Read the article and answer following question:Please identify 5 key lessons one can learn about strategy from our natural environment and as it is explained by the Theory of Evolution. it should be over 250 words.
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The Origin of
Strategy
Bruce D. Henderson
Consider this lesson in strategy. In 1934, Professor G.F. Gause of Moscow University,
known as “the father of mathematical biology,” published the results of a set of
experiments in which he put two very small animals (protozoans) of the same genus
in a bottle with an adequate supply of food. If the animals were of different species,
they could survive and persist together. If they were of the same species, they could
not. This observation led to Gause’s Principle of Competitive Exclusion: No two
species can coexist that make their living in the identical way.
Competition existed long before strategy. It began with life itself. The first one-‐cell
organisms required certain resources to maintain life. When these resources were
adequate, the number grew from one generation to the next. As life evolved, these
organisms became a resource for more complex forms of life, and so on up the food
chain. When any pair of species competed for some essential resource, sooner or
later one displaced the other. In the absence of counterbalancing forces that could
maintain a stable equilibrium by giving each species an advantage in its own
territory, only one of any pair survived.
Over millions of years, a complex network of competitive interaction developed.
Today more than a million distinct existing species have been cataloged, each with
some unique advantage in competing for the resources it requires. (There are
thought to be millions more as yet unclassified.) At any given time, thousands of
species are becoming extinct and thousands more are emerging.
What explains this abundance? Variety. The richer the environment, the greater the
number of potentially significant variables that can give each species a unique
advantage. But also, the richer the environment, the greater the potential number of
competitors—and the more severe the competition.
For millions of years, natural competition involved no strategy. By chance and the
laws of probability, competitors found the combinations of resources that best
matched their different characteristics. This was not strategy but Darwinian natural
selection, based on adaptation and the survival of the fittest. The same pattern exists
in all living systems, including business.
In both the competition of the ecosphere and the competition of trade and
commerce, random chance is probably the major, all-‐pervasive factor. Chance
determines the mutations and variations that survive and thrive from generation to
generation. Those that leave relatively fewer offspring are displaced. Those that
adapt best displace the rest. Physical and structural characteristics evolve and adapt
to match the competitive environment. Behavior patterns evolve too and become
embedded as instinctual reactions.
In fact, business and biological competition would follow the same pattern of
gradual evolutionary change except for one thing. Business strategists can use their
imagination and ability to reason logically to accelerate the effects of competition
and the rate of change. In other words, imagination and logic make strategy possible.
Without them, behavior and tactics are either intuitive or the result of conditioned
reflexes. But imagination and logic are only two of the factors that determine shifts
in competitive equilibrium. Strategy also requires the ability to understand the
complex web of natural competition.
If every business could grow indefinitely, the total market would grow to an infinite
size on a finite earth. It has never happened. Competitors perpetually crowd each
other out. The fittest survive and prosper until they displace their competitors or
outgrow their resources. What explains this evolutionary process? Why do business
competitors achieve the equilibrium they do?
Remember Gause’s Principle. Competitors that make their living in the same way
cannot coexist—no more in business than in nature. Each must be different enough
to have a unique advantage. The continued existence of a number of competitors is
proof per se that their advantages over each other are mutually exclusive. They may
look alike, but they are different species.
Consider Sears, Kmart, Wal-‐Mart, and Radio Shack. These stores overlap in the
merchandise they sell, in the customers they serve, and in the areas where they
operate. But to survive, each of these retailers has had to differentiate itself in
important ways, to dominate different segments of the market. Each sells to
different customers or offers different values, services, or products.
What differentiates competitors in business may be purchase price, function, time
utility (the difference between instant gratification and “someday, as soon as
possible”), or place utility (when your heating and cooling system quits, the
manufacturer’s technical expert is not nearly as valuable as the local mechanic). Or
it may be nothing but the customer’s perception of the product and its supplier.
Indeed, image is often the only basis of comparison between similar but different
alternatives. That is why advertising can be valuable.
Since businesses can combine these factors in many different ways, there will
always be many possibilities for competitive coexistence. But also, many
possibilities for each competitor to enlarge the scope of its advantage by changing
what differentiates it from its rivals. Can evolution be planned for in business? That
is what strategy is for.
Strategy is a deliberate search for a plan of action that will develop a business’s
competitive advantage and compound it. For any company, the search is an iterative
process that begins with a recognition of where you are and what you have now.
