns out green bananas. University graduates do not need to be perfectly ripe for the labour market - different companies will use various doses of human ethylene (i.e. training, mentoring, etc.) to make them fit for purpose. The important thing is university graduates are malleable.

On the other hand, vocational training systems (widespread in Germany and  Austria) deliver perfectly ripe employees to the labour market. However, over time these employees are not malleable. According to The Economist (June 1, 2013) "early [vocational] training can turn into a disadvantage by the age of 50. It appears that skills learnt in vocational training become obsolete at a faster rate." Once detached from the vocational training scheme, these employees cannot "ripen" much more.

The old George Bernard Shaw once said: “At my age, I don't even buy green bananas.” However, if a company or an economy can wait for the green bananas to ripen, that might be the optimal long-term choice, despite the swinging of the pendulum towards vocational training these days.

(Photo: Green bananas, Wikipedia)

Low-cost airlines: competitive advantage derived from evolution of turtle shells

Turtle shell and low-cost model both arose internally
George ILIEV

It is often the case that an internal trait can become your biggest external competitive advantage. Here is an analogy between present-day low-cost airlines and the evolution of the turtle shell 260 million years ago. The latest fascinating research by Yale and Smithsonian scientists shows that the upper and lower turtle shells have evolved from, respectively, the fused elongated vertebrae and broadened ribs of the turtle's prehistoric ancestor. Thus, two structures that were meant to provide support inside the animal's body became a signature tool giving it protection from the outside world.

In a similar way, low-cost airlines stumbled upon the low-cost model as an internal operational efficiency tool but are now thriving on it as their most distinctive marketing trait.

(Photo: Turtles from the western Black Sea coast, Aug 2011)

Why venture capitalists do not invest in flying penguins

Functional focus helps animals excel and entrepreneurs succeed
George ILIEV

Seasoned venture capitalists are known to refuse to invest in entrepreneurs who are working on more than one project at a time. Focus is the key feature that a VC looks for in a startup, as focused ventures are less likely to fail.

In the world of birds, the same principle holds true, known as the "tradeoff hypothesis". Birds that are efficient in diving are mediocre at flying, as wings optimised for diving make flying possible only at a very high energy cost. Murres and cormorants are an example of excellent divers but terrible fliers: murres are able to fly but only by burning energy at 31 times their rate at rest, which is the highest known ratio in the ornitological world. Similarly, because of the inefficiency of being able to both fly and dive, penguins gave up and lost their flying skills 70 million years ago.

Flying has evolved independently at least four times in the history of life on Earth (insects, dinosaurs, birds and bats) but the loss of flying in birds has occurred independently at least five times.

Focus appears to be the key to success in both startups and animals.

(Photo: Walking penguin, Boulders penguin colony, Cape Town, Oct 2012. Source: George ILIEV)

Big Bang matter formation resembles education: Neither represents final stage

The Big Bang created a limited number of elements just like education develops a limited set of skills
George ILIEV

Matter was created in the Big Bang in the form of only three chemical elements: hydrogen, helium and lithium.  All other elements lighter than (and including) iron are born in nuclear reactions within stars in a process known as stellar nucleosynthesis. All the elements heavier than iron are created largely in supernova explosions.

This mode of matter formation resembles education and professional development. School and university education can teach a student only so much. The rest they can only learn in their job. The more stellar the company, the more the employees will learn.

(Photo: The supernova that exploded in 1054, Source: Wikipedia)

Bigger brains lead to divergence of species and spinouts of companies

Learning animals and learning organisations evolve faster
George ILIEV

Statistical research on birds proves the old hypothesis that species with bigger brains diversify and evolve into other species faster. An analysis of over 7,000 bird species (or 3/4 of all known avian species) shows that those with the bigger brains relative to body size are also the ones that have diversified most, e.g. parrots, crows, owls and woodpeckers. Bigger brains allow animals to adopt more easily the behavioural changes needed to gain access to new environments or new resources, which in turn puts selection pressure on the species and can lead to its divergence into two or more species. Big brains thus facilitate changes in behaviour that result in adaptive divergence.

