Clockspeed and Business Genetics Reconsidered

Nearly 10 years ago, in Clockspeed, Charles Fine of MIT revived a metaphor for the economy that goes back to at least Herbert Spencer's essay, On The Social Organism (1860). A colleague recommended the book because I've lately been obsessed with issues of speed in innovation. Read as an anecdote-rich exposition of concurrent engineering, it is pretty good. As a justification of its title, it is badly derailed, since the limited discussion of time scales in the business world goes nowhere, least of all towards justification of the subtitle "winning industry control in the age of temporary advantage." But the book, despite its value, mainly struck me as a massive missed opportunity to explore the metaphor of business genetics. In this piece, I attempt to remedy this gap with the benefit of 10 years of hindsight. (Warning: despite its length, this is a highly compacted, beta version of an idea that probably needs book-length systematic treatment; in its current form the piece is rather quick and dirty. I'll work on a more polished/full treatment when I get the right opportunity). The Missed Opportunity Anecdote after revealing anecdote parades past you on the pages of Clockspeed. Most will be unfamiliar to you (like the enthralling description of the evolution of the bicycle industry). You'd think somebody sitting on top of this fantastic data set, with the best graduate students in the world, would do more with it. Maybe I am being unjust, since the angle I am about to present would probably only occur to somebody who has read the works of George Lakoff (who, being from the academic antipode of Berkeley, and sort of an anti-Noam-Chomsky, is possibly not well known in industry-obsessed MIT) Clockspeed, had it been less hurried than it seems to have been, could have been seminal, on par with The Innovator's Dilemma from about the same time. It could have been the successor to Herbert Simon's The Sciences of the Artificial and Wiener's Cybernetics. Instead it ended up being merely good, and even its one candidate neologism for posterity, clockspeed, is now fading from the business lexicon. I wouldn't have heard of it but for a senior colleague. So why didn't this book become great? The answer lies in the Churchill quote, "Men occasionally stumble over the truth, but most of them pick themselves up and hurry off as if nothing ever happened." The truth that Fine stumbled upon but didn't explore, is the genetics/organic metaphor for business. The "stumble" is an observation in Chapter 1 that the book is inspired by how biologists use studies of the fast-mutating/evolving fruit fly to inform their investigation of questions applicable to all species. Unfortunately, Fine abandons the metaphor as a systematic conceptual metaphor instantly, only retaining the figurative metaphor aspect. Besides the too-cute chapter titles, this mis-step is most vividly illustrated in Fine's treatment of the idea that there is a cyclic dynamic to vertical/horizontal structure through the evolution of an industry, which Fine calls the "double helix." A disorienting figurative metaphor that confuses the deeper conceptual metaphor. Even the highlighted bit of the genetics metaphor, "genetic evolution rate" doesn't get properly examined. You end the book confused about what "evolution clock rate" actually maps to: product lifespan? Company lifespan? Product-platform lifespan? Modular component lifespan? CEO lifespan? Fine himself explicitly argues that no meaningful answer is possible because of the hundreds of different "rates" in the economic organism. He is too pessimistic, as you will see. Applying conceptual metaphor allows you to weed away the irrelevant and actually begin mapping "evolution rate" correctly. But before I try to remedy the situation, a quick summary of what the book does do well. The One-Minute Summary You could say Clockspeed is an extended exploration of three (fairly defensible) assertions:

1. Increasing Clockspeed: The basic cyclic frequencies (product, process, etc.) driving evolution of an industry increase over time (the "product life cycle shortens" observation)
2. The Vertical/Horizontal Cycle: This is the idea that industries cycle slowly between highly vertically-integrated and horizontal/modular. Power shifts cyclically between integrators and suppliers, as does the driving competition. Industry fundamentals determine the lower limit of achievable modularity (Boeing will never be Lego, for instance).
3. 3d Concurrent Engineering: Yes, the term is dated, but it is still meaningful. The idea that you need to design the product, process and supply chain in parallel. A descendant of previous generations of design-for-manufacturability thinking, and today represented by Design for Lean Six Sigma (DfLSS).

