Friday, 18 January 2013

Using cladistics to understand and shape the evolution of economic, social and technological systems

"there is natural speculation that organizations, like species,can be engineered by understanding the evolutionary processes well enough to intervene and produce competitive organizational effects'' (March, 1994)

What is cladistics?
Here is the second posting on how evolutionary concepts can be used to understand and manage both innovation and change.

Most economic, social and technological systems change over time, and in a way that is much like biological evolution. Thus, to map and understand the change in industries, products and technologies, myself and other researchers have borrowed the technique of cladistics (also known as phylogenetic systematics) from the biological sciences, to classify how different types of system have evolved overtime. 

The word ‘cladistics’ is derived from the Greek word ‘clades’ meaning ‘branches’; cladistics is concerned with understanding how systems adapt and branch out over time. A cladistics analysis results in a ‘cladogram’ (see Figure 1 and Table 1), a tree-like diagram that depicts the pattern of relationships among different types of systems that share a common ancestor. The creation of a cladogram involves following three core assumptions (see McCarthy, 2005):  

1. The systems in any population (e.g., different organizations in the same industry, or different products in the same market) are related to each other, in that they have descended from a common ancestor. For instance, automotive companies such as the Morgan Motor Company, Tesla Motors, and the Ford Motor Company all have very different strategies and practices, but they can all be traced back to Karl Friedrich Benz and Bertha Benz who founded the first manufacturer of gasoline-powered automobiles – the company Mercedes-Benz.

2. System evolution follows a tree-like branching pattern with large punctuated changes (known as cladogenesis) producing new branches i.e. new systems or new species. For instance, the shift from the Ancient Craft Production method of automobiles, to Mass Producers in the 1920s, and then to Just-in-Time Systems in the 1970s (see Figure 1) represents some of the key branching moments in the history of the automobile manufacturing industry. Also, consider the evolution of mobile phone handsets. In 30 years they have transitioned from large shoe box sized devices, with antennas and keys, that were only able to make telephone calls, to much smaller candy bar sized devices with touch screen communication and no antennas. Currently mobile phones are evolving into multi-media devices that are again slowly increasing in size. 

3. Cladogenetic change is accompanied by a more continuous series of incremental change known as anagenesis. This is the improvement or refinement of a system rather than the creation of an entirely new type of system. Anagenesis is evolution within a branch lineage, while cladogenesis is evolution that results in a new branch.

For more information on how to undertake a cladistics analysis, see the five step process described in section 5 of this article. 

Figure 1 Automotive industry cladogram
(from McCarthy et al. 2000)

Table 1 Operational practices (characteristics) for the
automotive industry cladogram (from McCarthy et al. 2000)

Cladistic studies of industries and products

So what does a cladistics analysis tell us? Here are four core insights that cladograms provide for management scholars and practitioners:

  • System Recipes – the lineage or branching network for each type of system in a cladogram represents the DNA or recipe for that system. For example, if you wanted to know precisely what constitutes a Lean Producer strategy (see Figure 1) you simply trace all the characteristics on the branches that connect the ancestor branch (Ancient Craft Systems) to the Lean Producer branch. Thus, the first three characteristics in this recipe would be 1, 2 and 47, and the final three characteristics would be 15, 23, and 29.
  • Change Sequence– cladograms help us to understand how to transform one type of system to another type of system (e.g., from Mass Producer to Lean Producer) by providing information about the sequence in which changes should be made. For instance, a flexible, multifunctional workforce (characteristic 24) must first be in place in order to practice set-up time reduction (characteristic 25).
  • Path dependency – where you want to take a system, regardless of whether it is a social system or a technological system, often depends on where the system has come from. This is known as path dependency. If an organization wishes to successfully change from a Mass Producer to a Lean Producer it must adopt the characteristics on the Lean Producer branch (e.g., 29, 23, 15, 49, 35, etc.) but also it must drop, unlearn or stop doing those Mass Producer characteristics that will be in conflict with being a Lean Producer(e.g., 52, 46, 20 and 14).
  • The Velocity of Change – whether it is products, technologies or industries, a cladogram depicts the velocity of change. The changes in both the rate and direction of characteristics overtime can be counted to determine how dynamic the system is changing, both in terms of pace and continuity. Once the velocity is determined managers should then ensure that the velocities of their companies innovation processes (organizational, product and technological) are appropriate for their industry and market conditions.

Further Reading

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1 comment:

  1. I love the concept! I am an evolutionary biologits working in marketing and business dev (Pharma/biotech) for a biocluster.

    Few comments:
    You should have a look on the coding of character and the definition of the character as well. It could have a big impact on your results.

    I am thinking about the use of "reduction" for instance, in character 7. It infers an evolutionary direction.

    Il love this paper:
    Pleijel, F. 1995. On character coding for phylogeny reconstruction.
    Cladistics 11: 309–315.

    All the best,