Darwin’s lessons for the corporate world go beyond survival of fittest

Few thinkers have had quite the same effect as Charles Darwin. His theory of evolution was so powerful and compelling that it became the new orthodoxy, affecting how we think about many aspects of our lives. Not least of these influences has been on the way we do business.

So-called social Darwinism has played an important role in shaping our understanding of economics, markets and organizations.

For example, when discussing business organizations we often speak of them “adapting” and “evolving” to meet conditions in their changing “environment,” as if our business organizations were some sort of Galapagos seabird and not large and highly complex institutions.

When, during the recent economic crisis, many companies failed, it was easy for us to explain this in Darwinian terms. These failed businesses were weak: According to the law of “survival of the fittest,” they had been selected out.

The business world is a jungle, a harsh environment in which only the strong can adapt and survive. Or so our thinking often goes.

But do these Darwinian notions about business have any real grounding in Darwin’s own theory? The answer is largely no, Geoffrey Hodgson and Thorbjorn Knudsen say. They are the authors of “Darwin’s Conjecture: The Search for General Principles of Social and Scientific Evolution,” published by University of Chicago Press.

Nevertheless, Darwin’s theories can be extremely important in helping us understand how organizations, institutions and markets change. Rather than picking bits out of the Darwinian corpus and adapting them to suit our own purposes — or to fit our own preconceptions — we need to look at his theory as a whole.

This is not a book about business, but it is a book that businesspeople should read in order to understand business. It is a scholarly and profound work of relevance to all the social sciences, and there are times when the lay reader will be glad for the glossary thoughtfully provided at the end of the book.

Its primary value for the business reader is to expose some of the fallacies connected with Darwinism that have grown up over the years, and reexamine our ideas.

Hodgson and Knudsen, professors at the University of Hertfordshire Business School and the University of Southern Denmark, respectively, maintain that Darwinian ideas have been applied to economics “in crude form.”

Economists and business gurus have stressed ideas such as competition and individualism to the point where “survival of the fittest” has become something of a mantra.

As a result, key Darwinian ideas such as mutual aid, sympathy and cooperation have often been ignored by later writers on business and economics. The authors remind us of these overlooked theories and challenge the idea that Darwinism offers such easy solutions as “survival of the fittest” in any case.

“Darwinism as such provides no single model or axiomatic system,” they say. “There is no simple explanation of why some organizations prosper and others fail.”

Darwin’s theory rests on three simple principles: variation, selection and replication or inheritance.

Of the three, it is inheritance that has received the most attention in recent years thanks to advances in genetics. And in business we sometimes talk of organizations as “inheriting” characteristics in the same way that people do, or having an “organizational DNA” as part of their cultures.

But as the authors point out, this is a fallacy. Organizations do not have genes, nor is their method of evolving comparable to replication. There is, they say, no comparison between organizations and people on this level.

The authors conclude that Darwin’s theory of evolution can be a rich source of inspiration and understanding for modern social scientists, economists and businesspeople.

They are critical of those who shy away from Darwin’s theories as being somehow too difficult to understand and those who treat the theory as a pick and mix — helping themselves to the bits they like and discarding the rest.

One needs to understand the whole theory in order to see how evolution really works.

Book reviewer Morgen Witzel is a frequent contributor to the Financial Times of London, in which a longer version of this review first appeared.