The Origin of Disequilibrium

Disruptive events such as financial shocks, terror attacks, wars, natural calamities and pandemics, disturb the stability of a business ecosystem pushing it into a state of disequilibrium. Such external or exogenous events can play a much larger role in determining an organisation’s destiny, than a meticulously crafted business strategy, to counter market forces emerging from within a business ecosystem. Similarly, major disruptions of natural ecosystems are invariably the result of sudden external shocks, rather than the outcome of gradual, endogenous disturbances from within the ecosystem.

The famous naturalist, Charles Darwin, published his landmark “The Origin of Species” in 1859 suggesting that evolution was a gradual and incremental process unfolding slowly across the eons. In 1972, however, palaeontologists Stephen Jay Gould and Niles Eldredge challenged this widely held view of evolution. They proposed that the evolutionary process follows a principle they called ‘punctuated equilibrium’, where new species originate primarily during relatively brief periods of sudden and turbulent disequilibrium. These disruptive moments are normally followed by long periods of equilibrium and stability, when little evolutionary change occurs in the species. The amazing biodiversity of species we see is the direct result of countless cycles of disruption and stasis, over hundreds of millions of years.

This cycle of vicious extinction and virtuous origination of species is characterised by a few infrequent, but cataclysmic mass extinctions, triggered by external shocks such as asteroid strikes, volcanic eruptions, or climate change, that destroy on average 75% of the species existing. There are also frequently occurring smaller background extinctions that destroy on average 25% of the existing species, every one million years. Each of the five mass extinctions of the past have been followed by dramatic periods of origination of new species.

Just as this repeating pattern of disequilibrium is the norm in nature, it is also the norm in the evolution of business ecosystems. Ecosystems whether in nature, or in business, constantly transition between these periods of equilibrium and disequilibrium. The adaptability of all actors in these complex ecosystems is severely stress-tested during these periods of turbulence and uncertainty.

The theory of punctuated equilibrium also broadly describes the pattern of change that has shaped the rise and fall of civilisations through the centuries. Disequilibrating moments, as we are experiencing today, are precisely when humankind has not only overcome difficult challenges, but also regenerated tremendous progress in commerce, the sciences and the arts. We may not relish this pattern of disequilibrium, but we can draw comfort from the knowledge that we are walking in the shadows of forgotten ancestors, who have already tread this rugged path to create the modern world.

References

[1] Eldredge, Niles, and Stephen Jay Gould. 1972. “Punctuated Equilibria: An Alternative to Phyletic Gradualism.” American Museum of Natural History Research Library. DOI: 10.5555/doi.apa/10.5555/12345678.

[2] Raup, David M. 1994. “The Role of Extinction in Evolution.” PNAS 91: 6758–6763.