If I wasn't writing all the time, I'd read a lot more. And I'm not talking about Harry Potter. Blink was an eye-opener, Freakonomics shone a different light on the business world around me, and I have a better handle on the opportunities of risk after reading Aswath Damodaran's take on the issue.
But the latest item on my reading list could push all of those fine works into obsolescence. Eric Beinhocker's The Origin of Wealth ties risk management, incentives, and human psychology together with many other criteria, all under one philosophical framework. As you might guess from the book title, that framework is evolution.
Beinhocker's work takes you through the history of economics, taking care to point out weaknesses in traditional economics. The market never reaches a total equilibrium, and market players are neither omniscient nor perfectly rational.
But he also takes you through human history, going all the way back to the paleolithic era. When the first homo habilis traded a stone ax for a rabbit, the first economy was born. And as the physical technologies we traded became more advanced and valuable, we came up with more sophisticated social technologies to help us benefit from the new inventions. The progression of both the physical and social innovations has been governed by the same principles that led Mother Nature from single-cell bacteria to humans in the first place.
New tech needs new management
It's not exactly survival of the fittest, but survival of the most likely to reproduce. When Henry Ford showed how efficient a manufacturing line could be, it was only a matter of time before there were dozens of Ford
The global economy today is a constantly evolving patchwork of myriad smaller physical-social systems like the General Electric
Nobody could have designed all of this near-infinite complexity from the ground up. Instead, each piece has evolved from thousands of years of human ingenuity, with exponential acceleration in the last handful of centuries. And the changes are only speeding up.
Adapt and survive
So the companies best equipped to survive in this kind of primordial economic soup are the ones willing to do some evolving of their own. Cast a wide net of promising products and strategies, don't be afraid to see most of them fail, and then reap the rewards as a few mutants crawl ashore and start to breathe.
You know I have to hold up Google
"Companies don't innovate; markets do," but it's time for a new management strategy that lets an individual business thrive and evolve, too.
The book builds on ideas from the Santa Fe Institute, and there are plenty of logical exercises inside to support evolution's central role in economics -- and in the strategies needed to survive a while longer. After all, as Beinhocker points out, only 18 of today's Forbes 100 companies were on the original list in 1917. And most of those have struggled just to survive, as only General Electric has outperformed the broader market over the last 90 years.
Maybe we're seeing a new breed of businesses rise right now, and perhaps Google can do in the 21st century what GE did in the 20th. If it does, expect an army of clones to follow in its wake. And that's how another new world order might begin.
Fool contributor Anders Bylund owns shares in Netflix and Google, but holds no other position in any of the companies discussed here. If he wasn't an honest-to-goodness Fool, he'd want to work for the SFI. You can check out Anders' holdings if you like, and Foolish disclosure is always evolving, and will soon learn to fly.