In a similar way learning organisations (i.e. companies that facilitate the learning of their members) are in a state of continuous transformation and the top-ranked research-led universities are more likely to launch spinout companies. Big brains seem to lead to hiving off not only in bees.

(Photo: Macaw parrot, Wikipedia)

Birds of a feather: nectar-robbing bumblebees and rent-seeking investment banks

"Nec-tarred" with the same brush: Robbers learn their way to take advantage of nectar and Muppets*
George ILIEV

Bumblebees rob flowering plants of their nectar by cutting holes on the side of the flower, rather than entering  through the pollen-covered opening as the other bees and insects do. As a result, bumblebees do not contribute to the pollination of the plant. This was known to Darwin 150 years ago. A recent discovery, however, shows that this behaviour is not innate: bumblebees learn  from other bumblebees how to rob flowers. This has been proven by the fact that the hole is always cut on the same side (right or left) of all flowers in a given meadow - a sign that the flower-cutting technique is being passed from one bumblebee to another.

In a similar way, investment banks did not invent independently the plethora of rent-seeking financial innovations that led to the 2007-08 financial crisis. They copied each other. Once an instrument, such as the securitisation of subprime mortgages, collateralised debt obligations (CDO), or credit default swaps (CDS) appeared at one bank (usually in America), the others would copy the model so as not to lag behind. Thus by robbing their gullible clients (referred to as "Muppets"*), they damaged the global financial system - just like the bumblebees hinder the pollination of plants and reduce the efficiency of their ecosystem.

*Investment Bank Goldman Sachs came in the news in 2012 with the nickname bankers gave to unsophisticated clients who could be easily taken for a ride: Muppets.

(Photo: Bumblebee cutting its way into a flower, Wikipedia)

Apple’s product-launch pattern resembles memory recall in young people’s brains

Too frequent switching between different areas slows down memory and hampers companies
George ILIEV

As people age, their memory worsens partly because when they try to recall things, their brain flits between different areas and categories more often than necessary/optimal, research by Warwick University shows. If an old person would be asked to name 100 animals, he/she would switch too often between predators, herbivores, pets, marsupials etc. without exhausting each category, while a young person would be more focused and would exhaust the category before moving on to the next.

Apple’s product launch strategy thus resembles the pattern of functioning of a young person’s brain, as Apple does not flit between categories unnecessarily: Six years after the iPod came the iPhone, three years after the iPhone came the iPad. Google, on the other hand, used to move between various product categories a lot more and has only recently started to narrow down its focus to a few core areas.

(Photo: The old Apple logo, Wikipedia)

Short-term hearing loss resembles bursting of asset bubbles: No physical damage in either case

Temporary loss of hearing and reduction in asset value are both psychological mechanisms
George ILIEV

Reversible short-term hearing loss after a concert or a night in the club is not the result of damage to our hearing, groundbreaking research published in the Proceedings of the National Academy of Sciences shows. It is instead a protective psychological mechanism with which the body temporarily reduces hearing sensitivity in order to continue performing normally.

This resembles the bursting of asset bubbles. When a bubble starts to deflate, the underlying assets are not lost - be they houses, IT companies or railway lines. They are simply psychologically re-evaluated in a period of moderation which is needed for the economy to continue functioning normally.

(Photo: Human ear, Wikipedia)

Bacteria form protective biofilm in same way as companies engender loyal workforce

Molecular glue keeps bacteria together just like incentives keep employees cooperating
George ILIEV

When in danger, some bacteria shield themselves by creating a biofilm of slime that protects them from physical threats and from antibiotics, research published in the Journal of Biological Chemistry reveals. Such biofilms cause dental plaque and sinusitis in humans, as well as antibiotic-resistant infections. A protein switch triggers the production of the film-forming molecular glue that keeps the bacteria together and isolates them from the outside world. When the glue-production mechanism is not activated, the bacteria carry on living independently.

