THE BLOG

The Theory of Business Genes

05/21/2013 04:56 pm ET | Updated Jul 21, 2013

We are used to thinking that business revolves around companies, and because we believe this, we pay good money for a share in companies. But the new theory of business genes casts unwelcome doubt on whether we are right.

Thirty-seven years ago Richard Dawkins put the gene center-stage. "The fundamental unit of selection, and therefore of self-interest," he wrote, "is not the species, not the group, nor even, strictly, the individual. It is the gene, the unit of heredity."

Here is the gospel according to Dawkins.

In the beginning, there were molecules. One day, by chance, a remarkable molecule arrived -- the replicator. It could make copies of itself. When copies are made, mistakes happen: the copies are not always perfect. So the primeval soup began to fill up with several varieties of replicating molecules. There was a struggle for existence between the replicator varieties. The cunning replicators, the ones that survived, hit on the idea of building survival machines to live in. The survival machines got bigger, more varied, and more complex. The replicators now "swarm in huge colonies, safe inside gigantic lumbering robots," that is, plants and animals. The replicators, now called genes, created us, body and mind. We exist to preserve and perpetuate our genes.

Try a parallel theory for business. What is the DNA of business, the most fundamental unit of value? I think it's economic information -- we may think of useful economic information as 'business genes.' Examples of business genes or groups of business genes are ideas; the design behind a basic technology such as the steam engine or computer; the design for a product component such as the script for a movie or an integrated circuit; the intellectual capital leading to a piece of software; or a formula, such as that for Coca-Cola or an ethical drug. A business gene is anything intangible that comprises useful economic information and that can be incorporated, alone or alongside other business genes, into a product or service, or into a vehicle that then provides the product or service.

Business genes are the building blocks of know-how, skills, and technology in the broadest sense. They comprise economic information that needs to find a commercial vehicle before it can attain its potential and deliver a valuable product or service. Business genes are the origin of economic life. They seek to replicate as widely as possible by incorporating themselves into commercial vehicles, both inanimate things such as buildings, machines, software, factories, offices, trucks, and products, and also living entities such as people, teams, corporations, services, and economies.

Animals and plants are the vehicles for biological genes, the survival machines that do the hard work to allow the genes to survive and replicate themselves. The same is true for business genes and their vehicles. The business genes are the invisible business ideas, the knowledge about how to produce useful output and generate an economic surplus, the knowledge about how to increase human well-being and wealth. The business genes are the fundamental and invisible ideas and knowledge. The vehicles are the visible apparatus of economic activity - the moving parts such as people, organizations, physical assets, products, services and business systems. The business genes coat themselves with physical texture in order to become more robust, to deliver output, and to replicate. A business gene can neither survive nor create value without some physical home; it must embed itself in something tangible. Even business ideas need some physicality before they can be sold or given away -- they must be committed to paper or electronic record, or be communicated from one person to another in a standard and memorable form.

Vehicles are likely to attract good business genes to the extent that they are the best available vehicles for those genes; and they will succeed to the extent that they incorporate the best possible genes for their product and customers. The vehicles are nothing in themselves; they are just the physical expression of ever-shifting economic value and exist to multiply that value. Those best adapted to prevailing economic conditions (including fashion and the fickle finger of human approbation) will flourish; and if the nature of the economic information, the vehicles, or economic conditions change in a way that alters this fit, then the vehicles will cease to flourish.

Humans have an intricate and interesting relation to business genes. We are both their creators, and their vehicles. We use business genes, and are used by them. This is very similar to the standard theology of most religions -- individuals and groups are used by God (or the universe) to attain His (or its) purposes, and in the process perform useful tasks that give meaning to our lives. God comes into us to give us strength to serve Him and other people; we are His vehicles and are powered by Him.

In business, we can propagate business genes that we did not invent -- this is the normal course of economic progress. For every human who invents an idea or product, there can be millions of people who use or elaborate the idea. Most people who become rich or advance human well-being do so using other peoples' ideas or those that can be observed in nature -- those people may develop the ideas and give them a tangible incarnation in products and the vehicles to replicate them; but the source of the riches they create is mainly the business gene or collection of business genes they appropriated from elsewhere.

Where does this leave what we may call 'business theology'? Instead of corporate competition being the focus of study, as in the old economic paradigm, business genetics posits several layers of economic value creation, driven by business genes and their struggle to live and breed. Humans have multiple roles in the process -- as creators of business genes; as users of them to create better products; and as consumers of products and therefore the arbiters of which will survive, spread, or die.

And what of companies? They are important intermediate vehicles, but there are many other types of vehicles; and companies derive their power from being the best possible vehicles for business genes and their creators and evangelists, the entrepreneurs and knowledge workers. There is nothing sacrosanct about companies. As vehicles, they are only useful to the extent that they are the best possible incarnation of business energy and information in their specialized field. If that business energy and information would be better deployed elsewhere, we should discard the old vehicle and use or create another one. Vehicles that are no longer working well should be abandoned by healthy business machines and their robots -- you and me.

In next week's blog I will outline business genetics for managers and entrepreneurs, giving six action rules that can multiply your effectiveness and value.