No company, idea, or industry is “too big to fail” if it does not adapt and evolve as the marketplace demands. Whether the conversation is about manufacturing, taxis, cell phones, or advertising, any company still doing business the way it did a decade ago is mostly likely on the decline or in the process of going out of business completely. Why? - because the nature of business is change; and companies that don’t evolve with changing times, changing customers, and changing circumstances will get left behind.
For decades, the statistic stating that 9 out of 10 new businesses fail within the first three years has held steady for a couple of reasons: first, many small companies are simply undercapitalized and unable to fund the numerous expected and unexpected expenses associated with growing a new business; and second, many business owners are so focused on their business plan and projections that they don’t respond quickly enough and adapt to fluctuations in the marketplace that require a different approach.
So then, what are the characteristics that allow a business to successfully evolve into the current (and future) business environment? A 2013 article published in American DBE Magazine suggests that the idea of “natural selection” applies equally to nature and to business, stating: Natural selection is defined as “the gradual, non-random process by which biological traits become either more or less common in a population as a function of differential reproduction of their bearers.”
Translated to business, evolution is seen as the intentional process by which certain business characteristics become more or less common in the marketplace as a function of the entrepreneurial success of the business owners. As an example, think about business characteristics such as employee satisfaction, diversity, corporate responsibility, sustainability, business liquidity, etc.
There are three components to evolution by natural selection that are relevant to business development:
- Diversity – Every business is unique and brings different skills, abilities, and benefits (characteristics) to the marketplace.
- Fitness – Differences in business characteristics will place some businesses at an advantage over other businesses in the marketplace.
- Advantage – Businesses with a sustained advantage will survive in the marketplace, and thrive to the extent of their advantage. Those businesses that do not have an advantage will not survive, and may become extinct.
Here is the rub: just like the dinosaur in evolutionary history (which did not adapt to a new environment), a business may grow large in a particular cycle but may not have the ability (fitness) to adapt to a new environment in a later cycle. Not only must a business have an advantage to thrive in the current marketplace, it must be able to transition and adapt along with changes in the market. Current business environment changes in financial management, the use of technology, marketing strategies, diversity & inclusion, and talent management will leave a business on the endangered species list if it fails to adapt to the current environment - and not only pursue business growth - but also pursue business evolution.