When is it OK to Ignore Innovation?

The earth has been around for 4.5 billion years or so. If you think of the last 10% of that time, a fair bit has happened. There have periods of major global warming, and a few ice ages. There have been asteroid strikes, and other natural disasters too numerous to count. Continents that were one continuous land mass 450 million years ago are now separated by oceans. And there have been five major extinction events.

Through all of that change, disruption and chaos, what has been the most stable environment on earth? The deep ocean. There’s no light down there, so it doesn’t matter if an asteroid strike kicks so much stuff into the air that all of the coral reefs and dinosaurs die out. It’s always cold, so climate change up on the surface doesn’t have much of an impact either. The deep ocean has stayed pretty much the same all the way through.

And that’s where the Coelacanth lives.

I’ve been fascinated with Coelacanths since I first read about them in On Methuselah’s Trail: Living Fossils and the Great Extinctionsby Peter Douglas Ward.

The first fish in this family show up in the fossil record about 400 million years ago. Their fossils are pretty consistently around for a long time, until they disappeared about 65 million years ago around the Cretaceous extinction, the one that killed off the dinosaurs.

Because there was no record of them for 65 million years, scientists thought that they were extinct. And then a museum curator found one in the catch of a fishing boat off the coast of South Africa in 1938. In a curious aside, it turns out that the fishermen had known about the Coelacanths for a long time, but whenever they caught one they threw it back because they’re apparently very poor eating. It was only once they realised that museums were willing to pay them for specimens that they started to keep them.

There are two species of Coelacanth around now, and structurally they haven’t changed much at all since the first specimens from 400 million years ago.

In other words, they haven’t innovated one bit in 400 million years.

Why? Because they live in the deep ocean, the most stable environment in the world over that period of time.

So the answer to the question When is it OK to Ignore Innovation? is: when you’re in a stable environment.

Just as the Coelacanth shows that you don’t necessarily have to evolve to survive, in the economy you don’t necessarily have to innovate to survive. If, and it’s a big if, your environment is stable. It doesn’t need to be as stable as the deep ocean, but if you have good market share in an established industry, with little macroeconomic fluctuation, and you’re happy with your overall performance, then go ahead and ignore innovation.

The rest of us probably need to be thinking about how to execute some great new ideas, and also how to get those ideas to spread.

In his book The Evolutionary World: How Adaptation Explains Everything from Seashells to Civilization, Geerat Vermeij discusses how previous global warming periods have led to explosions in evolution:

The evolutionary dividends of a warmer world are attainable only if three conditions are met. First, populations must have ready access to a plentiful supply of necessary resources, so that when an imperfect innovation arises, it can linger in the population long enough to be improved by selection. If the population is allowed to grow under a permissive regime of of predictable plenty, not every deviant individual is purged from the population, and selection has enough to work with. Second, competition for locally scarce resources – the main agency of enemy-related selection – must be intense enough and consistent enough to allow improvements to spread in the population. Third, there must be sufficient evolutionary time – thousands to millions of years – to allow selection to do its work.

You can translate these rules of evolutionary innovation over to economic innovation:

  • You need slack resources to innovate. This is why efficiency and innovation often come into conflict. As Greg Satell says, most innovation is crappy. Vermeij points out that imperfect evolutionary innovations need sufficient resources to keep them around long enough to be improved by selection. It’s exactly the same for economic innovations. They rarely work as planned at the start – they need feedback from customers, suppliers and others to really become good. That takes time and resources.
  • Innovation works best when there’s competition. Even though there are extra resources around, there still needs to be competition to drive improvement. If the environment is too stable, like the Coelacanth’s, the lack of competition leads to no innovation.
  • You need time to turn your crappy innovation into something excellent. Innovative ideas diffuse along an S-Curve, and it usually takes a lot longer for this to happen than we expect it to. Fortunately, economic innovations don’t need hundreds of thousands of years for this to happen, but the gap between having the great idea and seeing it adopted is still usually very long.

Innovation is an evolutionary process, and you can learn interesting things about this process by studying natural history. And the story of the Coelacanth shows us that there even times when you don’t have to innovate at all.

Student and teacher of innovation - University of Queensland Business School - links to academic papers, twitter, and so on can be found here.

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6 thoughts on “When is it OK to Ignore Innovation?

  1. Tim I think you’ve given a new insight and application space for what has been the sole province of biomimicry in design and engineering. Translating evolutionary lessons to business processes sounds like a worthy book project.

    For example, take punctuated equilibrium, one of my favourite selection topics. Different populations are pushed toward local fitness maxima. But to get to the next higher peak requires a period of either sliding down the slope of the fitness peak you’re on to crawl up the next higher one – something most species and businesses are loath to do. Or, saltation – leaping from one local maxima to at least a the side of a higher one. That takes radical pressure, or innovation insight – but neither would be predicted as smart steps from the point of view of the jumper 😉

    I think we gotta book project here 😉

    Great article.

  2. Thanks Phil! There’s a reason that I’m an Evolutionary Economist! :-) I do think that I come up with better ideas when I’m reading natural history…

    There have been a handful of papers in business journals on punctuated equilibrium, but none have handled it very well, so that’s definitely still an open space. And I think it’s a pretty good model for technological advance through innovation.

    There’s been more on saltation. There is some very interesting work on traversing fitness landscapes using N/K modelling. It’s still on the obscure side, but the quality of that research is much better.

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