For many traditionalists in business and economics, the death of old-style competition as the number-one route to success will hard to swallow. But in the new view, Darwinian competition is of limited value in longer term. (1)The more important challenges is to create opportunities and adapt to changes in a complex network of companies that may sometimes be cooperators sometimes competitors.
Just as the idea of economic webs is forcing companies to change their business strategies, so it is altering views about economics. (2) In place of classic theory of decreasing returns as resources and markets are exploited economist Arthur sees what he calls increasing returns. “Increasing returns are the tendency for what is ahead to get farther ahead,” he says. “if a product or a company or a technology—one of many competing in a market-gets ahead by chance or clever strategy, increasing returns can magnify this, and the product or company can make a killing from a product that is not as good as its competitors.”
(3) If business systems and ecosystems have something basic in common there is worrying news for bosses. The first rule of complex systems is that it is almost impossible to predict who is a friend and who is an enemy,” says Pimm. He describes field experiments in which a predator is removed from a community. You might expect its prey, species A, to thrive. (4)But about half the time species A suffers because the predator has another prey species B, competing with species A. With the population of species B no longer kept in check by predator, it may even push species A to local extinction.
Business ecosystems face problem of deciding who is a friend and who is an enemy. And the bad news doesn’t stop here. “When everything is connected directly or indirectly to everything else, changes in one part of the system may be propagated throughout,” says Pimm. (60) “Sometimes species may go extinct though no fault of their own.”