If you wanted to understand these ideas in their latest incarnation, you are probably best off studying Open Innovation and Wikinomics, though these more current writers seem to have forgotten some interesting older lessons, which makes Clockspeed still valuable. In particular, all of today's rather right-brained talk of economic "orchestration" and "ecosystems" tends to cloud the hard-nosed left-brained discipline of build/buy decisions and the fact that supply chains (webs, rather) need to be continually re-engineered with an eye on financial analytics, not just musically, and artistically orchestrated (that old classic, The Goal, is still the best balanced-brained exposition of this theme). Enough on the healthy, still-alive parts of the book. Let's scrub in for the surgery to implant the missing organs. The "Business Genetics" Metaphor Let's finish the job for Fine. What is the best way to apply the metaphor of "genetics" and "evolution" to the business world? More specifically, we want to map the quantity "evolution rate" within this larger structural mapping. To do so, we'd have to correctly map the major aspects of evolutionary phenomenology to aspects of the business world, preserving relationships among the entities. Herbert Spencer's 1860s mapping won't do (neither will Hobbes' Leviathan and older incarnations). Here are some of the main features to be mapped:

1. The organism and its cells
2. The species
3. The ecosystem
4. The food chain (from photosynthesis up to sharks)
5. DNA, genotype and phenotype
6. Genetic mixing during sexual reproduction
7. Mutation
8. Ontogeny and cell division
9. Various characteristic time scales, most importantly, periods between significant DNA change, and ontogenic phases.

Commonly, when people refer to a notion of "corporate DNA" they have in mind one of two things: the "signature" features of products coming from the company (such as the distinctive look of any BMW), or an abstract notion of "core competence" (such as Apple and design for usability). Implicit in this sort of talk is the idea, for product companies, that the product is the organism and design is its DNA. This is beguiling but wrong. It is beguiling because talk of "product families" and "generations" and "platforms/variants" is very useful, and it is easy to think of blueprints as "DNA." It doesn't help that many products are anthropomorphically designed (car headlights=eyes). This was my starting point, and only when I went nuts trying to flesh out this mapping did I realize it was wrong. Here is the right answer (for products; I'll comment on services later):