Your most dangerous competitors are those that are most like you. The differences
between you and your competitors are the basis of your advantage. If you are in
business and are self-‐supporting, you already have some kind of competitive
advantage, no matter how small or subtle. Otherwise, you would have gradually lost
customers faster than you gained them. The objective is to enlarge the scope of your
advantage, which can happen only at someone else’s expense.
Chasing market share is almost as productive as chasing the pot of gold at the end of
the rainbow. You can never get there. Even if you could, you would find nothing. If
you are in business, you already have 100% of your own market. So do your
competitors. Your real goal is to expand the size of your market. But you will always
have 100% of your market, whether it grows or shrinks.
Your present market is what, where, and to whom you are selling what you now sell.
Survival depends on keeping 100% of this market. To grow and prosper, however,
you must expand the market in which you can maintain an advantage over any and
all competitors who might be selling to your customers.
Unless a business has a unique advantage over its rivals, it has no reason to exist.
Unfortunately, many businesses compete in important areas where they operate at a
disadvantage—often at great cost, until, inevitably, they are crowded out. That
happened to Texas Instruments and its pioneering personal computer. TI invented
the semiconductor; its business was built on instrumentation. Why was it forced out
of the personal computer business?
Many executives have been led on a wild goose chase after market share by their
inability to define the potential market in which they would, or could, enjoy a
competitive advantage. Remember the Edsel? And the Mustang? Xerox invented the
copying machine; why couldn’t IBM become a major competitor in this field? What
did Kodak do to virtually dominate the large-‐scale business copier market in the
United States? What did Coca-‐Cola do to virtually dominate the soft drink business
in Japan?
But what is market share? Grape Nuts has 100% of the Grape Nuts market, a smaller
percentage of the breakfast cereal market, an even smaller percentage of the
packaged-‐foods market, a still smaller percentage of the packaged-‐goods shelf-‐space
market, a tiny percentage of the U.S. food market, a minuscule percentage of the
world food market, and a microscopic percentage of total consumer expenditures.
Market share is a meaningless number unless a company defines the market in
terms of the boundaries separating it from its rivals. These boundaries are the
points at which the company and a particular competitor are equivalent in a
potential customer’s eyes. The trick lies in moving the boundary of advantage into
the potential competitor’s market and keeping that competitor from doing the same.
The competitor that truly has an advantage can give potential customers more for
their money and still have a larger margin between its cost and its selling price. That
extra can be converted into either growth or larger payouts to the business’s
owners.
So what is new? The marketing wars are forever. But market share is malarkey.
Strategic competition compresses time. Competitive shifts that might take
generations to evolve instead occur in a few short years. Strategic competition is not
new, of course. Its elements have been recognized and used ever since humans
combined intelligence, imagination, accumulated resources, and coordinated
behavior to wage war. But strategic competition in business is a relatively recent
phenomenon. It may well have as profound an impact on business productivity as
the industrial revolution had on individual productivity.
The basic elements of strategic competition are these: (1) ability to understand
competitive behavior as a system in which competitors, customers, money, people,
and resources continually interact; (2) ability to use this understanding to predict
how a given strategic move will rebalance the competitive equilibrium; (3)
resources that can be permanently committed to new uses even though the benefits
will be deferred; (4) ability to predict risk and return with enough accuracy and
confidence to justify that commitment; and (5) willingness to act.
This list may sound like nothing more than the basic requirements for making any
ordinary investment. But strategy is not that simple. It is all-‐encompassing, calling
on the commitment and dedication of the whole organization. Any competitor’s
failure to react and then deploy and commit its own resources against the strategic
move of a rival can turn existing competitive relationships upside down. That is why
strategic competition compresses time. Natural competition has none of these
characteristics.
Natural competition is wildly expedient in its moment-‐to-‐moment interaction. But it
is inherently conservative in the way it changes a species’s characteristic behavior.
By contrast, strategic commitment is deliberate, carefully considered, and tightly
reasoned. But the consequences may well be radical change in a relatively short
period of time. Natural competition is evolutionary. Strategic competition is
revolutionary.
Natural competition works by a process of low-‐risk, incremental trial and error.
Small changes are tried and tested. Those that are beneficial are gradually adopted
and maintained. No need for foresight or commitment, what matters is adaptation to
the way things are now. Natural competition can and does evolve exquisitely
complex and effective forms eventually. Humans are just such an end result. But
unmanaged change takes thousands of generations. Often it cannot keep up with a
fast-‐changing environment and with the adaptation of competitors.
By committing resources, strategy seeks to make sweeping …
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