In the business world, this molecular glue exists in the form of "incentives". Companies which use incentives to reward cooperation and long-term performance fare better in the dog-eat-dog corporate world. Partnerships are the best in engendering a loyal workforce, according to Colin Mayer, the former dean of Oxford Said Business School, and his book "Firm Commitment". In a partnership structure, the incentives are more likely to ensure alignment between the interests of the employees and the organisation, thus promoting cooperation among the stakeholders. 

Even business schools have cottoned on this idea. Some schools have a policy of non-disclosure of the GPA of MBA students to potential employers in order to enhance cooperation (e.g. Chicago Booth). Other schools do not even calculate a GPA for the graduates, so that the MBAs have an incentive to work together during business school and after graduation (e.g. Emory University).

(Photo: New York Stock Exchange, old trading floor. Source: Wikipedia)

Rate of oxidation defines flesh colour; Cash turnover rate defines corporate culture

Fish muscles burn oxygen; companies and banks churn cash
George ILIEV

The flesh of salmon, mackerel and other fish species is darker in some parts and whiter in others. This depends on the oxidation rate in the muscles. Muscles that contract a lot require a lot of oxygen. Oxygen is stored in the protein myoglobin, which makes the flesh darker. Farmed salmon does not move much so even its most active muscles do not contain as much myoglobin as the corresponding muscles of wild salmon. Overall, the flesh of fish is whiter than the meat of land animals and birds as fish are supported by the water they live in and do not need additional muscular strength to support their weight. In the same way, the breast meat of birds that do not fly much (turkeys and chickens) is white as they do not need to move their wings, while the meat of their legs is dark as these birds primarily move by walking.

Oxidation in the muscles is the fundamental process underlying movement. In the business world, the corresponding fundamental process is the turnover of cash at companies and banks. Cash turnover does not change the colour of an organisation but impacts its corporate culture. The organisations with the highest turnover rates can be expected to have the most aggressive culture and vice versa (See the book "Business at the Speed of Molasses" by Joey Reiman). Cash turnover rates are astronomical (and volatile) in the banking industry as money often changes hands multiple times a day. Therefore, banks do not even use "turnover" as a metric.

Slowing down can make the colour of meat whiter and the culture of companies and banks more agreeable.

(Photo: cooked wild Alaskan salmon, April 2013)

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)

Brand proliferation and contraction cycle resembles rise and fall of melanin content in human skin

Product portfolios and evolutionary adaptations sometimes go full circle to get back to square one
George ILIEV

(Photo: Chimpanzee, Wikipedia)

Early humans had pink skin covered by black fur, similar to modern chimpanzees. Around 2 million years ago as humans were gradually losing their fur to allow easier sweating and cooling, their skin melanin content started to increase as a protection against ultraviolet radiation. This process was driven by natural selection as dark-skinned homo sapiens had an evolutionary advantage under the tropical sun over pink-skinned furless creatures. However, as humans migrated out of Africa and into northern latitudes, the high melanin content of dark skin became an obstacle for the absorption of UV light and the production of vitamin D in the body. This resulted in less calcium in the bones which made them brittle. Natural selection again stepped in, leading to the loss of pigmentation and the return of pink skin in latitudes higher than 46 degrees north, closing the cycle with the early pink-skinned humans.

A similar cycle can be observed in the evolution and loss of fins in ocean-dwelling animals. The fins of ancient fish were lost and became legs when they moved onto land and became tetrapods. The legs were lost and became fins again when the ancestors of whales and dolphins moved back into the ocean.

Many companies share a similar history of cycles of product/brand proliferation and contraction. Starting with one main product, companies like Unilever, General Motors and Google gradually developed an array of brands. However, as market conditions changed and the managerial complexity increased, brand proliferation peaked and the three companies above started scaling down their brand/product portfolios to focus on fewer core products.

The most famous novel in Chinese literature, "Three Kingdoms", encapsulates this cyclical nature in its opening sentence: "The World under Heaven long divided, must unite; long united, must divide".

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)

Specialisation comes with age and because of age

Biological and psychological processes related to ageing lead to job specialisation
George ILIEV

(Photo: Elderly man, Wikipedia)

With age, neurobiological and psychological processes make us less interested in novelty and lead us to stick to what we know. (Scientific American, March 2013). "Old people do not need to remember as much new material as the young do because they are already familiar with so much of what they experience."