1. The organism is the entire historical fleet of comparable products produced by a company. For an automaker, this is the whole set from the oldest still-supported car in existence to the latest new release. Each individual product maps to a cell.
2. The "species" maps to the set of all comparable fleets in existence. The airliner industry thus has two "animals" -- the fielded still-flying fleets of Airbus and Boeing.
3. The "ecosystem" maps to the set of interacting species. For example airliner fleets and airports chains.
4. The food chain confused me the most initially, since I had two incorrect visualizations in my head. First, of companies "eating" other companies via M&A, and second, companies "eating" the output of their upstream supply chain partners. This is wrong because feeding is an entropy-increasing process for the "food", where complex things get broken down to biological waste. The right place to map this is to consumables: gas and rubber tires for cars, paper and toner for photocopiers. I'll leave you to figure out why this works.
5. DNA is the heart of the matter. In biological systems, every cell of every organism carries an explicit copy of the instruction set that produces the entire organism. Think about it. If you took a single BMW to another planet, you should be able to replicate the birth, growth and present condition of the entire BMW product fleet. The crucial observation for our metaphor is that DNA maps to the entire corporation's roles and processes, including the extended supply/distribution/franchise web and is not contained in each cell. The best explicit description is the set of organization charts and process documentation spread throughout the organization. Think ACGT -- adenosine, cytidine, guanosine, and thymidine and genetic grammar. These don't map at all. This tells us that the genetic metaphor maps best to a pre-DNA stage of the evolution of life, when a variety of autocatalytic replicator molecules hypothesized by Stuart Kauffman drove the emergence of life. Even this is incomplete, since only a single copy of the DNA exists, and outside the product fleet (organism). The phenotype however, is easier to map. The characteristic BMW grille is an element of the BMW phenotype. The overall brand perception may be viewed as the uniquely identifiable phenotype.
6. Since there is no equivalent of DNA, there is no precise analogue of sexual reproduction and chromosonal mixing. If we look, instead, for "spiky" changes in the DNA, we are drawn to mergers and acquisition or bankruptcy-driven asset sales. Partnerships and initiation/breakup of supply chain relationships are also analogous, but smaller spikes. Remember though that the organism (product fleet) is not a self-replicating entity. When Chrysler merges with Daimler, the car fleets don't get in bed with each other. The DNA, which exists outside the organism as the corporation's supply web, and partly merges with the other DNA set.
7. Mutation is hard to map -- a mutation is a useful mistake in the DNA that is passed on through inheritance through sexual reproduction. The Post-It note, discovered by accident, almost killed at 3M, and now a billion-dollar line of business, is a mutation. Presumably, if 3M ever goes bankrupt or evolves through M&A, the Post-it "mutant gene" production capability, will survive as a very successful mutation.
8. Ontogeny is the most interesting to map. Remember, we start as a bunch of stem cells, go through a roughly phylogeny-recapitulating process as the cell mass differentiates into different organ systems. It is very easy to get confused and attempt to map this process to the company itself (baby startup stage, growing pains, evolution into the Fortune 100...). This is wrong. Remember the "corporation" is part of the single external copy of the DNA, so its growth is actually the growth of the DNA code-base itself. What you actually want to map to is the growth from first prototype, through replication (mass manufacture), introduction of variant products (major tissue types), emergence of clearly defined product categories with their own management and marketing (organ systems) and so forth. You will be tempted to look for analogies to the complex coordination of life processes and homeostatic loops. But remember, by our mapping of "organism" to the fielded product fleet, with individual products as cells, this level of complexity actually does not exist in most products. Only internet-enabled products where the vast fleet of individual "cells" is able to interact, communicate, collaborate and drive "higher-level" behaviors admit this mapping. Viewed this way, Napster might well be the first business organism to evolve that is more complex than algae.
9. Time scales. Clearly,the basic cycle for major evolution is the typical period between DNA-rewriting events in a company's history in a given industry. For most industries, this will map to changes in supply chain relationships (since M&A and mutations are much rarer). Product and platform lifecycles in particular, do not qualify as cycles to be analyzed as "DNA changes" unless you mean the corresponding change in the codebase as new capabilities are learned by the supply web and old ones are forgotten.

So, to cut a (very) long story short, for most industries, the clockspeed is the median time between major changes in the supply chain. Not product life cycle, not even platform lifecycle, and not CEO tenure. These might well be correlated, but conceptually, do not map as well. If a CEO's tenure is marked by major process-shifts (like trying to instill DfLSS company-wide), then there is a genetic aspect. Where the Metaphor Breaks The reality of conceptual metaphors, as Lakoff demonstrated decades ago, is that they are incomplete. They highlight certain sets of similarities among domains, but fall apart in the non-highlighted parts. For the genetics metaphor, "fall-apart" happens in that there is no direct equivalent of DNA, and a missing "every cell has a copy of the DNA" feature. There is also no clear role for important elements if we were to go the other way. Money is the lifeblood of industry, but doesn't map clearly to anything in the biological world (I thought it might map to nerve impulses, but it doesn't. It also doesn't map to blood, oxygen or any major circulating entity in the organism). Customers also do not map ("employees" are a question mark for me at the moment). Until the economy evolves a LOT more, there will be very little by way of "food chains" and hierarchical predation and sharks. Right now, the only sorts of predation we see are Facebook widgets living off the Facebook organism. Much of this confusion is due to the fact that the economy-as-ecosystem metaphor competes with the "all technology is a single organism" metaphor. This metaphor, which I call the "Electric Leviathan" metaphor (a Gaia for technology), actually works better overall, but is harder to use. I'll explore it in a future piece. Services If you try to reconstruct service industries along these lines, you'll be forced to begin with the individual service engagement as the cell. So a McKinsey team working over a time-bound period is a cell. Unfortunately, service industry structures don't map as nicely. The only one I can think of that might work is the restaurant business (and in particular, the Seinfeld Soup Nazi). Franchises might also work, I'll think through that another time. I'll work this theme more in future pieces. In the meantime, comments appreciated.