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The Adaptive Cycle [Growth
Posted on January 19, 2018 @ 09:20:00 AM by Paul Meagher

I recently came across a "tool for thought" called the Adaptive Cycle. The Resilience Alliance has a discussion and depiction of what the Adaptive Cycle looks like:


Source: https://www.resalliance.org/adaptive-cycle

This diagram offers a way to think about change and succession in the natural world and possibly also in the business world. The basic idea is that when a new niche opens up there are companies that are effective at exploiting that niche and a large cohort who are not. Some of the successful ones will eventually scale up, gather up more resources and occupy more land, and will become more complex to the point where a reckoning of some sort leads to a phase of release and reorganization in the context, perhaps, of a transformed niche.

As an example, we might think about a company like Facebook who were successful at exploiting a social media niche and building on that early success to become a dominant social media company. The complexity of the company only grows as it welds increasing influence in personal, community and political affairs. Mark Zuckerberg has acknowledged that there are problems with Facebook and made a resolution to "Fix Facebook" in 2018. Perhaps Mark is acknowledging the need for an adaptive cycle of release and reorganization in order to evolve the company to the next stage. He may also be anticipating that if he does not signal a willingness to "fix facebook" then powerful government organizations might make that decision for him. At any rate, we may be witnessing the midpoint of an adaptive cycle where Facebook will release and reorganize perhaps like Google did when it turned into Alphabet but with some deeper fixes as well.

What is true of Facebook and Google may be true also of smaller companies. In the startup literature there is the concept of a "pivot". A startup may launch with the conviction that a certain business model will be successful and eventually realize that the business model is not working. At that point they might persist in their folly giving it "one more chance", they might fold the company and call it a day, or they might "pivot" to a new business model that is more likely to be viable and test if that is so. The psychology of sunk costs often makes it very difficult to recognize the need for and motivation to pivot.

One suggestion might be that instead of framing these major decision points as exceptional "pivot" moments we might frame them as part of an adaptive cycle and expect to encounter multiple release/reoganization phases as a company regenerates itself in response to a changing niche or changing corporate objectives.

In conclusion, the Adaptive Cycle is a tool for through that is meant to help you think about how growth and succession happens. Nature appears to generally follow this cycle (i.e., animal or plant death and subsequent nutrient recycling are the release and reorganization phases in the diagram). The Adaptive Cycle concept may not have much usefulness for thinking about company dynamics but it is worth googling the concept a bit more before you draw that conclusion. I have not done justice to the extensive research behind the concept but decided to blog about it because I think the diagram is a potentially useful "tool for thought" for startups and more established businesses facing the challenges of growth and succession.

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