Professionally, this natural phenomenon is correlated with, and possibly driving, job specialisation: As we get older, we become more comfortable with our professional field and less comfortable with new fields. Experience builds on this trend and creates "the expert".

Specialisation pays off with higher income though it also entails higher risk of job redundancy. Last but not least comes the comical danger of overspecialisation: "knowing more and more about less and less until you know everything about nothing”.

Disgruntled employees resemble malnourished algae

Algae under threat become poisonous; Employees under threat become litigious
George ILIEV

(Photo: Algae, Wikipedia)

"When Gulf of Mexico algae do not get enough nutrients, they focus their remaining energy on becoming more and more poisonous to ensure their survival." The algae become two to seven times more toxic when experiencing a shortage of phosphorus, a major nutrient. This protects them from their predators - grazers such as zooplankton.

A similar mechanism is at play when employees feel their job is under threat. Such employees often become litigious in order to keep their job or to extract the maximum compensation.

Could human attraction to still water account for frothy IPO prices?

Attraction to shiny surfaces = attraction to shiny stocks
George ILIEV

(Photo: The Bean, Chicago, 2009)

Humans are attracted to shiny surfaces as an evolutionary adaptation that helps them easily locate habitats with clear stagnant water (Margaret Boden, Mind as Machine: A History of Cognitive Science).

Could this evolutionary adaptation explain, at a higher conceptual level, the fact that the stock price of "flashy, funky and cool" companies such as Facebook is often overvalued at initial public offerings (IPO). Or could the "peacock tail" theory of sexual selection have a role in our preference for the colourful and the flashy? In any case, human investors seem to find it hard to resist anything that glitters, even if they consciously know it is not always gold.

Advertising helps humans surmount two evolutionary obstacles in food selection

A product that looks too different is either not noticed or consciously shunned
George ILIEV

(Photo: Fruit Loops, Wikipedia)

If something looks unfamiliar, it does not get eaten. Animals avoid eating unfamiliar berries or insects for two reasons: "dietary wariness" (fear of eating something poisonous) and "apostatic predation" (difficulty to spot prey that looks too different).

Humans in the supermarket do not need to worry about poisonous berries or insects, though high fat or sugar content may be almost equally undesirable characteristics of a food product. On the other hand, apostatic predation is something consumers often fall victim to, e.g. when unsuccessfully hunting for a familiar product whose package has been changed by the manufacturer.

This is where advertising steps in: by creating awareness for a cereal product, a commercial makes it both acceptable (i.e. reassuring that it is not harmful) and easy to spot among the packages of fried crickets and roasted beetles that British supermarkets regularly stock up. Looking too different and unfamiliar would help a package of cornflakes hang on to the supermarket shelf not for the love of marketing but for evolutionary reasons.

Cleaning symbiosis exists in nature but not in corporate HR

"Reverse recruiters" can take care of unwanted employees

George ILIEV

(Oxpeckers eating ticks off the back of an impala, Wikipedia)

Symbiotic relationships are abundant in nature: from lichens (an organism that consists of fungi and algae locked together) to cleaning symbiosis (where a small bird or fish feeds off the parasites living on the skin of larger animals).

Cleaning symbiosis in the corporate world is limited to firms specialising in collecting recyclables or unwanted equipment. However, no recruiting company specialises in taking care of unwanted employees, who may be a hugely undervalued resource.

A "reverse recruiter" can play three important roles: 1) placing unwanted/underperforming employees in a new job where they can generate more value; 2) training these employees for the next job; and 3) keeping such employees away from dabbling with unfair dismissal lawsuits and negative media publicity.

"Reverse recruiting" is not even a matter of reciprocal altruism: it is self-serving and has the potential to be an entirely profit-driven business, as companies would have an incentive to pay the "reverse recruiter" to get the unwanted employees off their payroll. The beauty of it is that the "reverse recruiter" can charge both the previous employer and the next employer. Any different from eating ticks off the back of an impala?

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.