Fabrice Cavaretta, ESSEC Business School, provides a striking metaphor to argue against the survival of the economic fittest and for the diversity of the business species.
The business ecosystem: pushing it a little too far
Natural ecosystems are made up of innumerable species. But since some are viewed more favorably than others, it might be tempting to want to raze the lot to the ground in the name of optimization. The same temptation exists where it comes to entrepreneurial ecosystems. And in both cases, it is important to remember that all species, like job functions, add to the richness of a healthy ecosystem.
The concept of “ecosystem” is familiar to most of us. It evokes a wealth and variety of actors who participate in the intertwined life of an economic sector, a territory, or a given industry. From Adam Smith to Michael Porter, economists have identified these interactions that help explain a businesses success. In other words, beyond the specific characteristics of a company or its management, economic success depends on the availability of various personnel, infrastructure and skills, which together are referred to as an ecosystem.
But have you really thought about the consequences of this ecological metaphor? Are you really sensitive to entrepreneurial ecology?
Where there’s greens, there’s beans: Sometimes unfortunately
Our generation is the first to really take environmental issues seriously, to question our over-exploitation of natural resources such as forests, our role in the disappearance of species, and our impacts on the climate. Our awareness of these issues has grown over time, and most of us now understand that we can’t selfishly optimize one’s small plot of land by ignoring the global impacts that “optimization” might have on the natural ecosystem.
Imagine a beautiful tropical forest in Brazil, for example, with a rich, varied ecosystem. From a certain perspective, this extraordinary biomass is difficult to exploit. It might be therefore tempting to “optimize” it to produce a certain kind of wealth in the very short term. For example, you could raze a section of forest and replace it with a beautiful GMO soybean field with a maximized output of a standardized product. And when yields drop, you can always turn to chemical fertilizers and insecticides.
Do you find this scenario troubling? Are you not convinced that this standardized productivism is preferable to a rich ecosystem of many species whose commercial profitability is difficult to identify? Congratulations, you are sensitive to biological ecology. But do you have the same sensitivity for entrepreneurial ecology?
Everyone has its place in the family of things
A healthy economic ecosystem is like a tropical forest. It contains a wide variety of actors, who nourish the ecosystem in different ways. In other words, their apparent productivity is not always obvious. It’s too easy to look at an ecosystem and focus-in on the cockroaches, leeches, careless birds, and snakes. An economic ecosystem is indeed a rich stratification of traders, teachers, artists and craftsmen, civil servants, students, do-it-yourselfers, and a horde of intermediaries who cling to their tiny niche. A myriad productivity is neither obvious nor is it easy to harness.
Like a virgin forest, an economic ecosystem can be optimized in the very short term by eliminating certain “species”. An ecosystem derives its strength from all of its actors, and disrupting the natural order of things will only be optimal in the short term. Thus, at the macro level, one can dream about optimizing the economy by freeing companies to produce and sell with a minimum or regulations and taxes, boosted by a maximum of capital. To hell the unproductive cockroaches of the economy! On the micro level, one can dream about optimizing the creation of new activities based on magnificent business plans supported by wealthy investors. To the devil with the do-it-yourselfers! These economic optimizations are just as logical our field of GMO soybeans.
Obviously, this metaphor is neither proof nor recipe of economic policy. Nevertheless, the next time you feel annoyed by the complexity, heat, humidity, and cacophony of your economic ecosystem, ask yourself if you really should not give it as much respect as a tropical forest whose infinite interactions you may not fully understand.
Our economic ecosystems are also complex systems, and it requires a great deal of maturity to capture their productivity. Let’s not play the sorcerer’s apprentice and instead learn to respect and appreciate our entrepreneurial ecologies in all their wealth and their apparent inefficiencies.
Articles and publications
- “When it depends amounts to more than simple contingent relationships: Three canonical forms of inversions” (F. Cavarretta, L. Trincher, D. Choi, S. Hannah), Journal of Organizational Behavior
- “Task complexity and shared value orientation: exploring the moderators of a social dilemma in team social networks” (F. Godart, F. Cavarretta, M. Thieman), Industrial and Corporate Change
- “Debunking the false dichotomy of leadership idealism and pragmatism: Critical evaluation and support of newer genre leadership theories” (S. Hannah, J. Sumanth, P. Lester, F. Cavarretta), Journal of Organizational Behavior, Jul 2014, Vol. 35, Issue 5, p. 598‑621
- “Who Changes Course? The Role of Domain Knowledge and Novel Framing in Making Technology Changes” (N. Furr, F. Cavarretta, S. Garg), Strategic Entrepreneurship Journal, Sep 2012, Vol. 6, Issue 3, p. 236‑256
- “Too much of a good thing? Resources effects in new ventures” (F. Cavarretta, N. Furr), Frontiers of Entrepreneurship Research, Jun 2011, Vol. 31, Issue 3, p. 85‑99
With thanks to ESSEC Knowledge
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