The Anna Karenina Principle of Business

The Anna Karenina principle was popularized by Jared Diamond. It comes from a line in the book Anna Karenina.

"Happy families are all alike; every unhappy family is unhappy in its own unique way."

This principle states that evolutionary success doesn't occur because of some particular positive trait, it is instead the absence of any serious negative traits that leads a species to thrive. If you were to apply this idea to business, it means a deficiency in any one core element will doom a company to extinction. However, a successful company somehow avoids each and every one of these potential failures as it grows and thrives.

The bigger question then becomes, what are the core traits that lead to business failure? In the case of domesticated animals, these traits are easy to identify (dietary needs, captive breeding, disposition, panic tendency, and social structure).

I propose the following, sure to be incomplete, list of positive traits required for a sustainable business:

  • Ability To Identify A Competitive Niche
  • Flexibility In Adopting Internal & External Innovation
  • Capability To Repeatedly Identify & Recruit Talent At Market Value
  • Ability To Sustain Periods of Frugality
  • Commitment To Organizational Learning

So what do you think? Did I leave anything off the list?

Written by Adam Harrell on September 21, 2010


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Brian Kirkpatrick says:

I also have a list of traits I think an organization must possess in order to be successful. And like your list my, mine has its origins seated in evolution.

Evolution is about an organism possessing the “right” traits which give it the ability to possess an advantage that will allow it capture enough energy to survive and reproduce. Just as this is true for an organism, it is also true for an organization.

There are 7 characteristic of life an organism must possess (cut and pasted from wiki):
1. Homeostasis: Regulation of the internal environment to maintain a constant state; for example, electrolyte concentration or sweating to reduce temperature.
2. Organization: Being structurally composed of one or more cells, which are the basic units of life.
3. Metabolism: Transformation of energy by converting chemicals and energy into cellular components (anabolism) and decomposing organic matter (catabolism). Living things require energy to maintain internal organization (homeostasis) and to produce the other phenomena associated with life.
4. Growth: Maintenance of a higher rate of anabolism than catabolism. A growing organism increases in size in all of its parts, rather than simply accumulating matter.
5. Adaptation: The ability to change over a period of time in response to the environment. This ability is fundamental to the process of evolution and is determined by the organism's heredity as well as the composition of metabolized substances, and external factors present.
6. Response to stimuli: A response can take many forms, from the contraction of a unicellular organism to external chemicals, to complex reactions involving all the senses of multicellular organisms. A response is often expressed by motion, for example, the leaves of a plant turning toward the sun (phototropism) and by chemotaxis.
7. Reproduction: The ability to produce new individual organisms, either asexually from a single parent organism, or sexually from two parent organisms.

These 7 characteristics of life are also required for an organization to be alive. The challenge for manages is to make the decisions which will give his or her organization a competitive advantage for each of the characteristics. For example, if an organization doesn’t have a culture that supports change, then it would score low on its ability to adapt and could be as defunct as the dodo.

The same forces that govern natural selection are the same forces that govern business evolution (as long as the market is free – government tinkering is the equivalent to selective breeding). The acquisition of ATP in the natural world is the equivalent to acquisition of cash in the business world. An organism’s unique traits from any of the characteristics above that give it a competitive advantage ensure its survivability and the same can be said for a business.

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Adam Harrell