“It is not the most intellectual of the species that survives; it is not the strongest that survives; but the species that survives is the one that is able to best adapt and adjust to the changing environment in which it finds itself” – Leon Megginson’s interpretation of Darwin’s ‘On the Origin of Species’.
This is how I started my presentation at an Intelematics’ ‘Meet-Up’ – a regular session held at our head office in Melbourne where staff and guests speak on topics relevant to our industry – from the Internet of Things and smart cities, to business survival.
Business survival means successfully navigating an ever-evolving marketplace with changing customer needs, new competitor entrants, and shortening product lifecycles. It is a complex landscape where no expert can reliably predict what will happen next, and significant investment means significant risk. So, if an expert can’t help you – what can you do to increase your business’ ability to survive and succeed?
Becoming the ‘success story’
Fashion chain Zara has done more than survive; it has thrived. Since its founding in 1975 in Spain, it has become a roaring success with now more than 10,000 stores worldwide and ranked 25th on global brand consultancy Interbrand’s list of ‘best global brands’.
Part of Zara’s success comes from its use of complexity management techniques. The company makes a large number of clothing lines in small batches. It uses information technology to analyse which have sold well and which have not. For those that sell well, it creates new lines with similar – but not the same – designs, again in small batches. Because of this, Zara’s clothing lines adapt to continually evolving fashions.
Take a step back and think about that. There is no mention of the Paris catwalk setting annual trends or expert fashion designers who ‘know’ fashion and ‘tell’ you what is good. What Zara does is far more incremental, responsive and evolutionary, a bit like nature.
Managing the ‘complex’
Consider a natural ecosystem such as the Amazon rainforest. We know that experts might be able to explain what caused the things that happened within it once they’ve occurred, but no expert could predict the impact of an event on all parts of the rainforest in advance. It has so many moving parts, animals large and small, plants, weather, terrains, and water that interact with each other. A rainforest is just too complex.
Through evolution, new species come into being, and some species become extinct. Their success is related to how well-suited they are to their local environment at that moment in time. It may encourage more of that species so it thrives – or may be adverse and lead to that species’ decline.
Nature inspires complexity management thinkers. We can apply that thinking to complex environments outside nature too. Zara is using it in fashion, and we also see it being applied to the Brexit Leave and Trump campaigns. This thinking can be applied to any number of businesses too.
The key is using large numbers of inexpensive safe-to-fail experiments in parallel. This enables you to test what resonates with your customers, make small iterative changes accordingly, or scrap what isn’t working altogether.
For Zara, its safe-to-fail experiments are its large number of clothing lines in small batches. The lines that sell survive and Zara goes on to make near variations of them. The ones that don’t sell aren’t reproduced and become extinct. The financial risk to Zara is low due to small batch sizes. The customer is happy because their desires are always being met.
For the Brexit Leave campaign, it had a complex system to navigate: the British voting public. Instead of relying on experts and focus groups to determine campaign messaging, it put out many and varied communications over digital channels in parallel and monitored which resonated well. It then doubled down on the successful messages and ‘binned’ the rest.
There is a lot to be learnt from complexity management techniques. It can support agile ways of working and assist businesses in making small, iterative changes to products based on the changing needs of the customer or the changing requirements of the market. One thing that is for sure, to survive and thrive in this ever-evolving marketplace businesses could turn to complexity management to assist in navigating the new terrain.